MLO PRACTICE TEST QUESTIONS AND
CORECT DETAILED ANSWERS (VERIFIED
ANSWERS) | ALREADY SCORED A+ | NEW
UPDATE 2025
A consumer receives an adverse action notice from her lender. Which of the
following may have occurred? - ANSWER The consumer's account was
terminated.
Which Gramm-Leach-Bliley Act rule requires financial institutions to disclose
policies and practices to consumers regarding information use and sharing and
permit them to opt out. - ANSWER The Privacy Rule
Melissa worked with Carter on his loan application. She told him that he should
take the high-interest loan because no other lender would even offer him a loan,
but she was able to because her loan guidelines were the most lenient available.
Also, she told him he must decide immediately, or the loan offer would be
rescinded. Is there an ethical issue here? - ANSWER Yes, she's using coercion to
make him decide quickly.
What's the purpose of the Loan Estimate being provided to prospective
borrowers? - ANSWER The disclosure helps them make informed decisions
about a loan's affordability.
How many years' worth of records might a loan originator request when verifying
alimony? - ANSWER Three years
,Damian is charging two of his clients, Elise and Ferdie, for the same settlement
service based on an average charge. However, the amount Damian charges Elise is
greater than the amount he charges Ferdie. Why is this a problem? - ANSWER
Damian must use the same average charge for every transaction within a defined
class.
What type of loan meets the acceptable criteria for purchase by Fannie Mae and
Freddie Mac? - ANSWER Conforming loan
How must consumers provide their consent to receive electronic documents and
provide e-signatures? - ANSWER Electronically
The ECOA requires lenders to make a mortgage loan determination based on
______. - ANSWER The applicant's credit rating
What is the purpose of the Know Before You Owe special initiative? - ANSWER
To help consumers understand what loan options are available and avoid large,
costly surprises at closing.
Who does homeowners insurance protect? - ANSWER The borrower and
lender
What is the maximum fine an MLO may be charged for a violation of state rules? -
ANSWER $34,401
The CFPB's interpretation of the requirements for the Prepaids section of the CD
connects this section to the parallel section in which other document? -
ANSWER The LE
, When must the Affiliated Business Arrangement (ABA) Disclosure form be
provided to the borrower? - ANSWER At the time of or before the referral
A settlement service is ______. - ANSWER Any service provided for a
prospective or actual settlement
When must a creditor provide notice to consumers if their loan is accepted? -
ANSWER 30 days
According to Regulation Z, MLOs may be compensated based on which loan
characteristic? - ANSWER The loan amount
To use gift funds toward a down payment, what must the gift letter include? -
ANSWER A statement that the money does not need to be paid back
Which two forms are required by TRID rules to be used in all lender-financed
residential closings? - ANSWER Loan Estimate and Closing Disclosure
In which of the following instances is an MLO considered to have steered a
consumer into a loan? - ANSWER The consummated transaction is in the
originator's interest.
What special initiative was created by the CFPB to help consumers understand the
loan options that are available to them? - ANSWER Know Before You Owe
CORECT DETAILED ANSWERS (VERIFIED
ANSWERS) | ALREADY SCORED A+ | NEW
UPDATE 2025
A consumer receives an adverse action notice from her lender. Which of the
following may have occurred? - ANSWER The consumer's account was
terminated.
Which Gramm-Leach-Bliley Act rule requires financial institutions to disclose
policies and practices to consumers regarding information use and sharing and
permit them to opt out. - ANSWER The Privacy Rule
Melissa worked with Carter on his loan application. She told him that he should
take the high-interest loan because no other lender would even offer him a loan,
but she was able to because her loan guidelines were the most lenient available.
Also, she told him he must decide immediately, or the loan offer would be
rescinded. Is there an ethical issue here? - ANSWER Yes, she's using coercion to
make him decide quickly.
What's the purpose of the Loan Estimate being provided to prospective
borrowers? - ANSWER The disclosure helps them make informed decisions
about a loan's affordability.
How many years' worth of records might a loan originator request when verifying
alimony? - ANSWER Three years
,Damian is charging two of his clients, Elise and Ferdie, for the same settlement
service based on an average charge. However, the amount Damian charges Elise is
greater than the amount he charges Ferdie. Why is this a problem? - ANSWER
Damian must use the same average charge for every transaction within a defined
class.
What type of loan meets the acceptable criteria for purchase by Fannie Mae and
Freddie Mac? - ANSWER Conforming loan
How must consumers provide their consent to receive electronic documents and
provide e-signatures? - ANSWER Electronically
The ECOA requires lenders to make a mortgage loan determination based on
______. - ANSWER The applicant's credit rating
What is the purpose of the Know Before You Owe special initiative? - ANSWER
To help consumers understand what loan options are available and avoid large,
costly surprises at closing.
Who does homeowners insurance protect? - ANSWER The borrower and
lender
What is the maximum fine an MLO may be charged for a violation of state rules? -
ANSWER $34,401
The CFPB's interpretation of the requirements for the Prepaids section of the CD
connects this section to the parallel section in which other document? -
ANSWER The LE
, When must the Affiliated Business Arrangement (ABA) Disclosure form be
provided to the borrower? - ANSWER At the time of or before the referral
A settlement service is ______. - ANSWER Any service provided for a
prospective or actual settlement
When must a creditor provide notice to consumers if their loan is accepted? -
ANSWER 30 days
According to Regulation Z, MLOs may be compensated based on which loan
characteristic? - ANSWER The loan amount
To use gift funds toward a down payment, what must the gift letter include? -
ANSWER A statement that the money does not need to be paid back
Which two forms are required by TRID rules to be used in all lender-financed
residential closings? - ANSWER Loan Estimate and Closing Disclosure
In which of the following instances is an MLO considered to have steered a
consumer into a loan? - ANSWER The consummated transaction is in the
originator's interest.
What special initiative was created by the CFPB to help consumers understand the
loan options that are available to them? - ANSWER Know Before You Owe
