NLMS REVIEWED STUDY
GUIDE QUESTIONS AND
ANSWERS GRADED A +
2025- 2026
Which of the following requires the lender to disclose to borrowers the possibility that
their loan will be sold, assigned or transferred to another?
a. Mortgage Servicing Disclosure
b. GFE
c. Service Providers List
d. Affiliated Business Arrangement Disclosure - ANS-a. Mortgage Servicing Disclosure
How many hours of annual continuing education are required by the SAFE Act for
state-licensed mortgage loan originators?
a. 11 hours
b. 20 hours
c. 8 hours
d. 3 hours - ANS-c. 8 hours
Which of the following best describes a lien?
a. A claim on the property
b. Forfeits the property
c. Stops all fees from incurring on the property
d. Allows the lender to sell the property - ANS-a. A claim on the property
,When the interest rate floats, it means which of the following?
a. That the interest rate cannot go down but can go up
b. That the interest rate cannot go up but can go down
c. That the interest rate can continue to go up or down until it is locked
d. That the interest rate cannot go down or up - ANS-c. That the interest rate can
continue to go up or down until it is locked
During the term of a fully amortized loan which of the following is true?
a. The monthly amount going to interest increases
b. The monthly amount going to principle increases
c. The monthly payment amount going to principal decreases
d. The principal balance increases - ANS-b. The monthly amount going to principle
increases
Borrower(s) may decide to disclose income from child support or alimony. What
federal law states that a lender cannot refuse to consider alimony or child support as
income?
a. Fair and Accurate Credit Transactions Act
b. Truth in Lending Act
c. Equal Credit Opportunity Act
d. Real Estate Settlement Procedures Act - ANS-c. Equal Credit Opportunity Act
Which ratio is described as the loan amount divided by the property value?
a. Housing expense ratio
b. PITI
c. Loan to Value
d. Debt to Income ratio - ANS-c. Loan to Value
The only loan considered a traditional loan in America today is:
a. Any loan that is not an ARM
b. A 30-year fixed rate
,c. Any fixed rate loan
d. A 30 or 15 year fixed rate loan - ANS-b. A 30-year fixed rate
According to the Disposal Rule, which of these could be considered a failure to secure
private information?
a. Disposing of documents into the trash bins for the janitorial service to empty
nightly
b. Shredding documents and throwing them in the trash
c. Burning old files in a steel drum behind the office once a month
d. Hiring a document destruction company to remove all old files - ANS-a. Disposing of
documents into the trash bins for the janitorial service to empty nightly
What is the conventional mortgage back end DTI ratio on a manually underwritten
loan?
a. 29%
b. 41%
c. 28%
d. 38% - ANS-d. 38%
For license renewal, an MLO is required annually to complete a minimum of how many
hours of continuing education on the topic of federal law?
a. 2 hours
b. 3 hours
c. 7 hours
d. 8 hours - ANS-b. 3 hours
The Truth in Lending Act does which of the following?
a. Prevents advertising FHA financing to the exclusion of Conventional
b. Regulates advertising regarding interest rates
, c. Requires all loan applications be made in person
d. Requires a closing cost breakdown on residential loans - ANS-b. Regulates
advertising regarding interest rates
In a typical mortgage loan, what are the mortgage note and the property called?
a. Financing instrument/deed
b. Hypothecation/security
c. Security instrument/collateral
d. Lien/appraised value - ANS-c. Security instrument/collateral
Reverse mortgages create:
a. Amortization
b. Demand features
c. Hypothecation
d. Negative amortization - ANS-d. Negative amortization
Which of the following is responsible for the accurate disbursements of all funds due
to and from all parties in a mortgage transaction?
a. Appraiser
b. Closing Attorney, settlement or escrow agent
c. Real estate agent
d. MLO - ANS-b. Closing Attorney, settlement or escrow agent
Under Equal Credit Opportunity Act (ECOA), when looking to qualify a borrower, a
lender may not consider which of the following?
