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) The Housing Act of 1990 amended RESPA to require:

Tougher criminal penalties only

Full disclosure of servicing transfers, sales, or assignments

State-level rather than federal enforcement

Complete removal of all service fees

2) Regulation Z requires lenders to:

Delay disclosures until after signing

Present credit terms in clear language

Repeal the 2012 gift-card rule

Define criminal penalties

3) ECOA’s core purpose is to:

Ensure equal pay for lenders

Standardize fees

B & C

Outlaw discrimination by creditors against any applicant

4) HMDA became law in:

2008

1975

1940

1988

5) Failure to report HMDA data can result in:

Prison for egregious cases

Warnings and resubmission requests

All of the above

Civil money penalties

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

Mandated transparency of broker fees

Added comparative-shopping disclosures

Allowed average-cost pricing

Let consumers dictate the exact prices lenders may charge

7) “Creditor” under ECOA includes:

Banks/credit issuers

Third-party loan companies

All of the above

Individuals who lend money

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

They plan to market products

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

They intend to use it for approval

Never permitted

9) Thanks to TILA, consumers may:

Terminate an unfavorable agreement within legal limits

A & B

Obtain lenders’ client lists

Make informed credit decisions

10) HMDA’s main focus is to:

Publish a national “How-to-lend” guide

Elect an industry president

Require data reporting to fight housing discrimination

Mandate annual meetings with the Fed

11) Withdrawn applications must be reported to HMDA.

Yes

Only for denied applications

Only loans over $1 million

12) When was RESPA enacted?

1972

1988

1974

1955

13) HMDA data are submitted via:

Email to HUD

State governor’s office

FFIEC/CFPB HMDA website portal

July 1 in-person drop-off

14) Which application types are not HMDA-reportable?

A & C

Closed-end mortgages

Family vacation-home loans

Open-end lines of credit

15) RESPA primarily reduces or eliminates the cost of:

Excess service fees tied to escrow accounts

Directly subsidized service fees

B & C

Government-funded closing grants

16) ECOA became law in:

1942

1974

2009

1953

17) RESPA protections apply primarily to:

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

Agricultural-purpose mortgages

Prospective home-purchase borrowers only

Business-purpose mortgages

18) ECOA prohibits discrimination based on:

Age

Gender, nationality, race

All of the above

Religion

19) Regulation M under TILA primarily:

Tells consumers how to enforce TILA

A & C

Explains consumer-leasing disclosure requirements

Details penalties for violations

20) Maximum penalties for TILA violations may include:

A & B

Up to $5 000 fine

Lifetime lending ban only

Up to one year in jail

21) Which is an ECOA violation?

Approving because applicant is the same race as the lender

Denying due to low credit score

Giving clear adverse-action reasons

Approving despite different religion

22) RESPA enforcement may include:

Consumer complaints to CFPB

Universal standards for brokers and lenders

Fines, license loss, or jail for violators

All of the above

23) TILA outlaws:

High-pressure sales

All of the above

Misrepresentation and nondisclosure

Unfair credit billing

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

Six months

Contracts are final

One week

Three days

25) ECOA requires creditors to:

All of the above

Base decisions on credit factors only

Treat applicants equally

Avoid discouraging protected applicants

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

Only on mortgages

Only on credit cards

False

True

27) TILA became law on:

Jan 1 2008

June 12 1977

May 29 1968

Feb 23 1955

28) Which is NOT TILA non-compliance?

Incorrect or missing disclosures

Clear disclosures to clients

Adding undisclosed junk fees

Influencing an appraiser’s value

29) How does RESPA protect the consumer?

Lenders must disclose every settlement cost and eliminate kickbacks

Allows lenders to hide fee breakdowns

Requires a third-party arbiter on every file

Consumers must file all documents with a judge

30) Since 2010, RESPA has been enforced by:

The President

Consumer Financial Protection Bureau (CFPB)

Individual state governments

Department of Housing and Urban Development (HUD)

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

Waiting two weeks to deliver the LE

Accepting a kickback for referrals

Providing a Loan Estimate within three business days

Delivering the LE and Closing Disclosures on schedule

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

True

Only if the buyer approves

Only if payment is under $15

False

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

Applicant race/ethnicity and reasons for denial

Daily business diaries

Ideas for law improvement

Applicant names and addresses only

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

Never

Yes

It depends

35) TILA requires mortgage professionals to:

Disclose product information

Negotiate every contract

A & B

Provide service details

36) Why did Congress pass RESPA?

Let homeowners settle disputes out of court

Protect banks’ capital reserves

Limit escrow abuses and ban kickbacks/referral fees

Give lenders greater negotiating freedom

37) Under ECOA, consumers may:

Demand special credit terms

Obtain lenders’ entire client list

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

A & B

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

Judging ability to repay in good faith

Delivering right-to-rescind notice

False advertising to attract borrowers

Clear fee disclosures

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

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

Accurate, complete data submissions

Following regulated mortgage practices

Publicly disclosing aggregate data

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

Borrowers suing for RESPA damages

Refusing to require a certain insurer as a loan condition

Keeping required disclosure records

A lender advertising a settlement provider in exchange for referral fees

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

True

Only for big banks

False

No, only to payday lenders

42) Which is NOT ECOA non-compliance?

Denying credit without explaining why

Maintaining required records of applications

Refusing an applicant because of race

Denying because applicant receives public assistance

43) Institutions must report which application types?

Refinances

Home-improvement loans

Mortgage loans

All of the above

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

Sometimes

True

False

Only on auto loans

45) The 2015 HMDA rule required reporting of:

Removal of applicant demographics

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

Public posting of all LARs for the first time

Applicant names/addresses

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

Always has an ARM rate

Cannot be prepaid, renegotiated, or refinanced without penalties

Always has a fixed rate

May be re-borrowed like a credit line

47) Which is NOT HMDA non-compliance?

Keeping and submitting complete mortgage data

Failing to collect or report any data

Missing the annual submission deadline

Denying loans based on neighborhood (redlining)

Your score is

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