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) Regulation M under TILA primarily:

A & C

Tells consumers how to enforce TILA

Explains consumer-leasing disclosure requirements

Details penalties for violations

2) Which is an ECOA violation?

Giving clear adverse-action reasons

Approving because applicant is the same race as the lender

Approving despite different religion

Denying due to low credit score

3) “Creditor” under ECOA includes:

Individuals who lend money

All of the above

Banks/credit issuers

Third-party loan companies

4) Since 2010, RESPA has been enforced by:

The President

Individual state governments

Department of Housing and Urban Development (HUD)

Consumer Financial Protection Bureau (CFPB)

5) ECOA requires creditors to:

Base decisions on credit factors only

Treat applicants equally

Avoid discouraging protected applicants

All of the above

6) The 2015 HMDA rule required reporting of:

Applicant names/addresses

Public posting of all LARs for the first time

Removal of applicant demographics

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

7) TILA requires mortgage professionals to:

Disclose product information

A & B

Provide service details

Negotiate every contract

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

Borrowers suing for RESPA damages

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

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

True

False

Only on auto loans

Sometimes

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

Tougher criminal penalties only

Full disclosure of servicing transfers, sales, or assignments

Complete removal of all service fees

State-level rather than federal enforcement

11) Failure to report HMDA data can result in:

Civil money penalties

All of the above

Warnings and resubmission requests

Prison for egregious cases

12) ECOA became law in:

1974

2009

1942

1953

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

They intend to use it for approval

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

They plan to market products

Never permitted

14) Which is NOT ECOA non-compliance?

Refusing an applicant because of race

Maintaining required records of applications

Denying credit without explaining why

Denying because applicant receives public assistance

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

Contracts are final

Three days

One week

Six months

16) ECOA’s core purpose is to:

B & C

Standardize fees

Outlaw discrimination by creditors against any applicant

Ensure equal pay for lenders

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

True

Only if payment is under $15

Only if the buyer approves

False

18) HMDA data are submitted via:

State governor’s office

Email to HUD

July 1 in-person drop-off

FFIEC/CFPB HMDA website portal

19) Institutions must report which application types?

All of the above

Home-improvement loans

Refinances

Mortgage loans

20) Which is NOT HMDA non-compliance?

Failing to collect or report any data

Missing the annual submission deadline

Keeping and submitting complete mortgage data

Denying loans based on neighborhood (redlining)

21) ECOA prohibits discrimination based on:

Age

Religion

All of the above

Gender, nationality, race

22) TILA outlaws:

All of the above

High-pressure sales

Unfair credit billing

Misrepresentation and nondisclosure

23) HMDA’s main focus is to:

Require data reporting to fight housing discrimination

Elect an industry president

Mandate annual meetings with the Fed

Publish a national “How-to-lend” guide

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

False advertising to attract borrowers

Judging ability to repay in good faith

Delivering right-to-rescind notice

Clear fee disclosures

25) How does RESPA protect the consumer?

Allows lenders to hide fee breakdowns

Requires a third-party arbiter on every file

Consumers must file all documents with a judge

Lenders must disclose every settlement cost and eliminate kickbacks

26) Maximum penalties for TILA violations may include:

A & B

Up to $5 000 fine

Lifetime lending ban only

Up to one year in jail

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

Always has an ARM rate

Cannot be prepaid, renegotiated, or refinanced without penalties

May be re-borrowed like a credit line

Always has a fixed rate

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

False

Only on mortgages

Only on credit cards

True

29) Why did Congress pass RESPA?

Give lenders greater negotiating freedom

Let homeowners settle disputes out of court

Protect banks’ capital reserves

Limit escrow abuses and ban kickbacks/referral fees

30) Withdrawn applications must be reported to HMDA.

Yes

Only for denied applications

Only loans over $1 million

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

Only for big banks

False

No, only to payday lenders

True

32) RESPA enforcement may include:

Universal standards for brokers and lenders

All of the above

Consumer complaints to CFPB

Fines, license loss, or jail for violators

33) TILA became law on:

June 12 1977

May 29 1968

Feb 23 1955

Jan 1 2008

34) Regulation Z requires lenders to:

Present credit terms in clear language

Repeal the 2012 gift-card rule

Define criminal penalties

Delay disclosures until after signing

35) Which is NOT TILA non-compliance?

Incorrect or missing disclosures

Clear disclosures to clients

Adding undisclosed junk fees

Influencing an appraiser’s value

36) RESPA protections apply primarily to:

Business-purpose mortgages

Agricultural-purpose mortgages

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

Prospective home-purchase borrowers only

37) Thanks to TILA, consumers may:

Obtain lenders’ client lists

Make informed credit decisions

A & B

Terminate an unfavorable agreement within legal limits

38) RESPA primarily reduces or eliminates the cost of:

Government-funded closing grants

B & C

Directly subsidized service fees

Excess service fees tied to escrow accounts

39) Which application types are not HMDA-reportable?

A & C

Family vacation-home loans

Open-end lines of credit

Closed-end mortgages

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

Added comparative-shopping disclosures

Let consumers dictate the exact prices lenders may charge

Mandated transparency of broker fees

Allowed average-cost pricing

41) Under ECOA, consumers may:

A & B

Demand special credit terms

Obtain lenders’ entire client list

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

42) When was RESPA enacted?

1955

1988

1974

1972

43) HMDA became law in:

1940

1975

1988

2008

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

Accurate, complete data submissions

Publicly disclosing aggregate data

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

Following regulated mortgage practices

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

Applicant race/ethnicity and reasons for denial

Daily business diaries

Applicant names and addresses only

Ideas for law improvement

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

Waiting two weeks to deliver the LE

Providing a Loan Estimate within three business days

Accepting a kickback for referrals

Delivering the LE and Closing Disclosures on schedule

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

Never

Yes

It depends

Your score is

See also: