NMLS TEST BANK 2026 EXAMINATION
QUESTIONS WITH COMPLETE SOLUTIONS
⩥ Adverse Action. Answer: An unfavorable credit decision rendered
against a consumer made on
the basis of information contained on the credit application. If a lender
takes adverse
action against an applicant, the lender must notify the applicant in
writing. If the adverse
action is taken as a result of information contained on the credit report,
the notice must
also provide the name, address and toll-free phone number of the credit
bureau that
supplied the information.
⩥ American Association of Residential Mortgage Regulators
(AARMR):. Answer: A national association of individuals who are
charged with administering and regulating various aspects of residential
mortgage lending. It played a major role in the formation of the NMLS-
R and in the drafting of the model licensing law.
⩥ Annual percentage rate (APR):. Answer: Does NOT include...TEN
ACT- (Title,Escrow,Notary,Appraisal,Credit Report,Termite)A
measurement of the total cost of the credit, expressed as an annual rate.
The APR includes those paid at the time of closing and those paid over
,the term of the loan. It includes all items that are part of the finance
charge, such as interest, discount points, mortgage insurance premiums
and administrative fees.
⩥ Application. Answer: A request for a residential mortgage loan and
includes the borrower-related information that lenders commonly use
when considering the request. Someone who takes an application from a
consumer is generally considered to be acting as a loan originator, even
when gathering application information over the phone or Internet
⩥ ARM Disclosure:. Answer: A disclosure required to be presented to
the applicant within three days of application on any ARM loan. This
disclosure provides the applicant with information about the specific
ARM product for which they are applying, such as a historical index
value
⩥ Balloon mortgage:. Answer: A type of fixed-rate mortgage loan with
monthly payments based on a 30-year amortization schedule, setting a
maturity date for a shorter period of time - usually five, seven, 10 or 15
years. This allows the borrower to make lower monthly payments for
that shorter period of time, with a large payment of the full remaining
principal balance and interest due at the maturity date
⩥ Bank Secrecy Act (BSA):. Answer: A federal law requiring that
financial institutions take steps to prevent and report cases of money
laundering.
, ⩥ Bridge loan:. Answer: A bridge loan is a loan for a short duration of
time and can be used when one is purchasing one property but is
dependent on the equity from another property that has not yet been
sold. Once the property is sold then the bridge loan is repaid.
⩥ Business day:. Answer: Monday through Saturday except holidays.For
the LE, when creditor is open to the public for carrying on substantially
all of the creditor's business functions
⩥ Certificate of Reasonable Value (CRV):. Answer: A form indicating
the appraised value of a property being financed with a VA loan.
⩥ Changed circumstance:. Answer: A material event or piece of
information that is discovered after the issuance of a Loan Estimate and
has an impact on either the borrower's settlement costs or the borrower's
eligibility for a loan. A changed circumstance allows a loan originator to
reissue the Loan Estimate to reset applicable tolerances.
⩥ Chapter 7 bankruptcy:. Answer: A common kind of bankruptcy in
which a borrower might need
to liquidate assets in order to satisfy creditors
⩥ Chapter 13 bankruptcy:. Answer: a reorganization form of bankruptcy
for individuals that allows the debtors to keep their property and use
their income to pay a portion of their debts over three to five years
QUESTIONS WITH COMPLETE SOLUTIONS
⩥ Adverse Action. Answer: An unfavorable credit decision rendered
against a consumer made on
the basis of information contained on the credit application. If a lender
takes adverse
action against an applicant, the lender must notify the applicant in
writing. If the adverse
action is taken as a result of information contained on the credit report,
the notice must
also provide the name, address and toll-free phone number of the credit
bureau that
supplied the information.
⩥ American Association of Residential Mortgage Regulators
(AARMR):. Answer: A national association of individuals who are
charged with administering and regulating various aspects of residential
mortgage lending. It played a major role in the formation of the NMLS-
R and in the drafting of the model licensing law.
⩥ Annual percentage rate (APR):. Answer: Does NOT include...TEN
ACT- (Title,Escrow,Notary,Appraisal,Credit Report,Termite)A
measurement of the total cost of the credit, expressed as an annual rate.
The APR includes those paid at the time of closing and those paid over
,the term of the loan. It includes all items that are part of the finance
charge, such as interest, discount points, mortgage insurance premiums
and administrative fees.
⩥ Application. Answer: A request for a residential mortgage loan and
includes the borrower-related information that lenders commonly use
when considering the request. Someone who takes an application from a
consumer is generally considered to be acting as a loan originator, even
when gathering application information over the phone or Internet
⩥ ARM Disclosure:. Answer: A disclosure required to be presented to
the applicant within three days of application on any ARM loan. This
disclosure provides the applicant with information about the specific
ARM product for which they are applying, such as a historical index
value
⩥ Balloon mortgage:. Answer: A type of fixed-rate mortgage loan with
monthly payments based on a 30-year amortization schedule, setting a
maturity date for a shorter period of time - usually five, seven, 10 or 15
years. This allows the borrower to make lower monthly payments for
that shorter period of time, with a large payment of the full remaining
principal balance and interest due at the maturity date
⩥ Bank Secrecy Act (BSA):. Answer: A federal law requiring that
financial institutions take steps to prevent and report cases of money
laundering.
, ⩥ Bridge loan:. Answer: A bridge loan is a loan for a short duration of
time and can be used when one is purchasing one property but is
dependent on the equity from another property that has not yet been
sold. Once the property is sold then the bridge loan is repaid.
⩥ Business day:. Answer: Monday through Saturday except holidays.For
the LE, when creditor is open to the public for carrying on substantially
all of the creditor's business functions
⩥ Certificate of Reasonable Value (CRV):. Answer: A form indicating
the appraised value of a property being financed with a VA loan.
⩥ Changed circumstance:. Answer: A material event or piece of
information that is discovered after the issuance of a Loan Estimate and
has an impact on either the borrower's settlement costs or the borrower's
eligibility for a loan. A changed circumstance allows a loan originator to
reissue the Loan Estimate to reset applicable tolerances.
⩥ Chapter 7 bankruptcy:. Answer: A common kind of bankruptcy in
which a borrower might need
to liquidate assets in order to satisfy creditors
⩥ Chapter 13 bankruptcy:. Answer: a reorganization form of bankruptcy
for individuals that allows the debtors to keep their property and use
their income to pay a portion of their debts over three to five years
