NMLS SAFE TEST MORTGAGE LICENSING PRACTICE EXAM
2025-2026. COMPLETELY SOLVED 100% CORRECT
Which federal law requires that the Loan Estimate be provided to the borrower within three
business days of the time of loan application is taken? - Correct Answer ->>TILA
What type of scam entails homeowners who are encouraged to refinance their property over and
over until little or no equity remains? - Correct Answer ->>Loan flipping or churning
After a loan closing, funds are disbursed. When are the funds disbursed for an owner- occupied,
residential refinance? - Correct Answer ->>After 3 business-day rescission period
What is the adjustable number used to compute the interest rate on an ARM called? - Correct
Answer ->>Index
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays
three discount points, what is the total cost of the points? - Correct Answer ->>$4200
Which day is counted as part of the CD three business day delivery period? - Correct Answer ->>
Monday-Saturday
A Latina applies to a mortgage company for a home loan. She is refused based on the reputation
of the neighborhood for a high number of foreclosures. This is an example of what illegal practice?
- Correct Answer ->>Redlining
Which Act amended the Truth in Lending Act, establishing disclosure requirements and prohibiting
equity stripping and other abusive practices in connection with "high cost" mortgages? - Correct
Answer ->>Home Ownership and Equity Protection Act (HOEPA)
The type of mortgage that can provide the borrower with a monthly check instead of the borrower
paying a monthly payment is known as - Correct Answer ->>Reverse mortgage
According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant
because of information on a credit report, the lender who used that report is required to - Correct
Answer ->>provide to the consumer the name, address, and telephone number of the consumer
reporting agency that furnished the report and the credit score used
At closing, the buyers realize that the lender changed the terms of the loan, but since he was
facing foreclosure, he felt he had no choice but to go ahead with the refinance or lose the house.
This could be an example of - Correct Answer ->>Predatory lending
The SAFE Act - Correct Answer ->>Establishes minimum standards for licensing and registering
mortgage loan originators
In a note, what gives the lender the right to charge the borrower a fee for retiring the loan early? -
Correct Answer ->>Prepayment penalty
Regulation B implements the Equal Credit Opportunity Act. True or False? - Correct Answer ->>
True
Which item is NOT included in the calculation that determines the annual percentage rate?
,the broker's origination fee
the lender's discount points
the mortgage insurance premium
the title insurance premium - Correct Answer ->>The title insurance premium (D)
Under RESPA, who would be subject to fines and penalties if a kickback is paid? - Correct
Answer ->>All parties paying or receiving a kickback
A conforming loan is a loan that - Correct Answer ->>Follows the secondary market criteria set by
Fannie Mae/Freddie Mac
MLO Jon from ABC Mortgage is meeting with a potential borrower. What may Jon NEVER ask
about during the loan application process? - Correct Answer ->>Religion
The clause in the mortgage that makes the note due in full upon sale or transfer of a property is
call a(n) - Correct Answer ->>Alienation clause AKA "due at sale clause"
The APR is required to be disclosed in a Truth in Lending statement is the - Correct Answer ->>
Relationship between the total cost of borrowing and the actual amount borrowed
Which of the following is NOT included as a protected class by the Equal Credit Opportunity Act?
marital status
receipt of public assistance
religion
Social security - Correct Answer ->>D
The rate that is used to amortize the mortgage loan and determining the monthly loan payments is
known as the - Correct Answer ->>note rate
The loan officer knows that the applicants source of income is public assistance, so he tells the
applicant not to waster his time filling out an application and paying any fees. What federal law
has the loan officer violated? - Correct Answer ->>ECOA
A subordination clause in a morgage - Correct Answer ->>Puts the mortgage in first lien position
over an earlier recorded mortgage
Where do the funds for FHA loans come from? - Correct Answer ->>approved lenders
An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly income of
$3,850. For a conforming loan, what is the maximum house payment- including PITI- for which
she qualifies? - Correct Answer ->>$961.00
What is the loan-to-value if the loan amount is $139,500, the appraised value is
$164,117 and the sales price is $155,000?
