The U.S. NMLS Exam Prep Test!

25 Questions | By NMLS Quiz | Updated: Mar 21, 2022 | Attempts: 14098

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The Department of Real Estate needs to manage all Mortgage Loan Originator (MLO) license endorsements, which is done through the NMLS. The U. S. NMLS Exam Prep Test will help the Mortgage Originator with the tools they need to pass the Nationwide Mortgage Licensing System Test and kick their journey into the real estate sector. Try it out, and good luck.

Questions and Answers

1.

Under the USA Patriot Act, which of the following is NOT obtained by a mortgage broker from a borrower for customer identification purposes?
- A.
  
  Passport number
- B.
  
  Credit card number
- C.
  
  Taxpayer identification number
- D.
  
  Alien identification number
2.

According to the Truth In Lending Act (TILA), which of the following notices by the creditor informs the customers about their rights to cancel a loan?
- A.
  
  Good Faith Estimate (GFE)
- B.
  
  Notice of right to rescind
- C.
  
  Servicing disclosure statement
- D.
  
  Affiliated business arrangement disclosure
3.

A mortgage company advertises on a real estate agent’s website by paying the required fees. Which company is in violation of the Real Estate Settlement Procedures Act (RESPA)?
- A.
  
  The mortgage broker only
- B.
  
  The real estate agent only
- C.
  
  Both are in violation
- D.
  
  Neither is in violation
4.

If a consumer reporting agency makes an inquiry related to a joint credit account of a borrower and the spouse, which of the following information can be provided under the Equal Credit Opportunity Act (ECOA)?
- A.
  
  Information about the borrower only
- B.
  
  Information about the spouse only
- C.
  
  Information about the borrower and the spouse
- D.
  
  Information cannot be provided about the borrower or spouse
5.

A homeowner’s equity position reaches 20% of the original value of the property. Which of the following statements is true pertaining to the cancellation of the Private Mortgage Insurance (PMI)?
- A.
  
  . The lender must automatically cancel the PMI
- B.
  
  The homeowner can request cancellation of the PMI
- C.
  
  The PMI gets automatically cancelled after 30 days
- D.
  
  The PMI gets cancelled 20 days after the request is submitted
6.

The purpose of the Fair Credit Reporting Act (FCRA) is to:
- A.
  
  Reduce home insurance costs
- B.
  
  Ensure the accuracy of the information in the consumer reports
- C.
  
  Help consumer receive lower interest rates
- D.
  
  Provide consumers with many finance options to choose from
7.

According to the Real Estate Settlement Procedures Act (RESPA), which of the following relationships between a lender and a settlement service provider does NOT require disclosures on the Good Faith Estimate (GFE)?
- A.
  
  Provider is an associate of the lender
- B.
  
  Provider has an outstanding loan with the lender
- C.
  
  The lender and the provider use the same attorney for legal services
- D.
  
  The lender has repeatedly used the services of the provider in the last 12 months
8.

How does Freddie Mac benefit the consumer?
- A.
  
  Consumers can take more than one mortgage
- B.
  
  By make mortgage products available to consumers
- C.
  
  Freddie Mac does not ask for a private mortgage insurance (PMI)
- D.
  
  If a consumer is unable to pay the installments, they can approach Freddie Mac for time
9.

A mortgage broker licensee charges a fee that exceeds the fee initially disclosed to the borrower. What MUST the mortgage broker provide the borrower three days prior to the signing of the closing documents?
- A.
  
  A copy of the borrower’s rights under the Consumer Loan Act
- B.
  
  A redisclosure of the fee including a clear written explanation for the increase
- C.
  
  The details of the mortgage broker’s trust account including subaccounts
- D.
  
  The details of the mortgage broker’s surety bond company and the amount of the bond
10.

A mortgage displays its sign at a real estate licensee’s office. Which of the following statements is CORRECT?
- A.
  
  Only the mortgage company is in violation of the Real Estate Settlement Procedures Act (RESPA)
- B.
  
  Only the real estate licensee is in violation or RESPA
- C.
  
  Both the mortgage company and the real estate licensee are in violation of RESPA
- D.
  
  Neither the mortgage company nor the real estate licensee is in violation of RESPA
11.

The loan fees increase from the initial Good Faith Estimate (GFE). The mortgage broker MUST provide the borrower with:
- A.
  
  Redisclosures
- B.
  
  A discount on the fees
- C.
  
  Refund of the GFE fee
- D.
  
  Additional discount points
12.

