NMLS SAFE EXAM PRACTICE QUESTIONS
Enhancing protection and reducing fraud by directing states to adopt minimum uniform
standards for the licensing and registration of residential mortgage loan originators was
the purpose of the federal act known as the:
a. S.A.F.E. Act
b. Federal Trade Act
c. Consumer Financial Protection Act
d. Dodd-Frank Act - Answer -a. S.A.F.E. Act
Loan processors and underwriters may not:
a. Communicate with consumers to obtain information necessary for loan processing
b. Collect information required to document a loan application
c. Distribute disclosures required in accordance with federal law
d. Take a loan application in the absence of a loan originator - Answer -d. Take a loan
application in the absence of a loan originator
The term " state licensed mortgage loan originator" applies to an individual that works
for:
a. Bank or credit union
b. Mortgage broker only
c. Mortgage broker or lender
d. Mortgage lender only - Answer -c. Mortgage broker or lender
Which of the following is not a part of the definition of a loan originator?
a. For compensation or gain, takes residential mortgage applications
b. For the expectation of compensation or gain, offers or negotiates terms of a
residential mortgage loan
c. Person or entity that only performs clerical duties in the processing of the documents
d. For compensation or gain, negotiates residential mortgage loans - Answer -c. Person
or entity that only performs clerical duties in the processing of the documents
Under the S.A.F.E. Act, states and their regulatory agencies have the duty and the
authority to enact licensing standards that meet the requirements of the Act, while
overall responsibility for interpretation, implementation, and compliance currently lies
with:
a. The NMLS
b. The Federal Reserve
c. HUD
d. The CFPB - Answer -d. The CFPB
,Which of the following is responsible for determining whether to issue a license
approval?
a. The NMLS
b. The Governor
c. The CFPB
d. The State Regulatory Authority - Answer -d. The State Regulatory Authority
An individual who is an employee of a depository institution or a subsidiary of a
depository institution meets the definition of a loan originator, defined as a(n):
a. Licensed mortgage loan originator
b. Exempt mortgage loan originator
c. Registered mortgage loan originator
d. Qualified mortgage loan originator - Answer -c. Registered mortgage loan originator
Which of the following is used as a method of identifying and holding licensees
accountable, according to the S.A.F.E. Act?
a. NMLS ID
b. Records of annual loan originator volume
c. Unique identifier
d. CSBS number - Answer -c. Unique identifier
Taneka is licensed and has received her unique identifier from the NMLS. Taneka must
clearly show her unique identifier on all of the following, except:
a. Residential mortgage loan applications
b. Solicitations and advertisements
c. Websites
d. Interoffice communications - Answer -d. Interoffice communications
Each of the following is true about the Department of Housing and Urban Development
(HUD), except:
a. The Federal Housing Administration, with its liberal-eligibility FHA loan programs,
operates under HUD's authority
b. It provides or makes referrals related to housing counseling for loan applicants
seeking a HECM or high-cost home loan
c. Public housing and multi-family housing fall under its purview
d. It has a major role in overseeing the mortgage industry - Answer -d. It has a major
role in overseeing the mortgage industry
Which of the following is not a part of the definition of a loan originator?
a. For compensation or gain, takes residential mortgage applications
, b. For the expectation of compensation or gain, offers or negotiates terms of a
residential mortgage loan
c. Person or entity that only performs real estate brokerage activities
d. For compensation or gain, negotiates residential mortgage loans - Answer -c. Person
or entity that only performs real estate brokerage activities
Bob Bachman is applying for a mortgage with MZ Mortgage. He is referred by MZ
Mortgage to a title company in which MZ Mortgage has a 10% ownership interest. At
what point must Bob be made aware of the relationship between the two companies?
a. At the time of the referral
b. It is not necessary, because MZ Mortgage owns less than 25% of the title company
c. Within three business days of application
d. Within three business days after the referral - Answer -a. At the time of the referral
Which of the following would not be considered a settlement service?
a. Servicing fees
b. Escrow services
c. Origination services
d. Appraisal services - Answer -a. Servicing fees
An escrow account analysis has been completed on Mary Thompson's loan. It is
discovered that there is a $40 overage in her account. How many days does the
servicer have to return the money?
a. There is no refund
b. The servicer would not return the money; it would be applied toward the principal
amount
c. The servicer has 30 days from completion of the analysis to return the overage
d. Ms. Thompson must be refunded within 90 days - Answer -a. There is no refund
Which of the following is least likely to be held in an escrow or reserve account?
a. HOA fees
b. Mortgage insurance premium
c. Hazard insurance reserve
d. Property tax reserve - Answer -a. HOA fees
Assuming a borrower is not allowed to shop for the credit report provider, which of the
following best describes the applicable tolerance?
