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2024 NMLS STUDY GUIDE
ACCURATE EXAM QUESTIONS WITH DETAILED VERIFIED ANSWERS
"FACTA requires that if a lender uses credit scores in making or arranging loans that it must provide certain information. Which of the following is not required? Select one: A. The range of possible credit scores under the model used B. If any factors adversely affected the consumer's score, up to 4 key factors that adversely affected the score (including inquiries) C. Suggestions on how to improve credit scores
D. The date the credit score was created - CORRECT ANSWER C. Suggestions on how to
improve credit scores" "Under TILA, a consumer lawsuit must begin within ___ year(s) of the actual violation? Select one: A. 1 B. 2 C. 3
D. 5 - CORRECT ANSWER A. 1"
"The Federal National Mortgage Association is which of the following? Select one: A. FEMA B. FHLMC C. GSE
D. Freddie Mac - CORRECT ANSWER C. GSE"
"Which of the following would restrict the CRA from supplying prescreened consumer report information on a potential borrower? Select one: A. Working for a licensed broker and not a licensed lender B. Attempting to order the report to just determine if the borrower is credit worthy C. The borrower had elected to opt out from being included on prescreened lists
D. The borrower had already allowed another mortgage loan originator to order the report -
CORRECT ANSWER C. The borrower had elected to opt out from being included on
prescreened lists"
"How often is a financial institution required to report data regarding its applications, origination, and purchases of home purchase loans, home improvement loans and refinancing? Select one: A. Every sixty (60) days B. Every six (6) months C. Every twenty-four (24) months
D. Every twelve (12) months or annually - CORRECT ANSWER D. Every twelve (12) months or
annually" "How many APRs are there for a loan? Select one: A. Two (2) APRs B. One (1) APR C. Three (3) APRs
D. It depends on the risk of the loan - CORRECT ANSWER B. One (1) APR"
"What type of loan requires reporting under the Home Mortgage Disclosure Act? Select one: A. HELOC's B. Loans purchased for the purpose of servicing those loans C. New construction loans
D. Vacant land loans - CORRECT ANSWER B. Loans purchased for the purpose of servicing
those loans" "What form does an Appraiser use to certify construction is complete? Select one: A. 1008 B. 1004 C. 4506T
D. 442 - CORRECT ANSWER D. 442"
"No creditor may make a residential mortgage loan unless the creditor first does which of the following? Select one: A. Establishes and maintains a net worth of a minimum of five hundred thousand dollars ($500,000) B. Posts a surety bond with the federal government in an amount not less than one million dollars ($1,000,000)
B. Twenty- four (24) months C. Five (5) years
D. The lesser of three (3) years or an audit date following a complaint - CORRECT ANSWER B.
Twenty- four (24) months" "Under GLB, mortgage lenders and brokers, check cashers, pay day lenders, and credit counselors are all examples of what? Select one: A. Depository Institutions B. Financial Institutions C. Regulatory Agencies
D. Banks - CORRECT ANSWER B. Financial Institutions"
"For the initial disclosures, what is the definition of "business day"? Select one: A. Any day other than Sunday and recognized legal holidays B. Monday through Friday C. Any day other than bank holidays D. A day where the creditor is customarily open to the public for carrying on substantially all the
creditor's business functions. - CORRECT ANSWER D. A day where the creditor is customarily
open to the public for carrying on substantially all the creditor's business functions" "Which of the following is included in the finance charge and must be calculated into the APR under TRID? Select one: A. Mortgage broker fee B. Wood destroying organism inspection (WDO) C. Credit report fee
D. Seller paid discount points - CORRECT ANSWER D. Seller paid discount points"
"What is it called when subprime products are pushed upon vulnerable or underserved groups for reasons other than credit quality? Select one: A. Steering B. Subprime lending C. Reverse Redlining
D. Contract knavery - CORRECT ANSWER C. Reverse Redlining"
"While trigger terms require disclosures of credit terms under TILA do general advertising terms also require disclosure? Select one: A. No if they do not refer to repayment period length or down payment cost B. Yes because they have to do with financing a home C. Yes because they are designed to lure consumers towards a product based on financing features D. Yes. Anytime general advertising terms are used for a product that is expensive enough to
typically require financing it requires additional disclosures Incorrect - CORRECT ANSWER B.
