NMLS MLO TEST QUESTIONS AND
ANSWERS
Which of the following statements is true regarding a broker's relationship with a
borrower?
a. A broker is obligated to reveal material facts which might affect the borrower so long
as they do not conflict with his own interests.
b. A broker can collect fees for services so long as they are disclosed to the borrower
before being provided.
c. A broker is obligated to carry out all of a borrower's instructions, regardless of legality.
d. A mortgage broker creates an agency relationship with a bo - Answer-b. A broker can
collect fees for services so long as they are disclosed to the borrower before being
provided
A mortgage broker realizes that his customer will not qualify for the loan, so he
convinces her to apply using her mother's identity and financial data. Even though the
mother does not know that her information was used, she could be considered a
a. Co-mortgagor
b. Mock purchaser
c. Secret signer
d. Straw buyer - Answer-d. Straw buyer
Which is least likely to be an indicator of predatory lending?
a. Charging excessive prepayment penalties
b. Increasing interest charges
c. Falsifying loan documents
d. Requiring mortgage insurance - Answer-d. Requiring mortgage insurance
It is unethical for a mortgage broker to provide in loan documentation the
a. current occupancy of the property
b. employment history of a client
c. identity of a prior customer to obtain loan for a customer unable to qualify on their
own
d. social security number of a client - Answer-c. identity of a prior customer to obtain
loan for a customer unable to qualify on their own
,Which of the following credit terms may be included in an advertisement for real estate
without further disclosure?
a. "$300 monthly payment"
b. "10% annual percentage rate"
c. "5,000 down payment"
d. "5 years to repay" - Answer-b. "10% annual percentage rate"
What word best describes a group of participants working together to commit single acts
of mortgage fraud?
a. Representation
b. Collusion
c. Discernment
d. Omission - Answer-b. Collusion
The lender collects and holds taxes in what type of account?
a. Trust
b. Savings
c. Escrow
d. Checking - Answer-c. Escrow
Driving by the property but not actually inspecting its condition is termed a(n)
a. windshield appraisal
b. evaluation compliance
c. review appraisal
d. coerced appraisal - Answer-a. windshield appraisal
Which is NOT an indicator of predatory lending?
a. Requiring mortgage insurance
b. Changing loan terms at the closing
c. Requiring credit insurance
d. Raising the interest rate if a payment is late - Answer-a. Requiring mortgage
insurance
Inducing owners to sell homes by suggesting the neighborhood's ethnic or racial
composition is changing, with the implication that property values will decline, is:
a. Flipping
b. Counseling
c. Blockbusting
d. Redlining - Answer-c. Blockbusting
,What piece of information is NOT an item reported under the Home Mortgage
Disclosure Act (HMDA)?
a. Property address
b. Loan amount
c. Type of loan
d. Action taken - Answer-a. Property address
William changes his W-2 in an effort to win approval for his loan application to buy a
new condo. What is this considered?
a. Fraud for a friend
b. Fraud for principle
c. Fraud for property
d. Fraud for profit - Answer-c. Fraud for property
A discount point is BEST described as a charge the borrower pays to:
a. A lender to decrease the interest rate on the mortgage loan
b. A mortgage broker at the time of application to obtain a favorable rate
c. The seller as part of the closing costs of a loan
d. A lender to ensure against foreclosure - Answer-a. A lender to decrease the interest
rate on the mortgage loan
A buyer has made an earnest money payment of $5,000. The buyer pays an additional
$2,000 in option money to be credited at closing on property with sale price of
$160,000. If the required down payment is 20%, how much additional money will the
buyer need to provide toward the down payment at closing?
a. $32,000
b. $27,000
c. $30,000
d. $25,000 - Answer-d. $25,000
$160,000 x .20 (20%) = 32,000 - $7,000 = $25,000
If an applicant works 40 hours a week and is paid $13.52 per hour, what is the
applicant's monthly income?
a. $2,163.20
b. $2,343.47
c. $2,379.52
d. $2,487.68 - Answer-b. $2,343.47
, $13.52 x 40 hrs = $540.8 x 52 wks = $28,121.60 annually / 12 months = $2,343.47
The requirement for private mortgage insurance is generally continued when the loan-
to-value ratio falls below:
a. 20%
b. 50%
c. 80%
d. 90% - Answer-c. 80%
Which of the following documents itemizes all settlement costs including lender
charges?
a. Agreement of Sale
b. HUD-1/Closing Disclosure
c. Form 1003
d. Forbearance Agreement - Answer-b. HUD-1/Closing Disclosure
According to the Truth-in-Lending Act (TILA), the term "refinance" applies to
a. A change in a payment schedule
b. A reduction in annual percentage rate
c. The renewal of a single payment obligation with no change in the original terms
d. The satisfaction of an existing obligation and its replacement by a new obligation -
Answer-d. The satisfaction of an existing obligation and its replacement by a new one
What does a loan originator use to determine the estimated value of a property based
on an analytical comparison of similar property sales?
a. An appraisal
b. A market survey
c. An area survey
d. A cost-benefit analysis - Answer-a. An appraisal
Which of the following methods of disclosure does NOT meet the requirements of Equal
Credit Opportunity Act (ECOA)?
a. E-mail
b. Mailed letter
c. Telephone
d. Faxed letter - Answer-c. Telephone
Term "20 basis points" expressed as a percentage is:
a. 0.2%
b. 0.20%
ANSWERS
Which of the following statements is true regarding a broker's relationship with a
borrower?