a. Zero tolerance
b. No tolerance requirement
c. Tolerance depends on certain factors
d. 10% tolerance - Answer -a. Zero tolerance
Enhancing protection and reducing fraud by directing states to adopt minimum uniform
standards for the licensing and registration of residential mortgage loan originators was
the purpose of the federal act known as the:
a. S.A.F.E. Act
b. Federal Trade Act
c. Consumer Financial Protection Act
d. Dodd-Frank Act - Answer -a. S.A.F.E. Act
Loan processors and underwriters may not:
a. Communicate with consumers to obtain information necessary for loan processing
b. Collect information required to document a loan application
c. Distribute disclosures required in accordance with federal law
d. Take a loan application in the absence of a loan originator - Answer -d. Take a loan
application in the absence of a loan originator
The term " state licensed mortgage loan originator" applies to an individual that works
for:
a. Bank or credit union
b. Mortgage broker only
c. Mortgage broker or lender
d. Mortgage lender only - Answer -c. Mortgage broker or lender
Which of the following is not a part of the definition of a loan originator?
a. For compensation or gain, takes residential mortgage applications
b. For the expectation of compensation or gain, offers or negotiates terms of a
residential mortgage loan
c. Person or entity that only performs clerical duties in the processing of the documents
d. For compensation or gain, negotiates residential mortgage loans - Answer -c. Person
or entity that only performs clerical duties in the processing of the documents
Under the S.A.F.E. Act, states and their regulatory agencies have the duty and the
authority to enact licensing standards that meet the requirements of the Act, while
overall responsibility for interpretation, implementation, and compliance currently lies
with:
a. The NMLS
b. The Federal Reserve
c. HUD
d. The CFPB - Answer -d. The CFPB
,Which of the following is responsible for determining whether to issue a license
approval?
a. The NMLS
b. The Governor
c. The CFPB
d. The State Regulatory Authority - Answer -d. The State Regulatory Authority
An individual who is an employee of a depository institution or a subsidiary of a
depository institution meets the definition of a loan originator, defined as a(n):
a. Licensed mortgage loan originator
b. Exempt mortgage loan originator
c. Registered mortgage loan originator
d. Qualified mortgage loan originator - Answer -c. Registered mortgage loan originator
Which of the following is used as a method of identifying and holding licensees
accountable, according to the S.A.F.E. Act?
a. NMLS ID
b. Records of annual loan originator volume
c. Unique identifier
d. CSBS number - Answer -c. Unique identifier
Taneka is licensed and has received her unique identifier from the NMLS. Taneka must
clearly show her unique identifier on all of the following, except:
a. Residential mortgage loan applications
b. Solicitations and advertisements
c. Websites
d. Interoffice communications - Answer -d. Interoffice communications
Each of the following is true about the Department of Housing and Urban Development
(HUD), except:
a. The Federal Housing Administration, with its liberal-eligibility FHA loan programs,
operates under HUD's authority
b. It provides or makes referrals related to housing counseling for loan applicants
seeking a HECM or high-cost home loan
c. Public housing and multi-family housing fall under its purview
d. It has a major role in overseeing the mortgage industry - Answer -d. It has a major
role in overseeing the mortgage industry
Which of the following is not a part of the definition of a loan originator?
a. For compensation or gain, takes residential mortgage applications
, b. For the expectation of compensation or gain, offers or negotiates terms of a
residential mortgage loan
c. Person or entity that only performs real estate brokerage activities
d. For compensation or gain, negotiates residential mortgage loans - Answer -c. Person
or entity that only performs real estate brokerage activities
Bob Bachman is applying for a mortgage with MZ Mortgage. He is referred by MZ
Mortgage to a title company in which MZ Mortgage has a 10% ownership interest. At
what point must Bob be made aware of the relationship between the two companies?
a. At the time of the referral
b. It is not necessary, because MZ Mortgage owns less than 25% of the title company
c. Within three business days of application
d. Within three business days after the referral - Answer -a. At the time of the referral
Which of the following would not be considered a settlement service?
a. Servicing fees
b. Escrow services
c. Origination services
d. Appraisal services - Answer -a. Servicing fees
An escrow account analysis has been completed on Mary Thompson's loan. It is
discovered that there is a $40 overage in her account. How many days does the
servicer have to return the money?
a. There is no refund
b. The servicer would not return the money; it would be applied toward the principal
amount
c. The servicer has 30 days from completion of the analysis to return the overage
d. Ms. Thompson must be refunded within 90 days - Answer -a. There is no refund
Which of the following is least likely to be held in an escrow or reserve account?
a. HOA fees
b. Mortgage insurance premium
c. Hazard insurance reserve
d. Property tax reserve - Answer -a. HOA fees
Assuming a borrower is not allowed to shop for the credit report provider, which of the
following best describes the applicable tolerance?
a. Zero tolerance
b. No tolerance requirement
c. Tolerance depends on certain factors
d. 10% tolerance - Answer -a. Zero tolerance