Yes because they have to do with financing a home" "Which of the following means relaxing more than one of the traditional underwriting standards, which potentially increases the risk of a loan default? Select one: A. Foreclosure Abuses B. Underwriting Abuses C. Usury
D. Risk Layering - CORRECT ANSWER D. Risk Layering"
"What was a major concern of the industry regulators when they authored the Interagency guidance for Non-Traditional Mortgages? Select one: A. Expanding Lending B. Risk Layering C. Mortgage Loan Originator Licensing
D. Alternative Documentation - CORRECT ANSWER B. Risk Layering"
"The Truth-In-Lending Act compels creditors (or brokers acting as a creditor agent) to disclose which of the following to borrowers who are refinancing a primary residence? Select one: A. That they are entitled to a three (3) business day right of rescission period B. That they are entitled to a home equity line of credit in lieu of a refinance C. That if their payment increases more than point five percent (.5%) over their existing rate that it is considered a high cost loan D. That they cannot refinance their loan again within a twelve (12) month period or it will be
considered churning which is illegal - CORRECT ANSWER A. That they are entitled to a three
(3) business day right of rescission period" "This type of notice is given to consumers who are not customers, in lieu of full initial notice, when the lender has no plans to share nonpublic personal information about them.
"Which of the following best describes the purpose of HMDA and Regulation C? Select one: A. To ensure the proper distribution and availability of credit to underserved geographic rural areas and neighborhoods B. To ensure the proper distribution and availability of credit to underserved geographic suburban areas and neighborhoods C. To ensure the proper distribution and availability of credit to underserved geographic urban areas and neighborhoods D. To ensure the proper distribution and availability of credit to underserved geographic all areas
and neighborhoods - CORRECT ANSWER C. To ensure the proper distribution and availability
of credit to underserved geographic urban areas and neighborhoods" "Which of the following would not be considered a non-traditional mortgage? Select one: A. A one (1) Year FHA ARM loan B. A seven (7) year balloon mortgage C. A payment option ARM loan
D. A thirty (30) year fixed rate loan - CORRECT ANSWER D. A thirty (30) year fixed rate loan"
"Which of the following must be reported to borrowers on the Loan Estimate as required under TILA (TRID)? Select one: A. Lenders percentage of closed loans (LPCL) B. Total Interest Percentage (TIP) C. Payment address
D. Servicer's name - CORRECT ANSWER B. Total Interest Percentage (TIP)"
"Which of the following best describes the importance of Ethics in the mortgage industry? Select one: A. If a mortgage agent or company behaves unethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole. B. If a mortgage agent or company behaves ethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole. C. If a mortgage agent or company behaves unethically, it is not only the reputation of that agent or company that is helped, but also the reputation of the mortgage industry as a whole. D. If a mortgage agent or company behaves unethically, it is only the reputation of that agent or
company that is harmed. - CORRECT ANSWER A. If a mortgage agent or company behaves
unethically, it is not only the reputation of that agent or company that is harmed, but also the reputation of the mortgage industry as a whole." "The Truth In Lending Act is which of the following Regulations? Select one: A. B B. C C. Z
D. X - CORRECT ANSWER C. Z"
"Any non-public, personal information a customer offers to a financial institution (paper, electronic, or otherwise) that the institution or its affiliates handles or maintains. Is considered to be: Select one: A. Confidential information B. Safeguarded information C. Private information
D. Customer information - CORRECT ANSWER D. Customer information"
"Which one of the following areas is not addressed by the agencies' guidance on nontraditional mortgage guidance? Select one: A. Portfolio and risk management practices B. Appraisal and fair market value practices C. Loan terms and underwriting standards
