NMLS Federal Mortgage Practice Test Questions 2025

Last Updated on June 23, 2025

NMLS Federal Mortgage Practice Test Questions 2025. The Nationwide Multistate Licensing System (formerly known as the Nationwide Mortgage Licensing System) has a Federal Mortgage-Related Laws section with a 24% rate.

There are currently five different federal loans that are federally backed. These are FHA, VA, USDA, Freddie Mac, and Fannie Mae loans. Since 2008, federal mortgage-related laws and regulations have undergone a comprehensive overhaul, incorporating updates and enhancements to the existing rules, including the implementation of the NMLS license and exam requirements.

These changes and present-day laws on a federal level will be essential to know inside and out, so in this chapter, you will be tested on your knowledge related to these very topics.

A. The Real Estate Settlement Procedures Act (RESPA)
B. The Truth in Lending Act (TILA)
C. The Home Mortgage Disclosure Act (HMDA)
D. The Equal Credit Opportunity Act (ECOA)
E. the Fair Housing Act (FHA)
F. the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)
G. The Consumer Financial Protection Bureau (CFPB) regulations

NMLS Federal Mortgage Practice Test

NMLS Federal Mortgage Practice Test Questions

1) TILA outlaws:

Misrepresentation and nondisclosure

High-pressure sales

Unfair credit billing

All of the above

2) HMDA’s main focus is to:

Mandate annual meetings with the Fed

Elect an industry president

Require data reporting to fight housing discrimination

Publish a national “How-to-lend” guide

3) Why did Congress pass RESPA?

Give lenders greater negotiating freedom

Protect banks’ capital reserves

Let homeowners settle disputes out of court

Limit escrow abuses and ban kickbacks/referral fees

4) HMDA became law in:

2008

1940

1975

1988

5) ECOA prohibits discrimination based on:

Gender, nationality, race

Age

Religion

All of the above

6) Which is NOT TILA non-compliance?

Incorrect or missing disclosures

Clear disclosures to clients

Adding undisclosed junk fees

Influencing an appraiser’s value

7) Which of the following is NOT an amendment to RESPA?

Let consumers dictate the exact prices lenders may charge

Allowed average-cost pricing

Mandated transparency of broker fees

Added comparative-shopping disclosures

8) ECOA bars creditors from weighing non-credit factors in decisions.

True

False

Only on auto loans

Sometimes

9) Under ECOA, consumers may:

A & B

Ask why they were denied credit and sue if ECOA was violated

Demand special credit terms

Obtain lenders’ entire client list

10) Since 2010, RESPA has been enforced by:

Individual state governments

Department of Housing and Urban Development (HUD)

Consumer Financial Protection Bureau (CFPB)

The President

11) On the Loan Application Register (LAR), lenders must report:

Ideas for law improvement

Applicant race/ethnicity and reasons for denial

Applicant names and addresses only

Daily business diaries

12) Which is an ECOA violation?

Approving because applicant is the same race as the lender

Approving despite different religion

Giving clear adverse-action reasons

Denying due to low credit score

13) Institutions must report which application types?

Mortgage loans

Refinances

All of the above

Home-improvement loans

14) TILA gives borrowers how long to rescind certain credit contracts?

Six months

Three days

Contracts are final

One week

15) Withdrawn applications must be reported to HMDA.

Yes

Only for denied applications

Only loans over $1 million

16) ECOA’s core purpose is to:

Outlaw discrimination by creditors against any applicant

Standardize fees

B & C

Ensure equal pay for lenders

17) A real-estate agent receiving payment for a referral violates RESPA.

