NMLS MLO Exam UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
What must a borrower do to avoid having late payments reported to a credit bureau? - CORRECT
ANSWER Pay within 30 days of due date
Max penalty if a borrower is required to use a specific title company or settlement agent? -
CORRECT ANSWER 3 times the fee
What should not be over-weighted in an analysis of borrower repayment capacity? - CORRECT
ANSWER Credit scores
Max prepayment penalty on residential mortgages in the first year of the loan - CORRECT
ANSWER 3%
What must condominium associations do with respect to property insurance? - CORRECT
ANSWER Keep a "blanket" policy that protects the entire structure
If a lender is planning on referring a borrower to a title company that the lender has ownership in,
when must the AFBA must be provided to the borrower? - CORRECT ANSWER Before the
referral to the title company is made
Website to obtain copy of your credit report that the credit bureaus are required to provide once per
year at no charge - CORRECT ANSWER annualcreditreport.com
2/3/6 caps - CORRECT ANSWER ARM initial adjustment max is 2%, subsequent adjustment
period max is 3%, and lifetime cap of 6%
What does FHLB stand for and what do they provide? - CORRECT ANSWER Federal Home
Loan Bank, and they provide advances to financial institutions for residential mortgage loans
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that
does not meet QRM guidelines? - CORRECT ANSWER 5%
,On a purchase transaction, what document contains the purchase price for a property? - CORRECT
ANSWER Sales Contract
After a loan has been closed and funded, the creditor notices a tolerance violation with a fee between
the LE and CD. How long does the creditor have to reimburse the borrower for the overcharge before
being considered in violation of the TRID rule? - CORRECT ANSWER 60 days after closing
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that
does not meet QRM guidelines? - CORRECT ANSWER 5%
Overt Discrimination - CORRECT ANSWER Refusing service to anyone of a certain race,
ethnicity, etc.
Under ECOA can you ask how many children a borrower has? - CORRECT ANSWER No
What document specifies that a property is being used as security in the event of nonpayment of a
debt? - CORRECT ANSWER Mortgage
On the LE, which piece of data tells applicants how much they will be paying in interest over the life
of the loan as a percentage of the loan? - CORRECT ANSWER TIP (Total Interest Percentage)
COFI comes from what region in the country? - CORRECT ANSWER The 11th Federal Home
Loan Bank (Arizona, California, and Nevada)
What disclosure is required to be provided to the applicant within 3 days of application under reg x? -
CORRECT ANSWER Mortgage Loan Servicing Disclosure
Verification of cash used in a closing is documented by: - CORRECT ANSWER last 2-3
months bank statements
The finance charge is the total cost of: - CORRECT ANSWER the loan in dollars, including
points and mortgage insurance
, What IRS forms would you requrest from a borrower who is 40% shareholder in a C-Corporation? -
CORRECT ANSWER Form 1120
Impersonating someone else in an attempt to obtain their personal financial information is called: -
CORRECT ANSWER Pretexting
What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank? -
CORRECT ANSWER Warehouse funding
Late fee for FHA and VA loans - CORRECT ANSWER 4%
Ginnie Mae _____ loans - CORRECT ANSWER Guarantees
A mortgage on personal property is: - CORRECT ANSWER Chattel mortgage
Who can transfer title insurance policy? - CORRECT ANSWER Mortgagee
What document is NOT recorded? - CORRECT ANSWER The Note
The borrower's IOU is: - CORRECT ANSWER The Note
Escheat - CORRECT ANSWER When a property owner dies without a will and the state is
unable to locate any heirs, so the state claims the property.
