NMLS SAFE EXAM Questions and Answers Graded A+
Where credit institutions originate loans - An advertisement must be presented "clearly and
ANSWER -Primary Mortgage Market conspicuously" to keep from being deceptive,
unfair, or otherwise violate a Commission rule -
ANSWER -Advertising Disclosure
When an ARM has rate caps of 5/2/6, the 6
refers to what?
A. The maximum rate increase at the initial Extenuating circumstances such as "bona fide
adjustment personal financial emergency - ANSWER -
B. The start rate for the loan Waving Right of Rescission
C. The maximum the rate can increase over the
life of the loan
D. The rate maximum the rate can decrease over Right that borrowers have to cancel a loan or line
the life of the loan - ANSWER -C. The of credit with a lender within three days of closing
maximum the rate can increase over the life of - ANSWER -Right of Rescission
the loan
When creditors office is open to the public, a
When utilizing a temporary buydown to lower the calendar working day except Sunday or a federal
interest rate on a FHA loan, which of the holiday - ANSWER -Business Day
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate Financial information used for purposes of
C. The rate cannot be more than 2% below the obtaining an extension of credit -
note rate
ANSWER -Application
D. Seller or builder can pay the discount points to
buydown the rate - ANSWER -B. The
borrower qualified at the buydown rate The act of making new information known -
ANSWER -Disclosure
All of the following are violations of the Fair
Housing Act EXCEPT
Mission is to promote consumer protection and
A. Age
eliminate and prevent anticompetitive business
B. National Origin
C. Disability practices - ANSWER -FTC
Federal Trade Commission
D.Religion - ANSWER -A. Age
Regulatory agency charged with overseeing
Claim against property held by one who is not
financial products and services offered to
the legal owner - ANSWER -Encrumbrance
consumers - ANSWER -CFPB
Consumer Financial Protection Bureau
Advertised term that requires additional
disclosures - ANSWER -Trigger Term Enacted 1968 promotes the informed use of
consumer credit by requiring disclosures about
terms and costs and standardizes the manner in
,NMLS SAFE EXAM Questions and Answers Graded A+
which costs with borrowing are calculated and Ratio of a loan to the value of an asset
disclosed - ANSWER -TILA purchased - ANSWER -LTV
Truth in Lending Act Loan to Value
Interest charged on a loan for one or more days - Principal, Interest, Taxes, Insurance
ANSWER -Per Diem Interest Refers to the components of a mortgage
payment - ANSWER -PITI
Principal (X) Interest Rate = Annual Interest Rate
- ANSWER -Annual Interest Rate Formula Housing to Debt
Ratio that measures an individual's ability to
manage monthly payment and repay debts -
Mortgage where the mortgagor is only required ANSWER -DIF
to pay off the interest that arises from the
principal that is borrowed for a set period -
ANSWER -Interest Only Mortgage Agreement between the lender and the borrower
to delay foreclosure - ANSWER -
Forbearance
Borrower chooses to pay additional "discount
points" to buy down the interest rate for the life of
the mortgage note - ANSWER -Permanent A permanent restructuring of the mortgage where
Buydown one or more of the terms of a borrower's loan are
changed to provide a more affordable payment -
ANSWER -Loan Modification
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates
that increase in stair-step fashion until a Legal process to collect debt on mortgaged
permanent interest rate is reached - property - ANSWER -Foreclosure
ANSWER -2/1 Buydown
Document generated and signed by a mortgage
A form of pre-paid interest which effectively lender, acknowledging that the borrower has paid
increases the yield on the loan above the amount off the mortgage loan in full and the mortgage is
of the stated interest rate - ANSWER - not a lien on the property - ANSWER -
Discount Point Satisfaction of Mortgage Letter
An amount in addition to the Loan to Value, When two mortgages are on a property, this
which simply represents the first position specifies which mortgage takes precedence -
mortgage or loan as a percentage of the ANSWER -Subordination Agreement
property's value - ANSWER -CLTV
Combined Loan to Value
Provides homeowner proof the mortgage is paid