a. The borrower has a low monthly income
b. The borrower is a senior citizen
c. The borrower has an average credit score
GUIDE QUESTIONS AND
ANSWERS GRADED A +
2025- 2026
Which of the following requires the lender to disclose to borrowers the possibility that
their loan will be sold, assigned or transferred to another?
a. Mortgage Servicing Disclosure
b. GFE
c. Service Providers List
d. Affiliated Business Arrangement Disclosure - ANS-a. Mortgage Servicing Disclosure
How many hours of annual continuing education are required by the SAFE Act for
state-licensed mortgage loan originators?
a. 11 hours
b. 20 hours
c. 8 hours
d. 3 hours - ANS-c. 8 hours
Which of the following best describes a lien?
a. A claim on the property
b. Forfeits the property
c. Stops all fees from incurring on the property
d. Allows the lender to sell the property - ANS-a. A claim on the property
,When the interest rate floats, it means which of the following?
a. That the interest rate cannot go down but can go up
b. That the interest rate cannot go up but can go down
c. That the interest rate can continue to go up or down until it is locked
d. That the interest rate cannot go down or up - ANS-c. That the interest rate can
continue to go up or down until it is locked
During the term of a fully amortized loan which of the following is true?
a. The monthly amount going to interest increases
b. The monthly amount going to principle increases
c. The monthly payment amount going to principal decreases
d. The principal balance increases - ANS-b. The monthly amount going to principle
increases
Borrower(s) may decide to disclose income from child support or alimony. What
federal law states that a lender cannot refuse to consider alimony or child support as
income?
a. Fair and Accurate Credit Transactions Act
b. Truth in Lending Act
c. Equal Credit Opportunity Act
d. Real Estate Settlement Procedures Act - ANS-c. Equal Credit Opportunity Act
Which ratio is described as the loan amount divided by the property value?
a. Housing expense ratio
b. PITI
c. Loan to Value
d. Debt to Income ratio - ANS-c. Loan to Value
The only loan considered a traditional loan in America today is:
a. Any loan that is not an ARM
b. A 30-year fixed rate
,c. Any fixed rate loan
d. A 30 or 15 year fixed rate loan - ANS-b. A 30-year fixed rate
According to the Disposal Rule, which of these could be considered a failure to secure
private information?
a. Disposing of documents into the trash bins for the janitorial service to empty
nightly
b. Shredding documents and throwing them in the trash
c. Burning old files in a steel drum behind the office once a month
d. Hiring a document destruction company to remove all old files - ANS-a. Disposing of
documents into the trash bins for the janitorial service to empty nightly
What is the conventional mortgage back end DTI ratio on a manually underwritten
loan?
a. 29%
b. 41%
c. 28%
d. 38% - ANS-d. 38%
For license renewal, an MLO is required annually to complete a minimum of how many
hours of continuing education on the topic of federal law?
a. 2 hours
b. 3 hours
c. 7 hours
d. 8 hours - ANS-b. 3 hours
The Truth in Lending Act does which of the following?
a. Prevents advertising FHA financing to the exclusion of Conventional
b. Regulates advertising regarding interest rates
, c. Requires all loan applications be made in person
d. Requires a closing cost breakdown on residential loans - ANS-b. Regulates
advertising regarding interest rates
In a typical mortgage loan, what are the mortgage note and the property called?
a. Financing instrument/deed
b. Hypothecation/security
c. Security instrument/collateral
d. Lien/appraised value - ANS-c. Security instrument/collateral
Reverse mortgages create:
a. Amortization
b. Demand features
c. Hypothecation
d. Negative amortization - ANS-d. Negative amortization
Which of the following is responsible for the accurate disbursements of all funds due
to and from all parties in a mortgage transaction?
a. Appraiser
b. Closing Attorney, settlement or escrow agent
c. Real estate agent
d. MLO - ANS-b. Closing Attorney, settlement or escrow agent
Under Equal Credit Opportunity Act (ECOA), when looking to qualify a borrower, a
lender may not consider which of the following?
a. The borrower has a low monthly income
b. The borrower is a senior citizen
c. The borrower has an average credit score