D. Consumer protection issues - CORRECT ANSWER B. Appraisal and fair market value
practices" "Which of the following is not covered in FACTA? Select one: A. Risk - based pricing notices B. Disclosure of credit scores C. Customer dispute resolution
D. Telemarketing/do not call - CORRECT ANSWER D. Telemarketing/do not call"
"According to the Telemarketing Sales Rule and the FCC's TCPA rule, when may telemarketing calls be placed? Select one: A. Between 8 am and 9 pm in the time zone being called B. Between 8 am and 8 pm in the time zone being called
"Which of the following need NOT be included on the credit score disclosure? Select one: A. Alternative consumer reporting agencies that may be used B. The range of possible credit scores under the model used C. The date the credit score was created
D. The consumer's current credit score - CORRECT ANSWER A. Alternative consumer
reporting agencies that may be used" "Which of the following reasons best describes why Congress chose to adopt the provisions of HMDA? Select one: A. Interest rates were approaching twelve percent (12%) and housing affordability was a problem B. The provisions of the Civil Rights Act were not being properly implemented C. Financial institutions had contributed to the decline of geographic areas by not providing financing
D. The legislation was adopted to complement the newly formed US Census Bureau - CORRECT
ANSWER C. Financial institutions had contributed to the decline of geographic areas by not
providing financing" "All of the following are part of what the term "unmarried' listed on the 1003 except which of the following? Select one: A. Never Married B. Divorced C. Separated
D. Widowed - CORRECT ANSWER C. Separated"
"One purpose of the HMDA and Regulation C is to provide the public with information that will help show whether financial institutions are serving what component of the neighborhoods and communities in which they are located? Select one: A. Ensuring that the housing credit needs of communities are met B. Making sure that local banking needs of neighborhoods are met C. Ensuring the real estate market remains liquid and affordable
D. Ensuring that housing counseling is made available to communities - CORRECT ANSWER A.
Ensuring that the housing credit needs of communities are met" "What is the transfer period window dictated by federal law in which no late fees can be charged to a borrower who sends his or her payment to the original servicer, rather than the new one,
before the payment's actual due date (including any grace period or late date allowed within the loan documents)? Select one: A. Fifteen (15) days B. Thirty (30) days C. Forty-five (45) days
D. Sixty (60) days - CORRECT ANSWER D. Sixty (60) days"
"Which of the following AUS is used by FHLMC? Select one: A. DU B. DO C. LTV
D. LPA - CORRECT ANSWER D. LPA"
"Under ECOA, entities making residential mortgage loans must maintain records or other data relating to those loans for how long? Select one: A. Two (2) years B. Twenty-five (25) months C. One (1) year
D. Five (5) years - CORRECT ANSWER B. Twenty-five (25) months"
"What federal law prohibits making a high cost loan to a customer without verifying the customer's ability to repay the loan? Select one: A. FCRA B. HMDA C. HOEPA
D. RESPA - CORRECT ANSWER C. HOEPA"
"The Red Flags Rule was enacted as part of what other legislation? Select one: A. TILA B. HMDA C. FACTA
D. RESPA - CORRECT ANSWER C. FACTA"
A. SCIB
B. Only APR disclosed on TILA C. CHARM
D. Fixed Rate Waiver - CORRECT ANSWER C. CHARM"
"Under the Guidance on Sub-Prime Mortgage Loans, the CSBS considers all of the following to be a predatory lending practice except: Select one: A. Basing a loan off the foreclosure value B. Refinancing a borrower repeatedly to collect more fee's C. Charging higher rates to risky buyers
D. Using fraud or deception to sell the loan - CORRECT ANSWER C. Charging higher rates to
risky buyers" "What will the interest rate adjust to for a 1st time a borrower's ARM loan on a 5/1 ARM with an initial rate of 3.25%, caps of 2/1/2, when at the time of the adjustment the index is 3% and the margin is 2.5%? Select one: A. 5.5% B. 6.25% C. 4.25%
D. 5.25% - CORRECT ANSWER D. 5.25%"
"What is an overall system of beliefs or values which help to decide right and wrong, good and bad? Select one: A. Ethics B. Morality C. Predatory lending
