FREE NMLS Practice Test 2025 Official Study Guide [PDF]

1) Before taking the NMLS licensing exam, an applicant must complete how many hours of pre-licensing education?

2) The main objective of the Secure and Fair Enforcement Act (SAFE) was to:

3) A 2/1 buydown means:

4) After a mortgage loan is paid in full, the lender must send a Satisfaction (or Release) of Mortgage within:

5) In mortgage lending, “PFC” stands for:

6) The SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act) requires:

7) On the Uniform Residential Loan Application (URLA), the government-monitoring section is completed:

8) Which rule prohibits loan-originator compensation based on loan terms such as interest rate or loan-to-value?

9) Which payment option is the absolute minimum required on an adjustable-rate mortgage (ARM)?

10) A 360/180 loan is best described as:

11) The Home Mortgage Disclosure Act (HMDA) primarily requires lenders to:

12) ECOA (Equal Credit Opportunity Act) makes it unlawful to discriminate against an applicant on the basis of:

13) On which document is the cost of a loan expressed as an annual percentage rate (APR)?

14) An Affiliated Business Arrangement (ABA) exists when:

15) Before the 2008 market intervention, Fannie Mae (FNMA) was best described as:

16) If an appraisal value comes in above true market value, the report is considered:

17) HOEPA (Home Ownership and Equity Protection Act) was added to TILA to:

18) The Market Conditions Addendum (Form 1004MC) is used to:

19) What is the minimum pre-licensing education required for an individual seeking an NMLS MLO license?

20) Under ECOA, within how many days must a lender notify a borrower of an underwriting decision?

21) A mortgage broker sometimes refers a loan to a second broker. Under RESPA, may the referring broker receive compensation?

22) A home’s value is likely to decline if a noisy airport runway is built one mile away because of:

23) In mortgage terminology, another word for mortgagee is:

24) When the loan balance grows because scheduled payments do not cover all accrued interest, the result is called:

25) If an applicant has questions about the credit score used in underwriting, they should contact the:

26) Which federal regulation implements the Real Estate Settlement Procedures Act (RESPA)?

27) A _________ cap limits the monthly payment increase on an ARM by deferring some interest to the loan balance.

28) Which required disclosure tells a borrower whether a loan includes a balloon payment?

29) Under ECOA, which of the following is not an acceptable method to deliver a required notice of action?

30) A typical late fee on a conventional mortgage is:

31) An Affiliated Business Arrangement (ABA) under RESPA is best described as:

32) Which federal department decides whether participants in third-party mortgage-fraud schemes will be prosecuted and under which statute?

33) If a mortgage applicant deliberately lies about income to obtain a loan, the applicant is guilty of:

34) Under RESPA, a mortgage loan originator is considered to have taken an application when:

35) CFPB mortgage-servicing rules provide an added layer of consumer protection specifically related to:

36) When giving required information to an applicant for an adjustable-rate mortgage (ARM), which of the following does not have to be disclosed?

37) Is a conventional mortgage loan insured or guaranteed by any government program?

38) Examples of RESPA violations include all of the following except:

39) All of the following actions by a loan underwriter are allowed during an appraisal process, except:

40) A __________ cap limits the increase in an ARM’s monthly payment by deferring part of the interest.

41) Under the Truth-in-Lending Act, borrowers have a right to rescind certain loans secured by their principal residence for:

42) Which of the following items is not listed on a HUD-1 Settlement Statement?

43) If an MLO discovers that a borrower has committed—or is about to commit—mortgage fraud, which report must be filed promptly?

44) While engaged in mortgage-loan origination, an individual is prohibited from:

45) A “240/60, 20-k, 9 %” note is best described as:

46) The Consumer Financial Protection Bureau (CFPB) was created to:

47) The federal right of rescission for certain real-estate loans is granted under which law?

48) As a mortgage loan originator, you will use which of the following documents to figure out the estimated value of a property based on an analytical comparison of similar properties?

49) Which loan program offers 100 % financing, is government-guaranteed, and requires entitlement plus a Certificate of Eligibility?

50) The chief goal of the Dodd-Frank Act is to:

51) “Negative __________” occurs when the loan balance rises because scheduled payments do not cover all accrued interest.

52) When a lender strips unsophisticated homeowners of equity through abusive terms, the practice is called:

53) In today’s marketplace, prepayment penalties are typically:

54) Which action is not normally associated with mortgage-fraud schemes?

55) Which of the following is not one of the three nationwide consumer credit-reporting agencies?

56) When must the appraisal disclosure be delivered to the borrower?

57) For any individual originating a residential loan, a unique identifier must be shown on all documents, except:

58) Which federal law requires delivery of a Mortgage Servicing Disclosure Statement?

59) Mortgage companies sometimes assemble many loans into one package and sell it to permanent investors. This interim financing process is called:

60) A balloon mortgage is most advantageous for:

61) If a mortgage company improperly calls two consumers on the National Do Not Call Registry, what is the maximum total fine it could face?

