National and UST Mortgage Practice Exam 2 Questions and Answers Latest Update
2025/2026
Stan has been in his house for 15 years and built up $100,000 in equity. He decides to do some
remodeling and pay off some bills, and he wants to use a closed-end home equity loan to pay
for it. He meets with Lending Guys and, because he has a great credit history, gets loan approval
right away. Two weeks later he signs the documents. Which of the following is true?
A. Stan may rescind the loan at any time during the term of the loan
B. Stan's loan is not subject to provisions of the Real Estate Settlement Procedures Act
C. Lending Guys was required to provide Stan with a copy of the Special Information Booklet
within three days after he submitted the application
D. Stan was required to provide Lending Guys with a Certificate of Completion prior to signing
his final documents, indicating that he has completed homeownership counseling with a HUD-
approved provider - Answers C. Lending Guys was required to provide Stan with a copy of the
Special Information Booklet within three days after he submitted the application
A borrower taking a closed-end home equity loan must be provided with a copy of the Special
Information Booklet within three days after submission of the application. A borrower is NOT
required to complete homeownership counseling unless the loan is a high-cost home loan. Stan
may rescind his loan in accordance with TILA's right of rescission; however, this right does not
extend for the entire term of the loan.
A "straw buyer" is:
A. A buyer who is a victim of identity theft
B. A buyer who uses another individual's identity in order to obtain a mortgage for which he or
she is not eligible
C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
D. A buyer who intends to purchase property but does not intend to occupy it - Answers C. A
buyer who accepts a fee for the use of his or her Social Security Number and other personal
information on a mortgage application
,A straw buyer is a person who purchases the property or applies for the loan in his or her own
name for the actual borrower and is typically paid for the use of his or her personally identifying
information.
Under the Fair Housing Act:
A. Lending decisions cannot be made based on residency status
B. Charging different fees based on race is prohibited
C. Lenders must provide clear, plain-language disclosures
D. Lenders are required to report demographic information to the federal government - Answers
B. Charging different fees based on race is prohibited
The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential
housing based on race, color, religion, national origin, sex, familial status, or mental or physical
handicap, and therefore, prohibits charging different fees based on race. Residency status is not
a protected category under the Fair Housing Act. Disclosure requirements are not imposed by
the Fair Housing Act. Government reporting requirements are covered under the Home
Mortgage Disclosure Act (HMDA).
This term refers to the practice of adjusting certain types of non-taxable income during
underwriting.
A. Flopping
B. Inflating
C. Ballparking
D. Grossing up - Answers D. Grossing up
Certain types of income may be grossed-up during underwriting. Underwriters may gross-up
Social Security income, child support, and some other forms of income, subject to limitations
based on product type and other guidelines.
According to the S.A.F.E. Act, all of the following are nontraditional loan products, except:
, A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - Answers D. Interest-only fixed-rate 30-year
mortgage loans
The S.A.F.E. Act defines a nontraditional loan as any loan product other than a 30-year fixed
mortgage. All ARMs have rates that are adjustable. A reverse mortgage does not have a 30-year
loan term and may have either a fixed rate or adjustable rate of interest. An interest-only loan is
considered a traditional loan under the S.A.F.E. Act definition if it has a fixed rate and a 30-year
term, even though the period of interest-only payments would be only five, 10, or 15 years. High-
risk loans that might still be considered "traditional" under the S.A.F.E. Act include interest-only
fixed-rate, no-money-down, subprime, and alternative-documentation (Alt-A) loans.
A husband and wife own their home as joint tenants. When the husband dies, what happens to
his share in the property?
A. Transfers according to the probate code
B. Transfers to the husband's heirs
C. Transfers to the wife
D. Transfers intestate - Answers C. Transfers to the wife
Joint tenants share equal ownership of the property and have equal, undivided right to keep or
dispose of the property. Joint tenancy creates a right of survivorship; if any of the joint tenants
die, the remainder of the property is transferred to the survivors. In this case, when the husband
dies, his interest in the property would transfer to his wife.
Which of the following would not need to be included in the notice of servicing transfer?
A. Toll-free number for the old servicer
B. Borrower's payment amount
C. Toll-free number for the new servicer
2025/2026
Stan has been in his house for 15 years and built up $100,000 in equity. He decides to do some
remodeling and pay off some bills, and he wants to use a closed-end home equity loan to pay
for it. He meets with Lending Guys and, because he has a great credit history, gets loan approval
right away. Two weeks later he signs the documents. Which of the following is true?