off - ANSWER -Payoff Statement
,NMLS SAFE EXAM Questions and Answers Graded A+
and is also an open-ended mortgage transaction
that is secured - ANSWER -HELOC
Legal presumption that anything recorded in a Home Equity Line of Credit
public record can be known by anyone -
ANSWER -Constructive Note
A FHA insured reverse mortgage that allows the
conversion of equity in a home to cash -
Direct knowledge that one has of the property - ANSWER -HECM
ANSWER -Actual Note Home Equity Conversion Mortgage
Information that should compel a reasonable A mortgage in which a large portion of the
person to make further inquiries about some borrowed principal is repaid in a single payment
aspect of the property - ANSWER -Inquiry at the end of the loan period and does not
Note amortize - ANSWER -Balloon Mortgage
Serves as a central repository of information Margin + Interset = Rate - ANSWER -ARM
about a parcel of land - ANSWER -Title Interest Rate Adjustment
Record
Regional average of interest expenses incurred
Payment received by lender after selling a loan by financial institutions which in turn is used as a
Based on market value - ANSWER -SRP base for calculating variable rate loans -
Service Release Premiums ANSWER -COFI
Cost of Fund Index
Created in 1968, goal to expand affordable
housing under HUD - ANSWER -GNMA Loan that is lower than fixed rate in beginning
Government National Mortgage Association Loan payment changes over time
Adjustable caps that vary
Used to obtain a higher loan amount -
Created 1968 works with Fannie Mae to increase ANSWER -ARM
affordable lending - ANSWER -FNMA Adjustable Rate Mortgage
Federal National Mortgage Association
Interest rate that remains the same over the life
Insures banks real estate loans and charges of the loan - ANSWER -Fixed Rate
borrowers a small premium - ANSWER -
FHA
Federal Housing Administration Does not meet Freddie Mac or Fannie Mae
guidelines - ANSWER -Non-Conforming
Loan
A loan in which the lender agrees to lend a
maximum amount within an agreed period
, NMLS SAFE EXAM Questions and Answers Graded A+
Conforms to terms and conditions set by from the lender - ANSWER -Reconveyance
government - ANSWER -Conforming Loan
The act of transferring an ownership interest in
Not guaranteed or insured by the government real property from one party to another -
but can still follow federal guidelines - ANSWER -Conveyance
ANSWER -Conventional Loan
A guarantee a lender will deliver a specific
Accelerated loan repayment if property is in combination of interest rate and points if the
default - ANSWER -Acceleration Clause mortgage closes by a specified date -
ANSWER -Mortgage Lock-In-Rate
Relieves one party form liability due to actions of
another party - ANSWER -Exculpatory A document that states the loan amount a lender
Clause is willing to make a borrower - ANSWER -
Approval letter
Creditor can obtain title without foreclosure
process - ANSWER -Defeasance Clause Estimate of loan amount a borrower can get with
limited financial information - ANSWER -
Pre-Qualification Letter
When fees are attached to late payment -
ANSWER -Late Payement Penalty
Indicates a borrower has passed lenders
underwriting guidelines and that they are willing
Fixed sum added to loan if loan is paid off early - to offer the borrower a home loan -
ANSWER -Pre-Payment Penalty ANSWER -Commitment Letter
Complete financing and sales contract agreed Letter subject to property specified for a loan and
upon by seller and seller with no note attached - dependent on an appraisal - ANSWER -
ANSWER -Contract of Deed Mortgage Approval Letter
Promise to repay debt - ANSWER -Note A computer generated loan underwriting
decision, using completed loan application
information - ANSWER -AUS
Pledge of collateral to secure a loan - Automated Underwriting System
ANSWER -Mortgage
A borrowers income assets - ANSWER -
A document issued by a mortgage holder Capacity
indicating that the borrower is released from the
mortgage debt and transfers the property title
Where credit institutions originate loans - An advertisement must be presented "clearly and
ANSWER -Primary Mortgage Market conspicuously" to keep from being deceptive,
unfair, or otherwise violate a Commission rule -
ANSWER -Advertising Disclosure
When an ARM has rate caps of 5/2/6, the 6
refers to what?