D. Rules to live by - CORRECT ANSWER B. Morality"
"In what decade did predatory lending increase significantly? Select one: A. 1960s B. 1970s C. 1980s
D. 1990s - CORRECT ANSWER D. 1990s"
"The borrower must notify the creditor (or broker) of any intent to rescind on a loan by midnight of the third business day after: Select one: A. Consummation of the loan B. Delivery of the right to rescind C. Delivery of all disclosures
D. Whichever of the above comes last - CORRECT ANSWER D. Whichever of the above comes
last" "Which of the following is not a risk associated with nontraditional mortgages? Select one: A. Risk layering B. Negative Amortization C. Payment shock
D. Fixed rate loans - CORRECT ANSWER D. Fixed rate loans"
"How long is the Loan Estimate good from the initial time it is provided? Select one: A. 3 days B. 10 days C. 7 days
D. 14 days - CORRECT ANSWER B. 10 days"
"The Dodd-Frank Act prohibits an appraiser providing an appraisal on a higher-priced loan from doing which of the following? Select one: A. Using comparable sales from a distance in excess of two (2) miles B. Providing an appraisal in which they did not perform a physical inspection of the interior C. Providing an appraisal in which they included comparables of foreclosed properties
D. Using comparable sales in excess of six (6) months old - CORRECT ANSWER B. Providing an
appraisal in which they did not perform a physical inspection of the interior" "Under ECOA, the length of time that adverse credit collection information may appear in a credit report is regulated by: Select one: A. Regulation D B. Regulation C C. Regulation B
D. Regulation X - CORRECT ANSWER C. Regulation B"
Select one: A. Amortization B. Appreciation C. Leverage
D. Hypothecation - CORRECT ANSWER C. Leverage"
"Under TILA an MLO is not required to provide a borrower with a LE if the lender turns down the loan within how many days? Select one: A. 3 B. 10 C. 15
D. 30 - CORRECT ANSWER A. 3"
"The Patriot Act broadened the scope of the 1970 Bank Secrecy Act to enhance which of the following objectives? Select one: A. The monitoring of funds being wired throughout the country B. Business lending and its subsequent financing of illegal activities C. Enhanced focus on terrorist financing and money laundering
D. The national monitoring of tax free institutions - CORRECT ANSWER C. Enhanced focus on
terrorist financing and money laundering" "The FCRA limits the circumstances in which credit reporting agencies may furnish a consumer report. Which of the following best describes an instance in which it is acceptable for a credit reporting agency to furnish a report? Select one: A. Upon the request of a lender B. Upon the request of the local police department C. In response to a court order or Federal Grand Jury Subpoena
D. Upon the request of a spouse of a consumer - CORRECT ANSWER C. In response to a court
order or Federal Grand Jury Subpoena" "What entity provided guidelines and rules for ECOA? Select one: A. HUD B. CFPB C. Federal Bank and Loan Board
D. Fannie Mae - CORRECT ANSWER B. CFPB"
"What Act is the TILA a part of? Select one: A. RESPA B. Community reinvestment act C. NVCC
D. Consumer Credit Protection Act - CORRECT ANSWER D. Consumer Credit Protection Act"
"The process that determines whether a loan applicant meets the necessary guidelines for qualification on a particular loan program is called what? Select one: A. Credit Verification B. Risk Evaluation C. Quality Control
D. Underwriting - CORRECT ANSWER D. Underwriting"
"When mortgage loan originators receive the credit information from the credit reporting agency (CRA), they must provide what to the borrower? Select one: A. The credit score and key factors of the report B. A disclose the credit score and how the borrower can improve scores by ten percent (10%) C. A disclosure on the costs and the required wait period before the consumer report can again be run D. A listing of the institutions to whom the mortgage loan originator will be furnishing the
information obtained - CORRECT ANSWER A. The credit score and key factors of the report"
"What is the term used for monthly payments that pay principal and accrued interest of the loan, with a large payment at the end of the term to pay off the remaining balance? Select one: A. Balloon Payment B. Equity Stripping C. Loan Flipping