Only if the buyer approves

True

Only if payment is under $15

False

18) Creditors may ask an applicant’s race or gender only if:

They intend to use it for approval

They plan to market products

They will ignore it in the decision and collect it for monitoring

Never permitted

19) HMDA data are submitted via:

FFIEC/CFPB HMDA website portal

Email to HUD

State governor’s office

July 1 in-person drop-off

20) “Creditor” under ECOA includes:

Banks/credit issuers

All of the above

Third-party loan companies

Individuals who lend money

21) Regulation Z requires lenders to:

Repeal the 2012 gift-card rule

Delay disclosures until after signing

Define criminal penalties

Present credit terms in clear language

22) Failure to report HMDA data can result in:

All of the above

Civil money penalties

Warnings and resubmission requests

Prison for egregious cases

23) The Housing Act of 1990 amended RESPA to require:

Complete removal of all service fees

State-level rather than federal enforcement

Full disclosure of servicing transfers, sales, or assignments

Tougher criminal penalties only

24) RESPA enforcement may include:

Fines, license loss, or jail for violators

Consumer complaints to CFPB

Universal standards for brokers and lenders

All of the above

25) Does TILA cover a $75 000 student loan?

It depends

Never

Yes

26) Which is NOT HMDA non-compliance?

Failing to collect or report any data

Denying loans based on neighborhood (redlining)

Missing the annual submission deadline

Keeping and submitting complete mortgage data

27) Maximum penalties for TILA violations may include:

Lifetime lending ban only

Up to one year in jail

Up to $5 000 fine

A & B

28) A “closed-end mortgage loan” is best defined as one that:

Always has an ARM rate

Always has a fixed rate

May be re-borrowed like a credit line

Cannot be prepaid, renegotiated, or refinanced without penalties

29) Thanks to TILA, consumers may:

A & B

Obtain lenders’ client lists

Terminate an unfavorable agreement within legal limits

Make informed credit decisions

30) TILA regulations apply to most kinds of consumer credit.

Only on mortgages

False

True

Only on credit cards

31) When was RESPA enacted?

1974

1972

1955

1988

32) How does RESPA protect the consumer?

Requires a third-party arbiter on every file

Allows lenders to hide fee breakdowns

Consumers must file all documents with a judge

Lenders must disclose every settlement cost and eliminate kickbacks

33) Which application types are not HMDA-reportable?

Open-end lines of credit

Family vacation-home loans

Closed-end mortgages

A & C

34) Which is NOT an example of RESPA non-compliance?

Accepting a kickback for referrals

Providing a Loan Estimate within three business days

Delivering the LE and Closing Disclosures on schedule

Waiting two weeks to deliver the LE

35) RESPA protections apply primarily to:

Home-purchase or refinance borrowers who are consumers (buyers and owners)

Agricultural-purpose mortgages

Business-purpose mortgages

Prospective home-purchase borrowers only

36) ECOA requires creditors to:

Treat applicants equally

Avoid discouraging protected applicants

All of the above

Base decisions on credit factors only

37) RESPA primarily reduces or eliminates the cost of:

Directly subsidized service fees

Excess service fees tied to escrow accounts

Government-funded closing grants

B & C

38) The 2015 HMDA rule required reporting of:

Removal of applicant demographics

Open-end, dwelling-secured lines of credit (HELOCs)

Applicant names/addresses

Public posting of all LARs for the first time

39) ECOA became law in:

1953

1974

2009

1942

40) Regulation M under TILA primarily:

Details penalties for violations

Explains consumer-leasing disclosure requirements

Tells consumers how to enforce TILA

A & C

41) Which is NOT ECOA non-compliance?

Denying credit without explaining why

Denying because applicant receives public assistance

Maintaining required records of applications

Refusing an applicant because of race

42) TILA requires mortgage professionals to:

A & B

Negotiate every contract

Provide service details

Disclose product information

43) Which action is an example of RESPA non-compliance?

Keeping required disclosure records

A lender advertising a settlement provider in exchange for referral fees

Refusing to require a certain insurer as a loan condition

Borrowers suing for RESPA damages

44) Which is an example of HMDA non-compliance?

Denying applicants solely because they live in a “poor part of town”

Following regulated mortgage practices

Accurate, complete data submissions

Publicly disclosing aggregate data

45) ECOA protections apply to traditional and non-traditional lenders alike.

No, only to payday lenders

Only for big banks

False

True

46) Which is an example of TILA non-compliance?

Delivering right-to-rescind notice

Judging ability to repay in good faith

Clear fee disclosures

False advertising to attract borrowers

47) TILA became law on:

May 29 1968

June 12 1977

Feb 23 1955

Jan 1 2008

Your score is

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