A. The maximum rate increase at the initial Extenuating circumstances such as "bona fide
adjustment personal financial emergency - ANSWER -
B. The start rate for the loan Waving Right of Rescission
C. The maximum the rate can increase over the
life of the loan
D. The rate maximum the rate can decrease over Right that borrowers have to cancel a loan or line
the life of the loan - ANSWER -C. The of credit with a lender within three days of closing
maximum the rate can increase over the life of - ANSWER -Right of Rescission
the loan
When creditors office is open to the public, a
When utilizing a temporary buydown to lower the calendar working day except Sunday or a federal
interest rate on a FHA loan, which of the holiday - ANSWER -Business Day
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate Financial information used for purposes of
C. The rate cannot be more than 2% below the obtaining an extension of credit -
note rate
ANSWER -Application
D. Seller or builder can pay the discount points to
buydown the rate - ANSWER -B. The
borrower qualified at the buydown rate The act of making new information known -
ANSWER -Disclosure
All of the following are violations of the Fair
Housing Act EXCEPT
Mission is to promote consumer protection and
A. Age
eliminate and prevent anticompetitive business
B. National Origin
C. Disability practices - ANSWER -FTC
Federal Trade Commission
D.Religion - ANSWER -A. Age
Regulatory agency charged with overseeing
Claim against property held by one who is not
financial products and services offered to
the legal owner - ANSWER -Encrumbrance
consumers - ANSWER -CFPB
Consumer Financial Protection Bureau
Advertised term that requires additional
disclosures - ANSWER -Trigger Term Enacted 1968 promotes the informed use of
consumer credit by requiring disclosures about
terms and costs and standardizes the manner in
,NMLS SAFE EXAM Questions and Answers Graded A+
which costs with borrowing are calculated and Ratio of a loan to the value of an asset
disclosed - ANSWER -TILA purchased - ANSWER -LTV
Truth in Lending Act Loan to Value
Interest charged on a loan for one or more days - Principal, Interest, Taxes, Insurance
ANSWER -Per Diem Interest Refers to the components of a mortgage
payment - ANSWER -PITI
Principal (X) Interest Rate = Annual Interest Rate
- ANSWER -Annual Interest Rate Formula Housing to Debt
Ratio that measures an individual's ability to
manage monthly payment and repay debts -
Mortgage where the mortgagor is only required ANSWER -DIF
to pay off the interest that arises from the
principal that is borrowed for a set period -
ANSWER -Interest Only Mortgage Agreement between the lender and the borrower
to delay foreclosure - ANSWER -
Forbearance
Borrower chooses to pay additional "discount
points" to buy down the interest rate for the life of
the mortgage note - ANSWER -Permanent A permanent restructuring of the mortgage where
Buydown one or more of the terms of a borrower's loan are
changed to provide a more affordable payment -
ANSWER -Loan Modification
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates
that increase in stair-step fashion until a Legal process to collect debt on mortgaged
permanent interest rate is reached - property - ANSWER -Foreclosure
ANSWER -2/1 Buydown
Document generated and signed by a mortgage
A form of pre-paid interest which effectively lender, acknowledging that the borrower has paid
increases the yield on the loan above the amount off the mortgage loan in full and the mortgage is
of the stated interest rate - ANSWER - not a lien on the property - ANSWER -
Discount Point Satisfaction of Mortgage Letter
An amount in addition to the Loan to Value, When two mortgages are on a property, this
which simply represents the first position specifies which mortgage takes precedence -
mortgage or loan as a percentage of the ANSWER -Subordination Agreement
property's value - ANSWER -CLTV
Combined Loan to Value
Provides homeowner proof the mortgage is paid