D. Subprime Lending - CORRECT ANSWER A. Balloon Payment"
"If a borrower is denied a loan request due to the credit score not meeting lender's guidelines, what must be done next? Select one: A. The borrower must be verbally informed B. Mail a copy of credit with instructions to dispute scoring
D. Illegal and Unethical - CORRECT ANSWER C. Unethical but Legal"
"Which best describes the difference between ethics and morality? Select one: A. Morality is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions we take and the decisions we make that reflect that system of beliefs. Correct. (See Section Ethics & Predatory Lending: What are Ethics?) B. Morality is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions that others take and the decisions that they make that reflect that system of beliefs. C. Ethics is an overall system of beliefs or values which help us decide right and wrong, good and
bad. The concept of morality is often set forth by society and - CORRECT ANSWER A. Morality
is an overall system of beliefs or values which help us decide right and wrong, good and bad. The concept of morality is often set forth by society and can differ from one society to another. Ethics refers to the actions we take and the decisions we make that reflect that system of beliefs." "While a creditor/ broker does not have to advertise every single plan offered, it is unlawful to conceal what from consumers? Select one: A. The popularity of the plan being offered with delinquency rates B. More consumer- friendly plans C. The length of time the plan will be available
D. The geographic locations where the plan is available - CORRECT ANSWER B. More
consumer- friendly plans" "When using the sales comparison approach to arrive at an opinion of value, an appraiser looks at which of the following? Select one: A. Into the future to anticipate the homes appreciation B. At current prices to all homes on the market in a given neighborhood C. Into the recent past to analyze similar sales
D. Into the past to see what an owner originally paid for a property - CORRECT ANSWER C. Into
the recent past to analyze similar sales" "If an institution determines that it is subject to the Red Flags Rule, it must create which of the following?
Select one: A. An audit program that insures the identity of each applicant B. An Identity Theft Prevention Program C. A revised HMDA program that provides for a personal ID check
D. A modified ATM system requiring proof of personal identity - CORRECT ANSWER B. An
Identity Theft Prevention Program" "Which of the following would be considered an acceptable reason to waive the three (3) business day waiting period after a material change and redisclosure? Select one: A. The property secured by the loan will be offered up for sheriff's sale during the waiting period B. The borrower has to attend a funeral out of town C. The borrower has non- refundable tickets to a trip scheduled during the waiting period
D. If the loan funds after the first of the month, the borrower will owe more in interim interest -
CORRECT ANSWER A. The property secured by the loan will be offered up for sheriff's sale
during the waiting period" "Dodd-Frank introduced new appraisal independence regulations that require that on a higher- priced loan the appraiser does which of the following? Select one: A. Physically performs a property visit of the interior of the property B. Use comparable sales from no further away than two (2) miles from the subject C. Not use comparable sales older than three (3) months from the loan application
D. Not include any bank foreclosure properties in his or her evaluation - CORRECT ANSWER A.
Physically performs a property visit of the interior of the property" "What are the potential patterns, practices, or specific activities indicating the possibility of identity theft considered to be? Select one: A. FACTA violations B. FCRA violations C. Red flags
D. ECOA rules - CORRECT ANSWER C. Red flags"
"What rescission period are borrowers who are refinancing a primary residence, entitled to which must be disclosed by lenders according to the TILA? Select one: A. One (1) business day rescission period B. Two (2) business day rescission period
