NMLS SAFE ACT MLO Exam - Ethics and
Fraud (Latest 2026/ 2027 Update)
questions and answers 100% Correct
[Grade A]
Which of the following credit terms may be included in an advertisement for real
estate without further disclosure?
A. "$300 monthly payment"
B. "10% annual percentage rate"
C. "$5,000 down payment"
D. "5 years to repay" - Correct answer B. "10% annual percentage rate"
The APR (annual percentage rate) is the cost of credit that consumers pay, expressed
as a simple annual percentage. If the ad only states the APR, then other disclosures
are not necessary.
Some common types of legal transactions that require appraisals are:
,A. All of the other options require appraisals
B. Income tax casualty losses, estate or inheritance tax, and property settlement upon
divorce.
C. Damage lawsuits, loan foreclosures, and security for bail bonds.
D. Company liquidation or merger, capital gains tax basis, and loan foreclosures. -
Correct answer A. All of the other options require appraisals
The above items all require an appraisal.
What word best describes a group of participants working together to commit single
acts of mortgage fraud?
A. representation
B. collusion
C. discernment
D. omission - Correct answer B. collusion
,Collusion is when a group of participants for example, appraisers, title companies, real
estate agents, mortgage brokers or lenders, or even lawyers all work together to
commit single acts of fraud.
What kind of mortgage would give Cathy deferred interest payments for the first two
years, anticipating that her salary would increase?
A. Full amortization
B. Non amortization
C. Partial amortization
D. Negative amortization - Correct answer D. Negative amortization
Negative amortization is A situation in which a borrower is paying less interest than
what is actually being charged for a mortgage loan. The unpaid interest is added to the
loan's principal.
Which of the following methods of disclosure does NOT meet the requirements of the
Equal Credit Opportunity Act (ECOA)?
, A. Hand written note
B. Telephone
C. Posted Letter
D. e-mail - Correct answer B. Telephone
Enacted in 1974, the Equal Credit Opportunity Act, or ECOA, seeks to ensure that non-
credit-related factors, such as a person's race, national origin, or sex, do not enter into
a decision to deny a person's request for credit.
The lender collects and holds taxes in what type of account?
A. Trust
B. Savings
C. Escrow
D. Checking - Correct answer C. Escrow
Fraud (Latest 2026/ 2027 Update)
questions and answers 100% Correct
[Grade A]
Which of the following credit terms may be included in an advertisement for real
estate without further disclosure?
A. "$300 monthly payment"
B. "10% annual percentage rate"
C. "$5,000 down payment"
D. "5 years to repay" - Correct answer B. "10% annual percentage rate"
The APR (annual percentage rate) is the cost of credit that consumers pay, expressed
as a simple annual percentage. If the ad only states the APR, then other disclosures
are not necessary.
Some common types of legal transactions that require appraisals are:
,A. All of the other options require appraisals
B. Income tax casualty losses, estate or inheritance tax, and property settlement upon
divorce.
C. Damage lawsuits, loan foreclosures, and security for bail bonds.
D. Company liquidation or merger, capital gains tax basis, and loan foreclosures. -
Correct answer A. All of the other options require appraisals
The above items all require an appraisal.
What word best describes a group of participants working together to commit single
acts of mortgage fraud?
A. representation
B. collusion
C. discernment
D. omission - Correct answer B. collusion
,Collusion is when a group of participants for example, appraisers, title companies, real
estate agents, mortgage brokers or lenders, or even lawyers all work together to
commit single acts of fraud.
What kind of mortgage would give Cathy deferred interest payments for the first two
years, anticipating that her salary would increase?
A. Full amortization
B. Non amortization
C. Partial amortization
D. Negative amortization - Correct answer D. Negative amortization
Negative amortization is A situation in which a borrower is paying less interest than
what is actually being charged for a mortgage loan. The unpaid interest is added to the
loan's principal.
Which of the following methods of disclosure does NOT meet the requirements of the
Equal Credit Opportunity Act (ECOA)?
, A. Hand written note
B. Telephone
C. Posted Letter
D. e-mail - Correct answer B. Telephone
Enacted in 1974, the Equal Credit Opportunity Act, or ECOA, seeks to ensure that non-
credit-related factors, such as a person's race, national origin, or sex, do not enter into
a decision to deny a person's request for credit.
The lender collects and holds taxes in what type of account?
A. Trust
B. Savings
C. Escrow
D. Checking - Correct answer C. Escrow
