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SAFE MLO NMLS Exam Practice Tests Free

SAFE MLO NMLS Exam Practice Tests for free will serve as educational resource to help you pass your upcoming exams
1) You have invited realtors to atted your seminar on new mortgage products. You serve refreshments to the realtors. Is this a violation of RESPA?
a) Yes
b) No
Answer : a
Explanation : According to RESPA educational interactions such as webinar (or) seminar is permissible, exchange of reasonable promotional items such as flyer talking about enw products is permissible. The refreshment is an item outside the scope and is an item of value that should not be offered or exchanged between mortgage brokers and realtors. Realtors are potential referral sources and this is a violation of RESPA
2) What is a higher-priced mortgage loan?
a) A loan with higher APR than a Average prime offer rate
b) A loan with lower APR than a Average prime offer rate
c) A loan with higher APR than a 30-year fixed loan
d) A loan with lower APR than a 30-year fixed loan
Answer : a
3) Is a bridge loan with a loan term of 12 months or less an eclusion from higher-priced mortgage loan?
a) Yes
b) No
Answer : a
4) You are planning to purchase a single-family home vailing higher-priced home loan option. Is this excluded in purchase list of higher-priced mortgage loan?
a) Yes
b) No
Answer : b
Explanation : Exclusions include construction loan, bridge loans with loan terms of 12 months or less, reverse mortgages, HELOC
5) Which among the following is a consumer protection statute passed by the U.S Congress in 1974 to help consumers become better shoppers for settlement services and eliminate kickbacks and referral fees that increases cost of settlement services?
a) TILA Act
b) RESPA Act
c) SOX Act
d) HIPAA Act
Answer : b
Explanation : Real Estate Settlement Procedures Act does take care of this requirement and helps consumers with home purchase
6) Which among the following items are included in RESPA completed application definition? Choose all that apply?
a) Borrowers name
b) Borrowers monthly income
c) Borrowers tax for past two years
d) Borrowers property details in a place outside USA if any
e) Borrowers SSN to obtain credit report
f) Property address
g) Estimate of value of the property
h) Loan Amount
Answer : a,b,e,f,g,h
7) Can a reverse mortgage payment money be used for a purpose of wedding expense?
a) Yes
b) No
Answer : a
Explanation : Reverse mortgage money can be used for any purpose
8) What does rescinding the loan mean?
a) Borrower should auction his personal belongings against home foreclosure
b) Borrower should break into his retirement fund including 401k, IRA to settle foreclosure
c) Borrower can void the loan as if it was never made
d) None of the above
Answer : c
9) You see an mortgage advertisement that says FHA financing available, 100% Veteran loan VA financing available, easy monthly payment option available. IS this a violation of TILA advertising terms ?
a) Yes
b) No
Answer: b
10) If the loan repayment tenure provides equal monthly payments as long as borrower lives and continues to occupy the home as a primary residence what is this called?
a) Fixed loan
b) Reverse mortgage Home equity Conversion Mortgage (HECMs)
c) VA Loan
d) FHA Loan
Answer : b
11) As per TILA REg Z new disclosures how well in advance is it required to notify before closing if there is a estimated figure change?
a) 3 days
b) 4 days
c) 5 days
d) 6 days
Answer : a
12) Which is a fixed-rate mortgage that offers borrowers a limited opportunity to reduce the interest rate one time during the course of the loan under certain conditions?
a) Variable option mortgage
b) ARM mortgage
c) Reduction option mortgage
d) FHA mortgage
Answer : c
13) The borrowers loan is current. The mortgage servicer is required to remove PMI on a high-risk loan. At what LTV can the mortgage servicer do this?
a) 80%
b) 77%
c) 100%
d) 78%
Answer : b
Explanation : As per the homeowners protection act (HPA), once the high-risk loan reached LTV of 77% the mortgage servicer should automatically remove PMI provided the borrower’s loan is in current standing
14) You are processing a FHA fixed-rate loan. The borrower wants to know details on whether they need to pay MIP. What is your answer?
a) A borrower availing FHA loan is required to pay MIP every month in form of monthly payments for a minimum of eleven years or the life of the loan based on the loan’s original LTV
b) The borrower is required to pay MIP for three years only
c) The borrower is not required to pay MIP in a FHA loan
d) Borrower need not have to pay MIP in 30year fixed FHA loan
Answer : a
15) A mortgage broker gets a business deal from a title insurance company. The title insurance company sends a computer system to the mortgage broker. The mortgage broker is processing loans and uses this business computer system to transmit information to the title insurance company. Is it legally acceptable as per RESPA?
a) Yes they are not at fault
b) Only title insurance company is at fault
c) Only mortgage broker is at fault
d) both mortgage broker and title insurance company are at fault
Answer : d
Explanation : As per RESPA computer is a thing of value that is used for business purposes which is unacceptable
16) A mortgage broker got a referral from a title insurance company. He sends a thank-you note to the title insurance company for referring a client. IS this violation os RESPA?
a) Yes. the mortgage broker is at fault
b) Yes. The title insurance company is at fault
c) Both are at fault
d) None of them are at fault as a thank-you note does not constitute a thing of any value
Answer : d
17) What is the value of a lenders title policy ?
a) It is 50% the amount of loan
b) It is less than amount of loan
c) It is equal to the amount of loan
d) None of tha above
Answer : c
18) A lender asks a borrower to obtain title insurance. Why is that?
a) A lender’s title policy is issues following an extensive title search by the insurance company. This consitutes reasonable assurance that title is clear and any losses from calims on title will be reimbursed. This policy amount is equal to loan amount
b) This policy can be marketed by lender
c) The claims can be made in case of theft in home
d) None of the above
Answer : a
19) Who is having oversight and supervisory authority over loan originators that does participate in NMLS, conduct background checks, write rules and regulations?
a) A state legislature
b) A federal legislature
c) A state licensing agency
d) Attorney at law
Answer : c
20) The title insurance company requests a mortgage lender to have his fee waived for a specific client. In return they offer to refer more clients in future. Who if any have violated RESPA here?
a) Both of them
b) None of them
c) Title company
d) Mortgage lender
Answer : a
Explanation : As per RESPA a thing of value comes into picture as soon as one of them has offered something of value. This is violation
21) The borrower family have been qualified for a loan amount of $250000 at two point broker fee. What is the dollar amount of the broker fee?
a) 5000
b) 500
c) 50000
d) 50
Answer : a