A mortgage broker refers clients to a title company. The mortgage broker owns 10% of the title company. The title company performs services and pays the mortgage broker a commission. The title company pays the mortgage broker annual dividends based on the amount of business that was referred to the title company. Which of the statements is CORRECT?
- A.
  
  Only the mortgage broker is in violation of the Real Estate Settlement Procedures Act (RESPA)
- B.
  
  Only the title company is in violation of the Real Estate Settlement Procedures Act (RESPA)
- C.
  
  Bothe the mortgage broker and the title company are in violation of the Real Estate Procedure Act (RESPA)
- D.
  
  Neither the mortgage broker nor the title company is in violation of the Real Estate Settlement Procedure Act (RESPA)
13.

Truth in Lending Act (TIL) requires disclosure of:
- A.
  
  Estimated closing costs
- B.
  
  Credit history of the borrower
- C.
  
  Key details of the property on which loan was taken
- D.
  
  Key terms of the credit transaction
14.

In whose name is a loan closed that is “table-funded”?
- A.
  
  Loan originator
- B.
  
  Independent contractor
- C.
  
  Mortgage broker licensee
- D.
  
  Designated mortgage broker
15.

Under the Fair Credit Reporting Act, who is responsible for ensuring that the reporting of consumers’ credit standing and reputation protects the consumer’s right to privacy?
- A.
  
  Mortgage broker
- B.
  
  Consumer credit counseling agencies
- C.
  
  Credit reporting agencies
- D.
  
  Board of Governors of the Federal Reserve Systems
16.

Truth in Lending Act (TILA) is designed to protect consumers in:
- A.
  
  Property offers
- B.
  
  Credit transactions
- C.
  
  Real estate practices
- D.
  
  Property evaluation
17.

A lender provides a borrower with an initial amortization schedule for Private Mortgage Insurance (PMI) disclosure at loan closing for an adjustable-rate mortgage. The lender MUST also provide a written notice stating the :
- A.
  
  Borrower’s right to refuse a PMI
- B.
  
  Borrower’s right to cancel PMI
- C.
  
  Lender’s right to extend the time for monthly payments for a PMI
- D.
  
  Lender’s right to increase the monthly payment amount for PMI
18.

Which of the following properties are considered residential real estate?
- A.
  
  Hotel
- B.
  
  Fourplex
- C.
  
  Mobile home park
- D.
  
  Apartment building
19.

A mortgage broker has advertised “$1200 down” for a house in a local newspaper. According to the Truth In Lending Act (TILA), which of the following information must be disclosed in the same advertisement?
- A.
  
  The location of the house
- B.
  
  The total area of the house
- C.
  
  The annual percentage rate
- D.
  
  The annual property taxes
20.

A creditor can retain files that are prohibited by the Equal Credit Opportunity Act (ECOA) when the information:
- A.
  
  About an applicant was obtained from a legal firm
- B.
  
  About an applicant was obtained from another creditor
- C.
  
  Was requested and obtained from a source after 1997
- D.
  
  Was obtained from a consumer reporting agency without the creditor requesting it
21.

What is the minimum amount of a home’s appraised value required to be paid to avoid taking Private Mortgage Insurance (PMI)?
- A.
  
  10%
- B.
  
  15%
- C.
  
  20%
- D.
  
  30%
22.

If the creditor fails to send the required disclosures related to Truth in Lending Act (TILA), within how many years does the customer have to rescind from the date of consummation of transaction?
- A.
  
  1
- B.
  
  2
- C.
  
  3
- D.
  
  4
23.

Which of the following documents is NOT part of the books and records a mortgage broker must retain and make available for examination?
- A.
  
  Advertisements
- B.
  
  Trust accounting record
- C.
  
  Mortgage transaction documents
- D.
  
  Continuing education course contents
24.

A lender has advertised “7.25%APR” in a newspaper advertisement. Which of the following information must be provided in the same advertising?
- A.
  
  The payment period for the loan
- B.
  
  The finance charge for the loan
- C.
  
  No financial information is required
- D.
  
  Last date for the offer at the same rate
25.

A borrower has approached a lender for refinancing a residential property. According to the Truth In Lending Act (TILA), which of the following information does the lender have to provide to the borrower?
- A.
  
  A new disclosure for the refinancing of credit
- B.
  
  The disclosure for the initial credit will have to be reissued
- C.
  
  A new disclosure for the refinancing credit only if the borrower requests it
- D.
  
  No new disclosures are required if a disclosure was provided for the initial credit