Disintermediation - CORRECT ANSWER The withdrawal of funds out of savings accounts and
into stocks and bonds
Eminent Domain - CORRECT ANSWER The condemnation of private property for public
good
Warranty Deed - CORRECT ANSWER The document conveying title from one party to
another and guaranteeing that the title is good
QUESTIONS AND CORRECT ANSWERS
What must a borrower do to avoid having late payments reported to a credit bureau? - CORRECT
ANSWER Pay within 30 days of due date
Max penalty if a borrower is required to use a specific title company or settlement agent? -
CORRECT ANSWER 3 times the fee
What should not be over-weighted in an analysis of borrower repayment capacity? - CORRECT
ANSWER Credit scores
Max prepayment penalty on residential mortgages in the first year of the loan - CORRECT
ANSWER 3%
What must condominium associations do with respect to property insurance? - CORRECT
ANSWER Keep a "blanket" policy that protects the entire structure
If a lender is planning on referring a borrower to a title company that the lender has ownership in,
when must the AFBA must be provided to the borrower? - CORRECT ANSWER Before the
referral to the title company is made
Website to obtain copy of your credit report that the credit bureaus are required to provide once per
year at no charge - CORRECT ANSWER annualcreditreport.com
2/3/6 caps - CORRECT ANSWER ARM initial adjustment max is 2%, subsequent adjustment
period max is 3%, and lifetime cap of 6%
What does FHLB stand for and what do they provide? - CORRECT ANSWER Federal Home
Loan Bank, and they provide advances to financial institutions for residential mortgage loans
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that
does not meet QRM guidelines? - CORRECT ANSWER 5%
,On a purchase transaction, what document contains the purchase price for a property? - CORRECT
ANSWER Sales Contract
After a loan has been closed and funded, the creditor notices a tolerance violation with a fee between
the LE and CD. How long does the creditor have to reimburse the borrower for the overcharge before
being considered in violation of the TRID rule? - CORRECT ANSWER 60 days after closing
According to the Dodd-Frank Act, how much risk must be retained by the securitizer for a loan that
does not meet QRM guidelines? - CORRECT ANSWER 5%
Overt Discrimination - CORRECT ANSWER Refusing service to anyone of a certain race,
ethnicity, etc.
Under ECOA can you ask how many children a borrower has? - CORRECT ANSWER No
What document specifies that a property is being used as security in the event of nonpayment of a
debt? - CORRECT ANSWER Mortgage
On the LE, which piece of data tells applicants how much they will be paying in interest over the life
of the loan as a percentage of the loan? - CORRECT ANSWER TIP (Total Interest Percentage)
COFI comes from what region in the country? - CORRECT ANSWER The 11th Federal Home
Loan Bank (Arizona, California, and Nevada)
What disclosure is required to be provided to the applicant within 3 days of application under reg x? -
CORRECT ANSWER Mortgage Loan Servicing Disclosure
Verification of cash used in a closing is documented by: - CORRECT ANSWER last 2-3
months bank statements
The finance charge is the total cost of: - CORRECT ANSWER the loan in dollars, including
points and mortgage insurance
, What IRS forms would you requrest from a borrower who is 40% shareholder in a C-Corporation? -
CORRECT ANSWER Form 1120
Impersonating someone else in an attempt to obtain their personal financial information is called: -
CORRECT ANSWER Pretexting
What type of funding occurs when a lender obtains funds from a line of credit at a commercial bank? -
CORRECT ANSWER Warehouse funding
Late fee for FHA and VA loans - CORRECT ANSWER 4%
Ginnie Mae _____ loans - CORRECT ANSWER Guarantees
A mortgage on personal property is: - CORRECT ANSWER Chattel mortgage
Who can transfer title insurance policy? - CORRECT ANSWER Mortgagee
What document is NOT recorded? - CORRECT ANSWER The Note
The borrower's IOU is: - CORRECT ANSWER The Note
Escheat - CORRECT ANSWER When a property owner dies without a will and the state is
unable to locate any heirs, so the state claims the property.
Disintermediation - CORRECT ANSWER The withdrawal of funds out of savings accounts and
into stocks and bonds
Eminent Domain - CORRECT ANSWER The condemnation of private property for public
good
Warranty Deed - CORRECT ANSWER The document conveying title from one party to
another and guaranteeing that the title is good
