NMLS MLO EXAM QUESTIONS
AND ANSWERS
What law allowed the government to assume control over Fannie Mae and Freddie
Mac? - Answer-HERA (Housing and Economic Recovery Act)
Borrowers with a high-cost loan cannot rescind the loan. True or False? - Answer-False,
the loan can be rescinded within 3 business days
FHFA determines underwriting guidelines for conforming loans. True or False? -
Answer-False, Fannie Mae does
What is the name of the Fannie Mae appraisal report form? - Answer-Uniform
Residential Appraisal Report (URAR)
What document is assigned along with the mortgage? - Answer-Promissory note
What is a deed-in-lieu and is it a loss mitigation option? - Answer-A deed in lieu of
foreclosure is a deed instrument in which a mortgagor conveys all interest in a real
property to the mortgagee to satisfy a loan that is in default and avoid foreclosure
proceedings. Yes
Is a seller financier part of the primary mortgage market? - Answer-Yes
Is an Insurance company part of the primary mortgage market? - Answer-No
Which is NOT a possible indication of a short sale fraud?
A. Buyer is a business partner of the seller
B. Seller has bad credit
C. Seller has excellent credit
D. Property appraises way below neighboring properties - Answer-B. Seller has bad
credit
What type of funding occurs when a lender borrows money from an investor and
assigns the mortgage and note to the investor immediately after closing? - Answer-
Table
Once a LE has been provided, how many days does the borrower have to express their
interest before the Loan Originator is no longer bound by the terms? - Answer-10
business days
, What are RESPA's 3 pre-settlement disclosures that must be sent to the borrower within
3 business days of receipt of the signed application? - Answer-Special information
booklet, GFE or LE, Mortgage Servicing Disclosure Statement
GEM - Answer-Growing Equity Mortgage, has a fixed interest rate and increasing
payments to pay loan balance quicker
Only fee that can't be charged on an FHA loan? - Answer-Tax Service Fee
What does not need to be verified for an FHA Streamline refi? - Answer-employment,
income, debt, or credit score. FHA believes that past payment history is sufficient proof
of the borrower's ATR
Can you do an FHA Streamline Cash-out refi? - Answer-No
Does HOEPA apply to HELOCs? - Answer-Yes
Do construction loans need a Loan Estimate? - Answer-Yes
Higher-Priced mortgages cannot have a prepayment penalty, true or false? - Answer-
False
A High-Cost mortgage has a prepayment penalty of 3% when paid off in the first year. If
a borrower has a mortgage of $245,000 and pays it all off in their first year owning the
mortgage (because he/she won the lottery) how much will the prepayment penalty cost
them? - Answer-A High-Cost mortgage cannot have a prepayment penalty, the
borrower should report this illegal loan
Who sets conforming loan limits? - Answer-FHFA
What is the only limit the FHA has? - Answer-Statutory Lending Limit
Tolerance for pre paids? - Answer-Unlimited
3rd party recording fee tolerance? - Answer-10%
What is a mortgage broker? - Answer-A COMPANY (not a person) who can originate
mortgage loans, but does not have the ability to fund them
Where can you find the YSP? - Answer-On the Closing Disclosure, NOT the Loan
Estimate
When is the period to renew your Loan Originator license? - Answer-November 1 -
December 31
AND ANSWERS
What law allowed the government to assume control over Fannie Mae and Freddie
Mac? - Answer-HERA (Housing and Economic Recovery Act)
Borrowers with a high-cost loan cannot rescind the loan. True or False? - Answer-False,
the loan can be rescinded within 3 business days
FHFA determines underwriting guidelines for conforming loans. True or False? -
Answer-False, Fannie Mae does
What is the name of the Fannie Mae appraisal report form? - Answer-Uniform
Residential Appraisal Report (URAR)
What document is assigned along with the mortgage? - Answer-Promissory note
What is a deed-in-lieu and is it a loss mitigation option? - Answer-A deed in lieu of
foreclosure is a deed instrument in which a mortgagor conveys all interest in a real
property to the mortgagee to satisfy a loan that is in default and avoid foreclosure
proceedings. Yes
Is a seller financier part of the primary mortgage market? - Answer-Yes
Is an Insurance company part of the primary mortgage market? - Answer-No
Which is NOT a possible indication of a short sale fraud?
A. Buyer is a business partner of the seller
B. Seller has bad credit
C. Seller has excellent credit
D. Property appraises way below neighboring properties - Answer-B. Seller has bad
credit
What type of funding occurs when a lender borrows money from an investor and
assigns the mortgage and note to the investor immediately after closing? - Answer-
Table
Once a LE has been provided, how many days does the borrower have to express their
interest before the Loan Originator is no longer bound by the terms? - Answer-10
business days
, What are RESPA's 3 pre-settlement disclosures that must be sent to the borrower within
3 business days of receipt of the signed application? - Answer-Special information
booklet, GFE or LE, Mortgage Servicing Disclosure Statement
GEM - Answer-Growing Equity Mortgage, has a fixed interest rate and increasing
payments to pay loan balance quicker
Only fee that can't be charged on an FHA loan? - Answer-Tax Service Fee
What does not need to be verified for an FHA Streamline refi? - Answer-employment,
income, debt, or credit score. FHA believes that past payment history is sufficient proof
of the borrower's ATR
Can you do an FHA Streamline Cash-out refi? - Answer-No
Does HOEPA apply to HELOCs? - Answer-Yes
Do construction loans need a Loan Estimate? - Answer-Yes
Higher-Priced mortgages cannot have a prepayment penalty, true or false? - Answer-
False
A High-Cost mortgage has a prepayment penalty of 3% when paid off in the first year. If
a borrower has a mortgage of $245,000 and pays it all off in their first year owning the
mortgage (because he/she won the lottery) how much will the prepayment penalty cost
them? - Answer-A High-Cost mortgage cannot have a prepayment penalty, the
borrower should report this illegal loan
Who sets conforming loan limits? - Answer-FHFA
What is the only limit the FHA has? - Answer-Statutory Lending Limit
Tolerance for pre paids? - Answer-Unlimited
3rd party recording fee tolerance? - Answer-10%
What is a mortgage broker? - Answer-A COMPANY (not a person) who can originate
mortgage loans, but does not have the ability to fund them
Where can you find the YSP? - Answer-On the Closing Disclosure, NOT the Loan
Estimate
When is the period to renew your Loan Originator license? - Answer-November 1 -
December 31
