NMLS Practice Exam 2

25 Questions | Total Attempts: 1725

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NMLS Practice Exam 2

Exam questions to help prepare to pass the 125 question NMLS UST Exam


Questions and Answers
  • 1. 
    According to the National Flood Insurance Program, which of the following agencies identifies areas that will require flood insurance?
    • A. 

      FHLMC

    • B. 

      FHFA

    • C. 

      FNMA

    • D. 

      FEMA

  • 2. 
    According to RESPA, which of the following charges can have a 10% variance between the amount disclosed on the initial Good Faith Estimate and the amount the borrower pays at settlement?
    • A. 

      Transfer Taxes

    • B. 

      The Origination Charge

    • C. 

      Government Recording Charges

    • D. 

      The credit or charge for the specific interest rate chosen

  • 3. 
    According to the Dodd-Frank Wall Street Reform and Consumer Protection Act, when must the borrower be provided with a copy of their appraisal?
    • A. 

      Within 90 days of the closing

    • B. 

      No later than 3 days prior to settlement

    • C. 

      Within 30 days of the closing

    • D. 

      Within 60 days of settlement

  • 4. 
    Based on the SAFE Mortgage Licensing Act of 2008, a conviction of which of the following crimes would bar an applicant for 7 years from licensure? 
    • A. 

      Money Laundering

    • B. 

      Tax Evasion

    • C. 

      Video Voyerism

    • D. 

      Felony Assault

  • 5. 
    A mortgage loan originator works for a Mortgage Broker that does not originate FHA loans. She has a borrower who wants an FHA loan. Which of the following is correct?
    • A. 

      She can refer the borrower to another mortgage company and not receive a referral fee.

    • B. 

      She can complete a referral agreement informing all parties that she will receive a fee.

    • C. 

      She can originate the loan and place it with a non-conforming investor.

    • D. 

      She can refer the loan to a friend of hers at a Mortgage Lender and receive a referral fee.

  • 6. 
    Which of the circumstances listed below would be an acceptable reason to re-disclose to the borrower?
    • A. 

      The loan originator forgot to include the Processing Fee in the Origination Charge.

    • B. 

      The borrower asked to change programs from a 30 year fixed rae loan to a 5/1 Hybrid ARM.

    • C. 

      The APR went down by .110%.

    • D. 

      The Title Company that the Lender selected increased their Settlement Charge from $450 to $850

  • 7. 
    According to TILA, if the APR varies by more than what tolerance must it be re-disclosed to the borrower?  
    • A. 

      .250%

    • B. 

      .500%

    • C. 

      .125%

    • D. 

      .750%

  • 8. 
    What is the minimum number of business days before a mortgage loan can be consummated and remain in compliance with TILA?
    • A. 

      5

    • B. 

      7

    • C. 

      3

    • D. 

      10

  • 9. 
    Which of the transactions listed below would not be covered by the 3 Day Right of Rescission under TILA?
    • A. 

      Closing on a Home Equity Loan that is a 2nd lien on a primary residence.

    • B. 

      Consummating a Debt Consolidation Refinance of a primary residence.

    • C. 

      Refinancing a higher interest mortgage to a lower interest rate on a primary residence.

    • D. 

      Purchase of a primary residence with a 5/1 Hybrid ARM.

  • 10. 
    According to FNMA Guidelines, what is the maximum total gross adjustment to the sales price of a comparable property that should not be exceeded in order for the comparable to be considered a good comparable property?
    • A. 

      20%

    • B. 

      15%

    • C. 

      25%

    • D. 

      10%

  • 11. 
    The Sales Comparison Approach to value is considered the most accurate of the appraisal methods for residential properties. What is it also known as?
    • A. 

      The Income Approach

    • B. 

      The Market Data Approach

    • C. 

      The Cost Approach

    • D. 

      The Appreciation Approach

  • 12. 
    Jose and Mary wish to purchase a home and want to get pre-approved before they start searching for their property. Jose was a Military Policeman in the Army for 6 years prior to being hired by the Sheriff's Department as a Deputy Sheriff. Hi gross pay is $1,812.50 every 2 weeks. Mary, his wife, is a Dental Hygienist. She has been employed for 3 years with her current employer and earns $1,463.00 per pay period and gets paid twice a month. They have a new car payment of $328 per month, student loans with payments of $181 per month and credit card payments of $89 per month. They are going to put 20% down. What is the maximum monthly mortgage payment, PITI, they can qualify for?
    • A. 

      $1,918.86

    • B. 

      $2,108.95

    • C. 

      $1,700.77

    • D. 

      $3,061.38

  • 13. 
    According to the Final Rule on  Valuation Independence which amended Regulation Z, which of the following would be permitted?
    • A. 

      Asking the appraiser for a pencil search to make sure they can "bring in the number".

    • B. 

      Telling the appraiser "If we don't get the value there will not be any more appraisals ordered"/

    • C. 

      The Listing Realtor meeting the appraiser and providing the most recent sales in the neighborhood.

    • D. 

      Ordering the appraisal from the Originators husband to ensure the value "comes in".

  • 14. 
    Clarence served in the Korean War. He has never used his VA Eligibility to purchase a home. He finds the perfect house. However, the owner refuses to sell to him because he is "too old for the neighborhood". Which federal law has the seller violated?
    • A. 

      Fair Housing Act

    • B. 

      Real Estate Settlement Procedures Act

    • C. 

      Equal Credit Opportuinity Act

    • D. 

      Truth in Lending Act

  • 15. 
    A new loan originator asks his manager if  "the red push pins" on the map on the wall of the manager's office are where they have branch offices. His manager replies "No, those are areas we don't lend in". This is an example of what type of discriminatory practice
    • A. 

      Steering

    • B. 

      Predatory Lending

    • C. 

      Blockbusting

    • D. 

      Redlining

  • 16. 
    George is buying a house and the seller has agreed to pay 3% of the closing costs toward his closing costs. He would like to use XYZ Title Company to provide his Title Insurance. The seller insists he use ABC Title or they will not close the transaction. This is a violation of which Federal Law?
    • A. 

      Section 32 of the Truth in Lending Act.

    • B. 

      Section 9 of the Real Estate Settlement Procedures Act.

    • C. 

      Title 8 of the Civil Rights Act of 1968.

    • D. 

      Section 16 of the Equal Credit Opportunity Act.

  • 17. 
    Vanessa is applying for a mortgage loan to build her dream home. The loan originator looks out in the lobby and sees her 3 children quietly working on their homework. He asks her "You're not planning on having any more children are you"? Which federal law that prohibits discrimination has the loan originator just violated
    • A. 

      Gramm-Leach-Bliley Act

    • B. 

      Community Reinvestment Act

    • C. 

      Home Mortgage Disclosure Act

    • D. 

      Equal Credit Opportunity Act

  • 18. 
    MNOP Mortgage has an ownership interest in QRS Title and WXY Real Estate. In order to be provided with Safe Harbor protection, which disclosure would they need to provide to the borrower if they refer them to either of these companies?
    • A. 

      Affiliated Business Arrangement Disclosure

    • B. 

      Mortgage Servicing Disclosure

    • C. 

      Truth in Lending Disclosure

    • D. 

      Anti Coercion Disclosure Notice

  • 19. 
    A borrower has completed an application and has been provided with their initial disclosures, including a Good Faith Estimate. How long is the loan originator bound after providing the GFE to the borrower?
    • A. 

      3 business days.

    • B. 

      7 business days

    • C. 

      10 business days

    • D. 

      Until the loan closes

  • 20. 
    How long after closing on the purchase of a home does the borrower have to move in and occupy the home when they use an FHA mortgage to finance the purchase?
    • A. 

      15 days

    • B. 

      45 days

    • C. 

      30 days

    • D. 

      60 days

  • 21. 
    Which of the following situations would not be a violation of Section 8 of RESPA?
    • A. 

      A Title Company pays a loan originator $200 for every closing they refer to them.

    • B. 

      A Realtor tells an originator "I'll send you all my business, I just need $500 per deal".

    • C. 

      Two loan originators work for the same lender and agree to split a commission on a loan they both work on.

    • D. 

      A loan originator at a bank will refer borrowers who have been denied for $350 per closed loan.

  • 22. 
    Which of the following mortgages do not require the borrwe make monthly payments after the closing?
    • A. 

      An Interest Only Home Equity Line of Credit

    • B. 

      A Home Equity Conversion Mortgage

    • C. 

      A Payment Option ARM

    • D. 

      A Shared Appreciation Mortgage

  • 23. 
    All of the following Notes require regular payments of principal and interest except:
    • A. 

      Installment Note with Balloon.

    • B. 

      Partially Amortizing Installment Note

    • C. 

      Fully Amortizing Installment Note

    • D. 

      Straight Note

  • 24. 
    Which of the characteristics listed below would not be considered a nontraditional loan?
    • A. 

      Permanent Buydown

    • B. 

      Fixed Rate

    • C. 

      20 year term

    • D. 

      5/1 Hybrid ARM

  • 25. 
    Which statement is true regarding the effect a buydown plan can have on a borrower's payments?
    • A. 

      The seller cannot pay for the buydown because they are an interested party.

    • B. 

      The borrower qualifies at the initial interest rate, allowing them to qualify for a larger loan.

    • C. 

      The payment gradually decreases giving the buyer more leverage.

    • D. 

      The borrower starts out with a lower interest rate and payment during the first few years.

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