National and UST Mortgage Practice Exam 1 Questions with Correct Answers Latest Update
2025/2026
A borrower received $1,000 per month in rental income. How much of the income may be used
to qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250 - Answers C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is
based on an industry standard that taxes, insurance, and maintenance costs will equal about
25% of the income that a property generates. In this case, 75% x $1,000 = $750.
What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS - Answers C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known
as Loan Prospector), while Fannie Mae's is called Desktop Underwriter.
Which of the following contains only items which should be used in calculating a borrower's
debt-to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
,D. Mortgage insurance payment, average grocery costs, electric bill - Answers B. Car payment,
boat payment, child support obligations
A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly
income. Total monthly debt would include simultaneous loans, debt obligations, alimony, and
child support. Typical living expenses (e.g., utilities, health and disability insurance, food, phone
or cable bills, etc.) are not included when calculating DTI.
Which of the following would NOT be required if a mortgage company wishes to utilize
electronic signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures electronically
C. The company must record the IP address from which the documents were accessed
D. The company must disclose hardware and software requirements to borrowers - Answers C.
The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before
obtaining a consumer's consent, a financial institution must provide a clear and conspicuous
statement to consumers, informing them of their right or option to have the record provided or
made available on paper or in a non-electronic form. The statement must also explain the
consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required
to allow them to access and retain the electronic records.
Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard to recordkeeping
include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent contractors by state
regulators
D. Making records and books available to the state regulator - Answers B. Making all of the
, licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books
available to their state regulator and permit interviews of officers, principals, employees,
independent contractors, agents and customers. They may not knowingly withhold, abstract,
remove, mutilate, destroy, or secrete any books, records, or other information during an
investigation or examination. Loan originators are not required to make all of their records
available to borrowers upon demand.
Which of the following federal regulations prohibits discrimination based on race, color, religion,
sex, marital status, or national origin in a credit transaction?
A. Regulation C
B. Regulation B
C. Regulation Z
D. Regulation G - Answers B. Regulation B
Regulation B implements the provisions of the Equal Credit Opportunity Act (ECOA), which
ensures that all persons, consumers, and businesses are given an equal chance to obtain credit
by prohibiting discrimination based on criteria including race, color, religion, national origin, sex,
marital status, and age (provided the individual is of age to enter into a contract).
According to the standard deed of trust, how soon must a borrower on an owner-occupied loan
occupy the property?
A. Within 30 days of closing
B. Within 90 days of closing
C. Within 60 days of closing
D. Within 15 days of closing - Answers C. Within 60 days of closing
Under most deed of trust, including most FHA and VA loans, a borrower who intends to occupy
the property as his/her residence must move in within 60 days after closing.
2025/2026
A borrower received $1,000 per month in rental income. How much of the income may be used
to qualify the borrower for a loan?
A. $1,000
B. $800
C. $750
D. $1,250 - Answers C. $750
Generally, 75% of rental income may be used to qualify a borrower for a loan. This formula is
based on an industry standard that taxes, insurance, and maintenance costs will equal about
25% of the income that a property generates. In this case, 75% x $1,000 = $750.
What is Freddie Mac's automated underwriting system called?
A. Desktop Originator
B. Underwriter Assistant
C. Loan Product Advisor
D. AUS - Answers C. Loan Product Advisor
Freddie Mac's automated underwriting system is called Loan Product Advisor (formerly known
as Loan Prospector), while Fannie Mae's is called Desktop Underwriter.
Which of the following contains only items which should be used in calculating a borrower's
debt-to-income ratio?
A. Monthly rent expense on current home, credit card payment, car insurance
B. Car payment, boat payment, child support obligations
C. Property tax payment, utility payment, cable bill
,D. Mortgage insurance payment, average grocery costs, electric bill - Answers B. Car payment,
boat payment, child support obligations
A debt-to-income ratio compares an applicant's total monthly debt to his or her total monthly
income. Total monthly debt would include simultaneous loans, debt obligations, alimony, and
child support. Typical living expenses (e.g., utilities, health and disability insurance, food, phone
or cable bills, etc.) are not included when calculating DTI.
Which of the following would NOT be required if a mortgage company wishes to utilize
electronic signatures on required disclosures?
A. Borrowers must be given the option to receive the disclosures in paper form
B. Borrowers must be able to withdraw their consent to receive the disclosures electronically
C. The company must record the IP address from which the documents were accessed
D. The company must disclose hardware and software requirements to borrowers - Answers C.
The company must record the IP address from which the documents were accessed
Under the Electronic Signatures in Global and National Commerce Act (the E-SIGN Act), before
obtaining a consumer's consent, a financial institution must provide a clear and conspicuous
statement to consumers, informing them of their right or option to have the record provided or
made available on paper or in a non-electronic form. The statement must also explain the
consumer's right to withdraw consent, including applicable conditions, consequences, and fees.
Consumers must also be provided with information about the hardware and software required
to allow them to access and retain the electronic records.
Under the S.A.F.E. Act, a licensed loan originator's responsibilities with regard to recordkeeping
include all of the following, except:
A. Not knowingly withholding, removing, or destroying any books or records
B. Making all of the licensee's records available to borrowers upon demand
C. Permitting interviews of principals, loan originators, and independent contractors by state
regulators
D. Making records and books available to the state regulator - Answers B. Making all of the
, licensee's records available to borrowers upon demand
Licensed loan originators and those required to be licensed must make records and books
available to their state regulator and permit interviews of officers, principals, employees,
independent contractors, agents and customers. They may not knowingly withhold, abstract,
remove, mutilate, destroy, or secrete any books, records, or other information during an
investigation or examination. Loan originators are not required to make all of their records
available to borrowers upon demand.
Which of the following federal regulations prohibits discrimination based on race, color, religion,
sex, marital status, or national origin in a credit transaction?
A. Regulation C
B. Regulation B
C. Regulation Z
D. Regulation G - Answers B. Regulation B
Regulation B implements the provisions of the Equal Credit Opportunity Act (ECOA), which
ensures that all persons, consumers, and businesses are given an equal chance to obtain credit
by prohibiting discrimination based on criteria including race, color, religion, national origin, sex,
marital status, and age (provided the individual is of age to enter into a contract).
According to the standard deed of trust, how soon must a borrower on an owner-occupied loan
occupy the property?
A. Within 30 days of closing
B. Within 90 days of closing
C. Within 60 days of closing
D. Within 15 days of closing - Answers C. Within 60 days of closing
Under most deed of trust, including most FHA and VA loans, a borrower who intends to occupy
the property as his/her residence must move in within 60 days after closing.