A. Stan may rescind the loan at any time during the term of the loan
B. Stan's loan is not subject to provisions of the Real Estate Settlement Procedures Act
C. Lending Guys was required to provide Stan with a copy of the Special Information Booklet
within three days after he submitted the application
D. Stan was required to provide Lending Guys with a Certificate of Completion prior to signing
his final documents, indicating that he has completed homeownership counseling with a HUD-
approved provider - Answers C. Lending Guys was required to provide Stan with a copy of the
Special Information Booklet within three days after he submitted the application
A borrower taking a closed-end home equity loan must be provided with a copy of the Special
Information Booklet within three days after submission of the application. A borrower is NOT
required to complete homeownership counseling unless the loan is a high-cost home loan. Stan
may rescind his loan in accordance with TILA's right of rescission; however, this right does not
extend for the entire term of the loan.
A "straw buyer" is:
A. A buyer who is a victim of identity theft
B. A buyer who uses another individual's identity in order to obtain a mortgage for which he or
she is not eligible
C. A buyer who accepts a fee for the use of his or her Social Security Number and other
personal information on a mortgage application
D. A buyer who intends to purchase property but does not intend to occupy it - Answers C. A
buyer who accepts a fee for the use of his or her Social Security Number and other personal
information on a mortgage application
,A straw buyer is a person who purchases the property or applies for the loan in his or her own
name for the actual borrower and is typically paid for the use of his or her personally identifying
information.
Under the Fair Housing Act:
A. Lending decisions cannot be made based on residency status
B. Charging different fees based on race is prohibited
C. Lenders must provide clear, plain-language disclosures
D. Lenders are required to report demographic information to the federal government - Answers
B. Charging different fees based on race is prohibited
The Fair Housing Act prohibits discrimination in the sale, rental, and financing of any residential
housing based on race, color, religion, national origin, sex, familial status, or mental or physical
handicap, and therefore, prohibits charging different fees based on race. Residency status is not
a protected category under the Fair Housing Act. Disclosure requirements are not imposed by
the Fair Housing Act. Government reporting requirements are covered under the Home
Mortgage Disclosure Act (HMDA).
This term refers to the practice of adjusting certain types of non-taxable income during
underwriting.
A. Flopping
B. Inflating
C. Ballparking
D. Grossing up - Answers D. Grossing up
Certain types of income may be grossed-up during underwriting. Underwriters may gross-up
Social Security income, child support, and some other forms of income, subject to limitations
based on product type and other guidelines.
According to the S.A.F.E. Act, all of the following are nontraditional loan products, except:
, A. Interest-only ARMs
B. Hybrid ARMs
C. Reverse mortgages with fixed rates
D. Interest-only fixed-rate 30-year mortgage loans - Answers D. Interest-only fixed-rate 30-year
mortgage loans
The S.A.F.E. Act defines a nontraditional loan as any loan product other than a 30-year fixed
mortgage. All ARMs have rates that are adjustable. A reverse mortgage does not have a 30-year
loan term and may have either a fixed rate or adjustable rate of interest. An interest-only loan is
considered a traditional loan under the S.A.F.E. Act definition if it has a fixed rate and a 30-year
term, even though the period of interest-only payments would be only five, 10, or 15 years. High-
risk loans that might still be considered "traditional" under the S.A.F.E. Act include interest-only
fixed-rate, no-money-down, subprime, and alternative-documentation (Alt-A) loans.
A husband and wife own their home as joint tenants. When the husband dies, what happens to
his share in the property?
A. Transfers according to the probate code
B. Transfers to the husband's heirs
C. Transfers to the wife
D. Transfers intestate - Answers C. Transfers to the wife
Joint tenants share equal ownership of the property and have equal, undivided right to keep or
dispose of the property. Joint tenancy creates a right of survivorship; if any of the joint tenants
die, the remainder of the property is transferred to the survivors. In this case, when the husband
dies, his interest in the property would transfer to his wife.
Which of the following would not need to be included in the notice of servicing transfer?
A. Toll-free number for the old servicer
B. Borrower's payment amount
C. Toll-free number for the new servicer
