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

Borrowers suing for RESPA damages

Refusing to require a certain insurer as a loan condition

A lender advertising a settlement provider in exchange for referral fees

Keeping required disclosure records

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

Delivering right-to-rescind notice

Clear fee disclosures

False advertising to attract borrowers

Judging ability to repay in good faith

3) RESPA primarily reduces or eliminates the cost of:

Government-funded closing grants

Directly subsidized service fees

B & C

Excess service fees tied to escrow accounts

4) Why did Congress pass RESPA?

Let homeowners settle disputes out of court

Protect banks’ capital reserves

Give lenders greater negotiating freedom

Limit escrow abuses and ban kickbacks/referral fees

5) “Creditor” under ECOA includes:

All of the above

Banks/credit issuers

Third-party loan companies

Individuals who lend money

6) Which is an ECOA violation?

Approving because applicant is the same race as the lender

Giving clear adverse-action reasons

Denying due to low credit score

Approving despite different religion

7) Institutions must report which application types?

Refinances

Mortgage loans

All of the above

Home-improvement loans

8) Regulation M under TILA primarily:

A & C

Explains consumer-leasing disclosure requirements

Details penalties for violations

Tells consumers how to enforce TILA

9) HMDA data are submitted via:

FFIEC/CFPB HMDA website portal

July 1 in-person drop-off

Email to HUD

State governor’s office

10) ECOA became law in:

1953

2009

1942

1974

11) When was RESPA enacted?

1974

1972

1955

1988

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

Cannot be prepaid, renegotiated, or refinanced without penalties

Always has an ARM rate

Always has a fixed rate

May be re-borrowed like a credit line

13) Which is NOT TILA non-compliance?

Influencing an appraiser’s value

Clear disclosures to clients

Adding undisclosed junk fees

Incorrect or missing disclosures

14) Thanks to TILA, consumers may:

Obtain lenders’ client lists

A & B

Make informed credit decisions

Terminate an unfavorable agreement within legal limits

15) The 2015 HMDA rule required reporting of:

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

Public posting of all LARs for the first time

Applicant names/addresses

Removal of applicant demographics

16) 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

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

Ideas for law improvement

Applicant race/ethnicity and reasons for denial

Daily business diaries

Applicant names and addresses only

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

Only on auto loans

Sometimes

False

True

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

Three days

One week

Contracts are final

Six months

20) How does RESPA protect the consumer?

Lenders must disclose every settlement cost and eliminate kickbacks

Requires a third-party arbiter on every file

Consumers must file all documents with a judge

Allows lenders to hide fee breakdowns

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

Accurate, complete data submissions

Publicly disclosing aggregate data

Following regulated mortgage practices

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

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

True

No, only to payday lenders

Only for big banks

False

23) RESPA protections apply primarily to:

Agricultural-purpose mortgages

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

Business-purpose mortgages

Prospective home-purchase borrowers only

24) Which application types are not HMDA-reportable?

Open-end lines of credit

Closed-end mortgages

Family vacation-home loans

A & C

25) Regulation Z requires lenders to:

Delay disclosures until after signing

Define criminal penalties

Repeal the 2012 gift-card rule

Present credit terms in clear language

26) Since 2010, RESPA has been enforced by:

Consumer Financial Protection Bureau (CFPB)

The President

Department of Housing and Urban Development (HUD)

Individual state governments

27) TILA became law on:

May 29 1968

Feb 23 1955

Jan 1 2008

June 12 1977

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

Delivering the LE and Closing Disclosures on schedule

Accepting a kickback for referrals

Providing a Loan Estimate within three business days

Waiting two weeks to deliver the LE

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

False

True

Only if the buyer approves

Only if payment is under $15

30) TILA outlaws:

All of the above

High-pressure sales

Misrepresentation and nondisclosure

Unfair credit billing

31) ECOA prohibits discrimination based on:

Age

Gender, nationality, race

Religion

All of the above

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

Yes

It depends

Never

33) Maximum penalties for TILA violations may include:

Up to one year in jail

Lifetime lending ban only

Up to $5 000 fine

A & B

34) 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

35) RESPA enforcement may include:

Consumer complaints to CFPB

Fines, license loss, or jail for violators

Universal standards for brokers and lenders

All of the above

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

Only on mortgages

Only on credit cards

True

False

37) TILA requires mortgage professionals to:

Negotiate every contract

Disclose product information

A & B

Provide service details

38) Withdrawn applications must be reported to HMDA.

Yes

Only loans over $1 million

Only for denied applications

39) ECOA’s core purpose is to:

B & C

Outlaw discrimination by creditors against any applicant

Standardize fees

Ensure equal pay for lenders

40) Which is NOT ECOA non-compliance?

Denying because applicant receives public assistance

Refusing an applicant because of race

Denying credit without explaining why

Maintaining required records of applications

41) Failure to report HMDA data can result in:

Warnings and resubmission requests

Prison for egregious cases

Civil money penalties

All of the above

42) ECOA requires creditors to:

Avoid discouraging protected applicants

Base decisions on credit factors only

All of the above

Treat applicants equally

43) HMDA became law in:

1940

1988

1975

2008

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

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

They intend to use it for approval

Never permitted

They plan to market products

45) Which is NOT HMDA non-compliance?

Keeping and submitting complete mortgage data

Missing the annual submission deadline

Denying loans based on neighborhood (redlining)

Failing to collect or report any data

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

Full disclosure of servicing transfers, sales, or assignments

Complete removal of all service fees

Tougher criminal penalties only

State-level rather than federal enforcement

47) Under ECOA, consumers may:

A & B

Obtain lenders’ entire client list

Demand special credit terms

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

Your score is

See also: