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NMLS Practice Test 1
NMLS Practice Test 1
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1
Inquiring as to whether income is derived from alimony, child support, or separate maintenance is prohibited by which:
Regulation B
Regulation C
Regulation Z
Regulation D
2
The NMLS may best be described as a:
Licensing syst available for all states but not actually used by all states
National mortgage regulator
Federal agency
Licensing system utilized by all U.S. states and territories
3
The 1003 is also known as the:
Mortgage Credit Analysis Worksheet
Uniform Residential Loan Application
Uniform Underwriting and Transmittal Summary
Appraisal
4
The Red Flags Rule identifies all of the following as possible red flags, except:
The borrower's identification looks altered
The borrower fails to respond to a request for additional information
The borrower is buying an investment property
The borrower's address is invalid
5
A borrower receives $1,000/month in rental income. How much of the income may be used to qualify the BWR for a loan?
$750
$800
$1,250
$1,000
6
Below
Acceptable only with proper disclosure
Acceptable only with property securitization
Considered unsafe and unsound
A strong mitigating factor
7
A loan which does not require payments during the life of the loan is most likely:
Illegal
A pay-option mortgage
A HECM
A modified mortgage
8
Below
$956.34
$1,074.67
$868.33
$940.33
9
Below
Ginnie Mae
Fannie Mae
Vinnie Mac
Federal Housing Administration
10
Which of these replaces the HUD-1 Settlement Statement and the final TIL Disclosure?
The Mortgage Servicing Disclosure Statement
The Loan Estimate
The Closing Disclosure
The Affiliated Business Arrangement Disclosure Statement
11
The APR factors in the effects of all of the following expenses, except:
Processing fee
Mortgage insurance premium
Hazard insurance premium
Origination fee
12
Extension of credit to borrowers who cannot afford it on the terms being offered is considered by most regulators to be:
Ethical, but not legal
A wise business tactic
Nontraditional lending
Predatory lending
13
Below
70%
50%
60%
40%
14
Under Regulation X, the term "loan originator" applies to a:
Loan processor
Mortgage broker or lender
Mortgage lender only
Mortgage broker only
15
Under the SAFE Act, mortgage loan originator license applicants must complete how many hours of pre-licensing education?
25
10
30
20
16
Below
Saturday
Thursday
Friday
Wednesday
17
Below
Is not confidential and is available for public access
Is confidential and is not available for public access
Is confidential, but is available for public access
Is not confidential, but is not available for public access
18
Below
80%
75
95%
100%
19
For a mortgage licensee, paying compensation for referrals is:
Unethical, and a violation of federal law
Unethical,&may be prohibited in some states, but not a violation of fed law
Unethical, but not illegal
Neither unethical nor illegal
20
What is Freddie Mac's automated underwriting system called?
Underwriter Assistant
AUS
Desktop Originator
Loan Product Advisor
21
Which of the following would be equal to one half of one discount point (.005) on a loan amount of $250,000?
$1,000
$1,250
$5,000
$2,500
22
Which of the following is true of the Loan Estimate?
It is always identical to the Closing Disclosure
It replaces the HUD-1 Settlement Statement and the final TIL Disclosure
It replaces the GFE and the early TIL Disclosure for most transactions
It should only be used for reverse mortgages
23
Mortgages may be sold individually or bundled w/ othr mortgages with similar features into mortgage-backed securities in
Secondary mortgage market
Primary mortgage market
Federal reserve market
Capital market
24
Below
32.5%
29.38%
30.6%
31.25%
25
What is the tolerance allowed for variances in the APR disclosure required by TILA in a regular transaction?
$200
1%
0.125%
.25%
26
Which of the following would convey a property?
Deed rider
Warranty deed
Deed of trust
Note
27
Under Fannie Mae guidelines, the amount of hazard insurance must be equal to:
The lower of the replacement cost or the unpaid loan amount
The appraised value
The purchase price
80% of the replacement cost
28
In regard to obtaining property, the S.A.F.E. Act states that loan originators:
May not do so in the course of their professional duties
Must not do so by fraud or misrepresentation
May do so in any way they see fit
Must not do so without using the services of a real estate licensee
29
Below
A change in the loan amount
The addition of any costs to the borrower
An increase of more than 1% in cash required to close
An increase in the APR by more than .125%
30
Ethics:
Is a guideline for answering questions when a choice of action is available
Is set out in law
Defines how a person must act
Is a branch of philosophy dealing with legal behavior
31
Below
Concession
Inflation
Adjustment
Inspection
32
Which of the following best describes the federal limitation on the shortest adjustment period allowed on an ARM?
No limit
Six months
One month
Three months
33
Which of the following is most true concerning a VA funding fee?
It is always refundable
It is nonrefundable
It is not charged to active members of the military
It is not charged to veterans
34
Which of the following is least likely to be considered nonpublic personal information?
Borrower's job title
Employer's phone number
Borrower's home phone number
Borrower's income
35
The acronym LIBOR represents a:
State law
Possible ARM index
Federal agency
Federal law
36
Which of the following terms would apply when calculating the maximum loan amount available to a VA borrower?
Guarantee fee
UFMIP
Entitlement
Insured amount
37
For an FHA loan, how much may the seller contribute toward the borrower’s closing costs?