**remember to use lower number of either appraised value or sales price** - Correct Answer ->>
90%
To comply with the Safeguard Rules of Gramm, Leach, Bliley, a loan officer should - Correct
Answer ->>place all loan applications and documentation in a secure place when not working on
them
VA loans allow for a maximum LTV of what percent? - Correct Answer ->>100%
, Byuyer with a credit score of 703 makes an offer of $156,000 on a house that was appraised for
$162,000. If the seller accepts his offer, how much will he have to pay down on a FHA loan? -
Correct Answer ->>$5,460
Private mortgage insurance (PMI) is NOT required when - Correct Answer ->>the loan has been
paid down to less than 78% of the property's current value
The federal Truth in Lending Act - Correct Answer ->>regulates advertising with references to
mortgage interest rates
When qualifying a borrower, an installment debt down not need to be included in the debt ration
on conventional loans when the balance of the term of repayment is less than how many months?
- Correct Answer ->>10
Market value can best be defined as a property's - Correct Answer ->>most probable selling price
How many business days from the day of application does the creditor have to deliver the Loan
Estimate? - Correct Answer ->>3
What document does the VA use to determine the amount of a veteran's entitlement? - Correct
Answer ->>COE
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two weeks. In
addition, she indicates that she receives $500 a month in alimony. what is the gross monthly
income you can use to qualify her? - Correct Answer ->>$3,425
Which is a disclosure that RESPA requires creditors to give to customers at the time of the
mortgage loan closing? - Correct Answer ->>Closing Disclosure
A Chapter 7 bankruptcy could show on a credit report for a maximum of - Correct Answer ->>10
years
How many days does a borrower have to occupy a home with an FHA loan? - Correct Answer -
>>60 days
A HELOC is a type of mortgage - Correct Answer ->>where the balance fluctuates as the
borrower accesses funds
Which is NOT a triggering term requiring additional disclosing in advertising?
"360 easy payments"
$3,000 down"
"Pay only $800/month"
"Terms to fit your budget" - Correct Answer ->>D
Which is NOT a requirement of the Safeguards Rule of the Gramm-Leach-Bliley Act?
allow consumers to add their numbers to a list that prohibits unauthorized calls
ensures the security and confidentiality of customer records
protect against any anticipated threats of hazards to the security of consumer records
protect against the unauthorized access or use of consumer information in ways that could result
in substantial harm - Correct Answer ->>A
As the lender looks over the borrower's loan application and is deciding whether or not to make
the loan, the lender should NOT refuse to consider the - Correct Answer ->>borrower's receipt of
2025-2026. COMPLETELY SOLVED 100% CORRECT
Which federal law requires that the Loan Estimate be provided to the borrower within three
business days of the time of loan application is taken? - Correct Answer ->>TILA
What type of scam entails homeowners who are encouraged to refinance their property over and
over until little or no equity remains? - Correct Answer ->>Loan flipping or churning
After a loan closing, funds are disbursed. When are the funds disbursed for an owner- occupied,
residential refinance? - Correct Answer ->>After 3 business-day rescission period
What is the adjustable number used to compute the interest rate on an ARM called? - Correct
Answer ->>Index
A borrower is buying a house for $180,000. He provides a down payment of $40,000. If he pays
three discount points, what is the total cost of the points? - Correct Answer ->>$4200
Which day is counted as part of the CD three business day delivery period? - Correct Answer ->>
Monday-Saturday
A Latina applies to a mortgage company for a home loan. She is refused based on the reputation
of the neighborhood for a high number of foreclosures. This is an example of what illegal practice?
- Correct Answer ->>Redlining
Which Act amended the Truth in Lending Act, establishing disclosure requirements and prohibiting
equity stripping and other abusive practices in connection with "high cost" mortgages? - Correct
Answer ->>Home Ownership and Equity Protection Act (HOEPA)
The type of mortgage that can provide the borrower with a monthly check instead of the borrower
paying a monthly payment is known as - Correct Answer ->>Reverse mortgage
According to the Fair Credit Reporting Act, if adverse action is taken against a credit applicant
because of information on a credit report, the lender who used that report is required to - Correct
Answer ->>provide to the consumer the name, address, and telephone number of the consumer
reporting agency that furnished the report and the credit score used
At closing, the buyers realize that the lender changed the terms of the loan, but since he was
facing foreclosure, he felt he had no choice but to go ahead with the refinance or lose the house.
This could be an example of - Correct Answer ->>Predatory lending
The SAFE Act - Correct Answer ->>Establishes minimum standards for licensing and registering
mortgage loan originators
In a note, what gives the lender the right to charge the borrower a fee for retiring the loan early? -
Correct Answer ->>Prepayment penalty
Regulation B implements the Equal Credit Opportunity Act. True or False? - Correct Answer ->>
True
Which item is NOT included in the calculation that determines the annual percentage rate?