a. A broker is obligated to reveal material facts which might affect the borrower so long
as they do not conflict with his own interests.
b. A broker can collect fees for services so long as they are disclosed to the borrower
before being provided.
c. A broker is obligated to carry out all of a borrower's instructions, regardless of legality.
d. A mortgage broker creates an agency relationship with a bo - Answer-b. A broker can
collect fees for services so long as they are disclosed to the borrower before being
provided
A mortgage broker realizes that his customer will not qualify for the loan, so he
convinces her to apply using her mother's identity and financial data. Even though the
mother does not know that her information was used, she could be considered a
a. Co-mortgagor
b. Mock purchaser
c. Secret signer
d. Straw buyer - Answer-d. Straw buyer
Which is least likely to be an indicator of predatory lending?
a. Charging excessive prepayment penalties
b. Increasing interest charges
c. Falsifying loan documents
d. Requiring mortgage insurance - Answer-d. Requiring mortgage insurance
It is unethical for a mortgage broker to provide in loan documentation the
a. current occupancy of the property
b. employment history of a client
c. identity of a prior customer to obtain loan for a customer unable to qualify on their
own
d. social security number of a client - Answer-c. identity of a prior customer to obtain
loan for a customer unable to qualify on their own
,Which of the following credit terms may be included in an advertisement for real estate
without further disclosure?
a. "$300 monthly payment"
b. "10% annual percentage rate"
c. "5,000 down payment"
d. "5 years to repay" - Answer-b. "10% annual percentage rate"
What word best describes a group of participants working together to commit single acts
of mortgage fraud?
a. Representation
b. Collusion
c. Discernment
d. Omission - Answer-b. Collusion
The lender collects and holds taxes in what type of account?
a. Trust
b. Savings
c. Escrow
d. Checking - Answer-c. Escrow
Driving by the property but not actually inspecting its condition is termed a(n)
a. windshield appraisal
b. evaluation compliance
c. review appraisal
d. coerced appraisal - Answer-a. windshield appraisal
Which is NOT an indicator of predatory lending?
a. Requiring mortgage insurance
b. Changing loan terms at the closing
c. Requiring credit insurance
d. Raising the interest rate if a payment is late - Answer-a. Requiring mortgage
insurance
Inducing owners to sell homes by suggesting the neighborhood's ethnic or racial
composition is changing, with the implication that property values will decline, is:
a. Flipping
b. Counseling
c. Blockbusting
d. Redlining - Answer-c. Blockbusting
,What piece of information is NOT an item reported under the Home Mortgage
Disclosure Act (HMDA)?
a. Property address
b. Loan amount
c. Type of loan
d. Action taken - Answer-a. Property address
William changes his W-2 in an effort to win approval for his loan application to buy a
new condo. What is this considered?
a. Fraud for a friend
b. Fraud for principle
c. Fraud for property
d. Fraud for profit - Answer-c. Fraud for property
A discount point is BEST described as a charge the borrower pays to:
a. A lender to decrease the interest rate on the mortgage loan
b. A mortgage broker at the time of application to obtain a favorable rate
c. The seller as part of the closing costs of a loan
d. A lender to ensure against foreclosure - Answer-a. A lender to decrease the interest
rate on the mortgage loan
A buyer has made an earnest money payment of $5,000. The buyer pays an additional
$2,000 in option money to be credited at closing on property with sale price of
$160,000. If the required down payment is 20%, how much additional money will the
buyer need to provide toward the down payment at closing?
a. $32,000
b. $27,000
c. $30,000
d. $25,000 - Answer-d. $25,000
$160,000 x .20 (20%) = 32,000 - $7,000 = $25,000
If an applicant works 40 hours a week and is paid $13.52 per hour, what is the
applicant's monthly income?
a. $2,163.20
b. $2,343.47
c. $2,379.52
d. $2,487.68 - Answer-b. $2,343.47
, $13.52 x 40 hrs = $540.8 x 52 wks = $28,121.60 annually / 12 months = $2,343.47
The requirement for private mortgage insurance is generally continued when the loan-
to-value ratio falls below:
a. 20%
b. 50%
c. 80%
d. 90% - Answer-c. 80%
Which of the following documents itemizes all settlement costs including lender
charges?
a. Agreement of Sale
b. HUD-1/Closing Disclosure
c. Form 1003
d. Forbearance Agreement - Answer-b. HUD-1/Closing Disclosure
According to the Truth-in-Lending Act (TILA), the term "refinance" applies to
a. A change in a payment schedule
b. A reduction in annual percentage rate
c. The renewal of a single payment obligation with no change in the original terms
d. The satisfaction of an existing obligation and its replacement by a new obligation -
Answer-d. The satisfaction of an existing obligation and its replacement by a new one
What does a loan originator use to determine the estimated value of a property based
on an analytical comparison of similar property sales?
a. An appraisal
b. A market survey
c. An area survey
d. A cost-benefit analysis - Answer-a. An appraisal
Which of the following methods of disclosure does NOT meet the requirements of Equal
Credit Opportunity Act (ECOA)?
a. E-mail
b. Mailed letter
c. Telephone
d. Faxed letter - Answer-c. Telephone
Term "20 basis points" expressed as a percentage is:
a. 0.2%
b. 0.20%