off - ANSWER -Payoff Statement
,NMLS SAFE EXAM Questions and Answers Graded A+
and is also an open-ended mortgage transaction
that is secured - ANSWER -HELOC
Legal presumption that anything recorded in a Home Equity Line of Credit
public record can be known by anyone -
ANSWER -Constructive Note
A FHA insured reverse mortgage that allows the
conversion of equity in a home to cash -
Direct knowledge that one has of the property - ANSWER -HECM
ANSWER -Actual Note Home Equity Conversion Mortgage
Information that should compel a reasonable A mortgage in which a large portion of the
person to make further inquiries about some borrowed principal is repaid in a single payment
aspect of the property - ANSWER -Inquiry at the end of the loan period and does not
Note amortize - ANSWER -Balloon Mortgage
Serves as a central repository of information Margin + Interset = Rate - ANSWER -ARM
about a parcel of land - ANSWER -Title Interest Rate Adjustment
Record
Regional average of interest expenses incurred
Payment received by lender after selling a loan by financial institutions which in turn is used as a
Based on market value - ANSWER -SRP base for calculating variable rate loans -
Service Release Premiums ANSWER -COFI
Cost of Fund Index
Created in 1968, goal to expand affordable
housing under HUD - ANSWER -GNMA Loan that is lower than fixed rate in beginning
Government National Mortgage Association Loan payment changes over time
Adjustable caps that vary
Used to obtain a higher loan amount -
Created 1968 works with Fannie Mae to increase ANSWER -ARM
affordable lending - ANSWER -FNMA Adjustable Rate Mortgage
Federal National Mortgage Association
Interest rate that remains the same over the life
Insures banks real estate loans and charges of the loan - ANSWER -Fixed Rate
borrowers a small premium - ANSWER -
FHA
Federal Housing Administration Does not meet Freddie Mac or Fannie Mae
guidelines - ANSWER -Non-Conforming
Loan
A loan in which the lender agrees to lend a
maximum amount within an agreed period
, NMLS SAFE EXAM Questions and Answers Graded A+
Conforms to terms and conditions set by from the lender - ANSWER -Reconveyance
government - ANSWER -Conforming Loan
The act of transferring an ownership interest in
Not guaranteed or insured by the government real property from one party to another -
but can still follow federal guidelines - ANSWER -Conveyance
ANSWER -Conventional Loan
A guarantee a lender will deliver a specific
Accelerated loan repayment if property is in combination of interest rate and points if the
default - ANSWER -Acceleration Clause mortgage closes by a specified date -
ANSWER -Mortgage Lock-In-Rate
Relieves one party form liability due to actions of
another party - ANSWER -Exculpatory A document that states the loan amount a lender
Clause is willing to make a borrower - ANSWER -
Approval letter
Creditor can obtain title without foreclosure
process - ANSWER -Defeasance Clause Estimate of loan amount a borrower can get with
limited financial information - ANSWER -
Pre-Qualification Letter
When fees are attached to late payment -
ANSWER -Late Payement Penalty
Indicates a borrower has passed lenders
underwriting guidelines and that they are willing
Fixed sum added to loan if loan is paid off early - to offer the borrower a home loan -
ANSWER -Pre-Payment Penalty ANSWER -Commitment Letter
Complete financing and sales contract agreed Letter subject to property specified for a loan and
upon by seller and seller with no note attached - dependent on an appraisal - ANSWER -
ANSWER -Contract of Deed Mortgage Approval Letter
Promise to repay debt - ANSWER -Note A computer generated loan underwriting
decision, using completed loan application
information - ANSWER -AUS
Pledge of collateral to secure a loan - Automated Underwriting System
ANSWER -Mortgage
A borrowers income assets - ANSWER -
A document issued by a mortgage holder Capacity
indicating that the borrower is released from the
mortgage debt and transfers the property title