,the broker's origination fee
the lender's discount points
the mortgage insurance premium
the title insurance premium - Correct Answer ->>The title insurance premium (D)
Under RESPA, who would be subject to fines and penalties if a kickback is paid? - Correct
Answer ->>All parties paying or receiving a kickback
A conforming loan is a loan that - Correct Answer ->>Follows the secondary market criteria set by
Fannie Mae/Freddie Mac
MLO Jon from ABC Mortgage is meeting with a potential borrower. What may Jon NEVER ask
about during the loan application process? - Correct Answer ->>Religion
The clause in the mortgage that makes the note due in full upon sale or transfer of a property is
call a(n) - Correct Answer ->>Alienation clause AKA "due at sale clause"
The APR is required to be disclosed in a Truth in Lending statement is the - Correct Answer ->>
Relationship between the total cost of borrowing and the actual amount borrowed
Which of the following is NOT included as a protected class by the Equal Credit Opportunity Act?
marital status
receipt of public assistance
religion
Social security - Correct Answer ->>D
The rate that is used to amortize the mortgage loan and determining the monthly loan payments is
known as the - Correct Answer ->>note rate
The loan officer knows that the applicants source of income is public assistance, so he tells the
applicant not to waster his time filling out an application and paying any fees. What federal law
has the loan officer violated? - Correct Answer ->>ECOA
A subordination clause in a morgage - Correct Answer ->>Puts the mortgage in first lien position
over an earlier recorded mortgage
Where do the funds for FHA loans come from? - Correct Answer ->>approved lenders
An applicant for a mortgage has recurring monthly debt of $425 and a gross monthly income of
$3,850. For a conforming loan, what is the maximum house payment- including PITI- for which
she qualifies? - Correct Answer ->>$961.00
What is the loan-to-value if the loan amount is $139,500, the appraised value is
$164,117 and the sales price is $155,000?
**remember to use lower number of either appraised value or sales price** - Correct Answer ->>
90%
To comply with the Safeguard Rules of Gramm, Leach, Bliley, a loan officer should - Correct
Answer ->>place all loan applications and documentation in a secure place when not working on
them
VA loans allow for a maximum LTV of what percent? - Correct Answer ->>100%
, Byuyer with a credit score of 703 makes an offer of $156,000 on a house that was appraised for
$162,000. If the seller accepts his offer, how much will he have to pay down on a FHA loan? -
Correct Answer ->>$5,460
Private mortgage insurance (PMI) is NOT required when - Correct Answer ->>the loan has been
paid down to less than 78% of the property's current value
The federal Truth in Lending Act - Correct Answer ->>regulates advertising with references to
mortgage interest rates
When qualifying a borrower, an installment debt down not need to be included in the debt ration
on conventional loans when the balance of the term of repayment is less than how many months?
- Correct Answer ->>10
Market value can best be defined as a property's - Correct Answer ->>most probable selling price
How many business days from the day of application does the creditor have to deliver the Loan
Estimate? - Correct Answer ->>3
What document does the VA use to determine the amount of a veteran's entitlement? - Correct
Answer ->>COE
An applicant for a mortgage loan is a salaried employee who is paid $1,350 every two weeks. In
addition, she indicates that she receives $500 a month in alimony. what is the gross monthly
income you can use to qualify her? - Correct Answer ->>$3,425
Which is a disclosure that RESPA requires creditors to give to customers at the time of the
mortgage loan closing? - Correct Answer ->>Closing Disclosure
A Chapter 7 bankruptcy could show on a credit report for a maximum of - Correct Answer ->>10
years
How many days does a borrower have to occupy a home with an FHA loan? - Correct Answer -
>>60 days
A HELOC is a type of mortgage - Correct Answer ->>where the balance fluctuates as the
borrower accesses funds
Which is NOT a triggering term requiring additional disclosing in advertising?
"360 easy payments"
$3,000 down"
"Pay only $800/month"
"Terms to fit your budget" - Correct Answer ->>D
Which is NOT a requirement of the Safeguards Rule of the Gramm-Leach-Bliley Act?
allow consumers to add their numbers to a list that prohibits unauthorized calls
ensures the security and confidentiality of customer records
protect against any anticipated threats of hazards to the security of consumer records
protect against the unauthorized access or use of consumer information in ways that could result
in substantial harm - Correct Answer ->>A
As the lender looks over the borrower's loan application and is deciding whether or not to make
the loan, the lender should NOT refuse to consider the - Correct Answer ->>borrower's receipt of