62) A discount point is best described as:

63) The primary purpose of the Truth-in-Lending Act (Reg Z) is to:

64) The Telemarketing Sales Rule primarily sets requirements for:

65) Which of the following fees is excluded from the annual percentage rate calculation, according to the Truth in Lending Act?

66) For the overall quality of an appraisal, Fannie Mae ultimately holds which party responsible?

67) A loan’s annual percentage rate (APR) must be disclosed to the consumer on the:

68) A lender typically verifies a loan applicant’s employment by sending a:

69) Which type of loan is usually the easiest to qualify for when a borrower has imperfect credit and other high-risk factors?

70) The legal process used to enforce an outstanding mortgage lien is called:

71) Under RESPA, how many months of cushion may a lender hold in an escrow account for taxes and insurance?

72) Under ECOA-Valuations rules, a copy of the appraisal must be provided to the borrower:

73) “Discount points,” commonly just called points, are best defined as:

74) According to Fannie Mae, a borrower must occupy the property within:

75) “Periodic adjustment caps” on an ARM:

76) On the Closing Disclosure, the final APR may vary from the initial APR by no more than what amount before a new waiting period is triggered?

77) Age discrimination is acceptable under the Equal Credit Opportunity Act by a lender in which circumstance?

78) RESPA (Real Estate Settlement Procedures Act) was enacted chiefly to help consumers:

79) When an agent might not put a client’s interests first, the situation is called:

80) When calculating debt-to-income ratios, an auto loan is counted as debt:

81) Which of the following loans is not covered by RESPA disclosure rules?

82) What feature limits how much the interest rate on an ARM may increase or decrease at any single adjustment?

83) The SAFE Act is best defined as the:

84) The phrase that NMLS-approved education credits in one state can satisfy education requirements in another state refers to:

85) Freddie Mac and Fannie Mae allow what maximum variance adjustment percentage on comparable-sales appraisals?

86) One of the most critical points of the Federal Reserve’s Loan Originator Compensation Rule is:

87) The three-day Right of Rescission does not apply to which transaction?

88) The Homeowners Protection Act (HPA) was enacted in order to:

89) After the lender receives a signed loan application, a Good-Faith Estimate (now Loan Estimate) must be mailed or delivered to the borrower within:

90) A borrower may deposit funds into an escrow reserve primarily for:

91) Which loan program is specifically designed for borrowers purchasing in rural areas?

92) Expressed as a percentage, “20 basis points” equals:

93) Which law forbids lenders from deterring applicants with discouraging statements that a reasonable person would find off-putting?

94) Which document itemizes all settlement costs, including lender charges?

95) A Mortgage Insurance Premium (MIP) is required on:

96) How many days prior to closing must a lender provide the HUD-1 Settlement Statement to the borrower?

97) The extra amount a lender adds to the index to determine the ARM’s interest rate is called the:

98) The Equal Credit Opportunity Act (ECOA) specifically bars discrimination based on:

99) The closing date is approaching and the loan is not yet approved, though progress looks positive. The loan originator should:

100) Insurance companies that do not deal with borrowers directly will usually pay a loan-servicing fee and make real-estate mortgage loans purchasable through:

101) Industry standards for title-insurance and title-related activities are set by:

102) “HPML” stands for:

103) Recording an instrument at the county courthouse provides:

104) A mortgage without risky features such as negative amortization, interest-only payments, or balloon terms is called a:

105) Under ECOA, within how many days of receiving a completed application must a creditor notify the applicant of the loan’s status?

106) To document income for a salaried or hourly borrower, the lender typically requires:

107) Under federal fair-lending rules, which topic should never be asked of a real-estate loan applicant?

108) At what percentage does the loan-to-value ratio have to fall below before the requirements of private mortgage insurance are lifted?

109) When a mortgage loan originator presents only one loan program instead of multiple suitable options, the unethical practice is known as:

110) Which clause in a mortgage allows the lender to raise the interest rate under specified conditions?

111) The term refinance, according to the Truth in Lending Act, refers to:

112) In a standard appraisal report, which section analyzes the economic setting and market forces that influence a property’s value?

113) If a borrower defaults on a loan, which clause authorizes the lender to begin foreclosure?

114) In an adjustable-rate mortgage (ARM), the interest rate periodically changes according to:

115) The primary purpose of the Dodd-Frank Act is to:

116) Which loan product requires no income or asset verification and no payments until the home is sold or the borrower dies?

117) A funding fee is required on which type of mortgage?

118) Which law is also known as Regulation B?

119) The extra amount a lender adds to the index to set the ARM interest rate is called the:

120) In an adjustable-rate mortgage (ARM), the interest rate adjusts periodically based on:

121) Under federal lending rules, within how many days must a lender deliver an adverse-action notice after denying a credit application?

122) For which type of loan does RESPA not require lenders to disclose closing costs and procedures?

123) The primary purpose of the Equal Credit Opportunity Act (ECOA) is to ensure that:

124) Which federal entity is responsible for overseeing and enforcing RESPA?

125) A mortgage-loan advertisement aimed at consumers must comply with which law and regulation?