3% of the loan amount
Nothing
3% of the sales price
6% of the sales price
38
According to the standard deed of trust, how soon must a borrower on an owner-occupied loan occupy the property?
Within 15 days of closing
Within 30 days of closing
Within 90 days of closing
Within 60 days of closing
39
Which of the following is most likely to be considered a violation of Regulation B?
Declining a loan for a bwr who is 75 due to a high debt-to-income ratio
Charging a minority bwr a higher interest rate due to a low down payment
Charging minority Bwr a higher int rate than a similar non-minority bwr
Declining a loan for a single woman due to a low credit score
40
Combining stated income with a nontraditional mortgage product is an example of:
Risk enhancement
Risk layering
Risk optimization
Risk premium
41
According to ECOA, when could a lender ask a borrower about their race?
If the borrower's race is not evident
Never
If they ask for monitoring purposes
If the loan is not federally-regulated
42
With respect to FHA loans, the FHA:
Issues private mortgage insurance
Acts as the lender
Guarantees the loans, thereby protecting the lender
Insures the loans, thereby protecting the lender
43
A loan originator license applicant must pass the NMLS-required examination with a score of at least __ percent.
85
70
80
75
44
Below
Cash-outs
Subprime
Air loans
No cash-outs
45
Below
Use the income shown on the borrower's most recent two pay stubs
Average the last six months' worth of pay stubs from the borrower
Average the income showing on the W-2s for the past two years
Average the income shown on the 1040s for the past two years
46
It replaces the security instrument
Negotiates the sale and purchase of residential real estate
May take responsibility for servicing a loan after it has been consummated
Advises loan applicants on current rates and loan terms
Performs clerical and support duties for his/her sponsoring broker
47
A 180 / 360 loan is considered a(n) ____mortgage.
Pay-option
Hybrid
Balloon
Adjustable-rate
48
Loan originator compensation records must be retained for at least:
Five years
Two years
Three years
Four years
49
On an ARM loan, which of the following will not be found on the note?
Adjustment parameters
Margin
Fully-indexed rate after one year
Identification of index
50
Below
Package money
Open-end
Silent second
Double escrow
51
Redlining is addressed in which federal law?
ECOA
HOEPA
RESPA
FCRA
52
A loan which allows the borrower to take a lump sum distribution without any monthly repayment requirements is a(n):
HECM
HELOC
Pay-option mortgage
Equity mortgage
53
Co-borrower information must be provided on the 1003 when the co-borrower:
Is the borrower's spouse
Has income being used for loan qualification
Is a minor
Has a credit score that is below average
54
Which of the following would not be considered an established business relationship under the Do-Not-Call rules?
A financial transaction between a consumer and a seller
A consumer purchases an item from a seller
A consumer inquiry into the purchase of an item six months ago
A consumer purchases a service from a seller
55
When must a borrower receive notification of a servicing transfer?
Within 30 days of the effective date of the transfer
With the borrower's next payment coupon
15 days prior to the effective date of the transfer
Ten days prior to the effective date of the transfer
56
What does "FHA" stand for, when referring to the agency which oversees the FHA loan program?
Federal Housing Agency
Federal Housing Administration
Federal Housing Association
Federal Housing Act
57
All of the following would be common activities in fraud for housing, except:
Income and employment fraud
Asset fraud
Silent second
Flipping
58
Below
Zero tolerance
10% tolerance
No tolerance limitation
15% tolerance
59
When would business tax returns be required as documentation of income for a borrower?
If the borrower owns more than 25% of a company
If the borrower is an officer of a company
If the borrower receives a K-1 from a company
If the borrower owns 15% of a company
60
The penal sum of a loan originator's required surety bond must be maintained:
In an amount that reflects the dollar amount of loans originated
In an amount that reflects the originator's yrs of professional experience
In a flat-rate amount determined by each state
In an amount that reflects the number of loans originated
61
Which of the following best describes a note (i.e., a promissory note)?
It is identical to a mortgage
Both a promise to repay the money brwd with interest and evidence the debt
It is given by the lender to the buyer
It replaces the security instrument
62
A misleading representation, omission, act, or practice is considered deceptive when, among other conditions, it is:
Material
Malicious
Intentional
Repeated
63
Below
7%
9%
8%
6%
64
Mortgage interest rates are influenced by all of the following, except:
Regional property tax rates
Foreclosure rates
Federal Reserve activities
Loan fraud
65
Below
Regulation B
Regulation Z
Regulation C
Regulation G
66
The purpose of the Truth-in-Lending Act is to do which of the following?
Protect consumers from abusively high interest rates
Ensure meaningful disclosure of credit terms to consumers
Require cnsmr be provided w/ a GFE of closing costs at the time of loan app
Prevent lenders from charging interest rates that are unfair to consumers
67
Which of the following types of mortgages typically carries two different types of mortgage insurance?
VA
Conventional
FHA
Subprime
68
Below
Table funding
Warehouse lending
Mortgage brokering
Wholesale lending
69
Which of the following terms describes the fee charged to the borrower to insure an FHA loan?
Upfront mortgage insurance premium
Funding fee
Guaranty fee
Insuring fee
