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NMLS SAFE ACT MLO EXAM - ETHICS AND
FRAUD EXAM NEWEST 2026 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) ALL
ANSWERED {105 Q & A} ALREADY GRADED A+ |
BRAND NEW! | 100% GUARANTEED PASS | +
RATIONALES
What type of scam entails homeowners who are encouraged to
refinance their property over and over until little or no equity
remains?
A. property skimming
B. double sold loan
C. reverse equity
D. loan flipping - ✔✔✔ Correct Answer > D. loan flipping
Home loan flipping is a trick used by the lenders to make you pay
extra cash (points and closing costs) by forcing you into
refinancing more often than you need. For example, everyone of
us would like to get some extra cash, especially if we have had
our mortgage for some years and we are convinced that our
equity has to work for us. Our lender can easily talk us into loan
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refinancing telling us we should tap the equity we have built over
the years and make a cash-out refinance. The repetitive
unnecessary loan refinancing is in fact the so-called home loan
flipping.
It is unlawful to discriminate in lending practices by refusing to
grant a loan or altering the terms of a loan because of a
borrower's
A. residence, sex, national origin, or color.
B. job, handicap, religion, or sex.
C. race, color, neighborhood, or children.
D. race, color, sex, or national origin. - ✔✔✔ Correct Answer > D. race,
color, sex, or national origin.
The ECOA, also known as Regulation B, prohibits discrimination
in granting credit to people based on sex, age, marital status,
race, color, religion, national origin, or receipt of public
assistance.
When Jones purchased Brown's property on an installment sale,
he assumed an existing loan, which exceeded Brown's basis in
the property. The amount of the assumed loan over Brown's basis
will be:
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A. Treated as part of the sales price.
B. Deducted from Brown's basis.
C. Treated as part of the down payment whether cash was
received or not.
D. Added to Brown's basis. - ✔✔✔ Correct Answer > C. Treated as part
of the down payment whether cash was received or not.
In an installment sale, the amount of an assumed loan which
exceeds the seller's cost basis is treated as part of the down
payment and is taxable in the year of the sale.
If you tell your mortgage loan applicant that his monthly check
from public assistance is not an acceptable source of income,
you will be in violation of
A. The Fair Housing Act
B. the ECOA.
C. no federal law.
D. the Civil Rights Act of 1866. - ✔✔✔ Correct Answer > B. the ECOA.
The Equal Credit Opportunity Act (ECOA) is a United States law,
enacted in 1974, that makes it unlawful for any creditor to
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discriminate against any applicant, with respect to any aspect of
a credit transaction, on the basis of race, color, religion, national
origin, sex, marital status, or age (provided the applicant has the
capacity to contract); to the fact that all or part of the applicant's
income derives from a public assistance program; or to the fact
that the applicant has in good faith exercised any right under the
Consumer Credit Protection Act. The law applies to any person
who, in the ordinary course of business, regularly participates in
a credit decision, including banks, retailers, bankcard companies,
finance companies, and credit unions.
According to the Truth In Lending Act (TILA), which of the
following notices by the creditor informs the customers about
their rights to cancel a loan?
A. Servicing disclosure statement
B. Affiliated business arrangement disclosure
C. Good Faith Estimate (GFE)
D. Notice of right to rescind - ✔✔✔ Correct Answer > D. Notice of right
to rescind
In a credit transaction in which a security interest is or will be
retained or acquired in a consumer's principal dwelling, each
consumer whose ownership is or will be subject to the security
interest has the right to rescind the transaction. Lenders are
required to deliver two copies of the notice of the right to rescind
NMLS SAFE ACT MLO EXAM - ETHICS AND
FRAUD EXAM NEWEST 2026 ACTUAL EXAM
QUESTIONS AND CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) ALL
ANSWERED {105 Q & A} ALREADY GRADED A+ |
BRAND NEW! | 100% GUARANTEED PASS | +
RATIONALES
What type of scam entails homeowners who are encouraged to
refinance their property over and over until little or no equity
remains?
A. property skimming
B. double sold loan
C. reverse equity
D. loan flipping - ✔✔✔ Correct Answer > D. loan flipping
Home loan flipping is a trick used by the lenders to make you pay
extra cash (points and closing costs) by forcing you into
refinancing more often than you need. For example, everyone of
us would like to get some extra cash, especially if we have had
our mortgage for some years and we are convinced that our
equity has to work for us. Our lender can easily talk us into loan
,Page 2 of 65
refinancing telling us we should tap the equity we have built over
the years and make a cash-out refinance. The repetitive
unnecessary loan refinancing is in fact the so-called home loan
flipping.
It is unlawful to discriminate in lending practices by refusing to
grant a loan or altering the terms of a loan because of a
borrower's
A. residence, sex, national origin, or color.
B. job, handicap, religion, or sex.
C. race, color, neighborhood, or children.
D. race, color, sex, or national origin. - ✔✔✔ Correct Answer > D. race,
color, sex, or national origin.
The ECOA, also known as Regulation B, prohibits discrimination
in granting credit to people based on sex, age, marital status,
race, color, religion, national origin, or receipt of public
assistance.
When Jones purchased Brown's property on an installment sale,
he assumed an existing loan, which exceeded Brown's basis in
the property. The amount of the assumed loan over Brown's basis
will be:
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A. Treated as part of the sales price.
B. Deducted from Brown's basis.
C. Treated as part of the down payment whether cash was
received or not.
D. Added to Brown's basis. - ✔✔✔ Correct Answer > C. Treated as part
of the down payment whether cash was received or not.
In an installment sale, the amount of an assumed loan which
exceeds the seller's cost basis is treated as part of the down
payment and is taxable in the year of the sale.
If you tell your mortgage loan applicant that his monthly check
from public assistance is not an acceptable source of income,
you will be in violation of
A. The Fair Housing Act
B. the ECOA.
C. no federal law.
D. the Civil Rights Act of 1866. - ✔✔✔ Correct Answer > B. the ECOA.
The Equal Credit Opportunity Act (ECOA) is a United States law,
enacted in 1974, that makes it unlawful for any creditor to
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discriminate against any applicant, with respect to any aspect of
a credit transaction, on the basis of race, color, religion, national
origin, sex, marital status, or age (provided the applicant has the
capacity to contract); to the fact that all or part of the applicant's
income derives from a public assistance program; or to the fact
that the applicant has in good faith exercised any right under the
Consumer Credit Protection Act. The law applies to any person
who, in the ordinary course of business, regularly participates in
a credit decision, including banks, retailers, bankcard companies,
finance companies, and credit unions.
According to the Truth In Lending Act (TILA), which of the
following notices by the creditor informs the customers about
their rights to cancel a loan?
A. Servicing disclosure statement
B. Affiliated business arrangement disclosure
C. Good Faith Estimate (GFE)
D. Notice of right to rescind - ✔✔✔ Correct Answer > D. Notice of right
to rescind
In a credit transaction in which a security interest is or will be
retained or acquired in a consumer's principal dwelling, each
consumer whose ownership is or will be subject to the security
interest has the right to rescind the transaction. Lenders are
required to deliver two copies of the notice of the right to rescind
