TheoryNMLS Mortgage Loan
Practice Test
Practice for the NMLS Mortgage Loan with realistic exam questions, full explanations, timed mock exams and progress tracking — fully offline.
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NMLS Mortgage Loan exam — full Q&A walkthrough
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30 free NMLS Mortgage Loan questions
Sampled across every topic area — not just the first page. Try them as a quiz or flip them as flashcards.
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Federal Mortgage Law
What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?
Correct — B. RESPA is a consumer-protection statute focused on settlement-cost transparency and on banning kickbacks and unearned fees for the referral of settlement-service business. It does not cap interest rates. -
Federal Mortgage Law
A title company gives a loan originator a $200 gift card each time the originator refers a borrower for title insurance. Under RESPA, this arrangement is:
Correct — A. RESPA Section 8 bans giving or accepting any thing of value pursuant to an agreement to refer settlement-service business. There is no de-minimis dollar exception and disclosure does not cure an illegal kickback. -
Federal Mortgage Law
The Truth in Lending Act (TILA) is primarily designed to:
Correct — C. TILA, implemented by Regulation Z, promotes the informed use of consumer credit by requiring meaningful disclosure of credit terms, most notably the Annual Percentage Rate (APR) and finance charge. -
Federal Mortgage Law
The Annual Percentage Rate (APR) differs from the note rate because the APR:
Correct — B. The APR expresses the cost of credit as an annual percentage that folds in interest plus prepaid finance charges (such as certain origination fees and mortgage insurance), so it is typically higher than the note rate. -
Federal Mortgage Law
Under TILA, the right of rescission applies to which type of transaction?
Correct — C. The TILA right of rescission applies to non-purchase loans secured by the consumer's principal dwelling (e.g., refinances with a new creditor, HELOCs). Purchase-money loans are not rescindable. -
Federal Mortgage Law
How long is the TILA rescission period for a qualifying refinance on a principal residence?
Correct — C. The borrower may rescind until midnight of the third business day after the latest of consummation, delivery of the material TILA disclosures, or delivery of the two copies of the rescission notice. -
Federal Mortgage Law
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions on the basis of which factor?
Correct — A. ECOA, implemented by Regulation B, bars discrimination based on the listed protected classes. Legitimate creditworthiness factors such as credit score and DTI may still be used. -
Federal Mortgage Law
Under ECOA/Regulation B, when a lender denies a loan application, it must provide the applicant with:
Correct — B. Regulation B requires an adverse-action notice that gives the principal reasons for the credit denial (or tells the applicant how to request them), generally within 30 days. -
Federal Mortgage Law
Under ECOA, a creditor evaluating an individual credit application from a qualified applicant may NOT:
Correct — D. ECOA prohibits requiring a spouse's signature when the applicant individually qualifies; a creditor may not condition credit on a spouse co-signing absent a legitimate need such as securing jointly owned collateral. -
Federal Mortgage Law
The Home Mortgage Disclosure Act (HMDA) requires covered lenders to:
Correct — B. HMDA requires covered institutions to collect, report, and disclose loan-level data (including race, ethnicity, and sex of applicants) so regulators can detect discriminatory patterns and assess community credit needs. -
Federal Mortgage Law
HMDA demographic data on race, ethnicity, and sex is collected primarily to:
Correct — C. HMDA's government-monitoring information is used to detect potential discrimination and redlining; it must not be used in the credit decision itself. -
Federal Mortgage Law
The SAFE Act requires mortgage loan originators to be:
Correct — A. The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act mandates that MLOs be licensed (non-bank) or registered (depository) and obtain a unique NMLS identifier. -
Federal Mortgage Law
Each mortgage loan originator is assigned a unique identifier through the NMLS. This number:
Correct — B. The NMLS unique identifier is permanent, follows the MLO across employers and states, and must be disclosed on residential mortgage loan applications and certain documents. -
Federal Mortgage Law
Under the SAFE Act, the minimum pre-licensing education for a new state-licensed MLO includes how many hours?
Correct — C. The SAFE Act requires at least 20 hours of NMLS-approved pre-licensing education, including 3 hours of federal law, 3 hours of ethics, and 2 hours of nontraditional mortgage lending. -
Federal Mortgage Law
The SAFE Act requires a licensed MLO to complete how many hours of continuing education annually?
Correct — B. Each year a state-licensed MLO must complete 8 hours of CE: 3 hours federal law, 2 hours ethics, 2 hours nontraditional mortgage products, and 1 hour of elective. -
Federal Mortgage Law
To pass the NMLS national SAFE test component, a candidate must score at least:
Correct — C. A minimum score of 75% is required to pass the SAFE MLO test. -
Federal Mortgage Law
Under Regulation Z, a 'higher-priced mortgage loan' (HPML) generally triggers a requirement to:
Correct — B. For HPMLs secured by a first lien on a principal dwelling, Regulation Z generally requires the creditor to escrow for taxes and insurance for at least five years (subject to exemptions). -
Federal Mortgage Law
The Home Ownership and Equity Protection Act (HOEPA) applies to certain high-cost mortgages and:
Correct — A. HOEPA (a TILA amendment) targets high-cost loans, banning or limiting features like balloon payments, prepayment penalties, and default interest, and mandating pre-loan counseling and added disclosures. -
Federal Mortgage Law
The Fair Credit Reporting Act (FCRA) governs:
Correct — C. FCRA regulates how consumer reporting agencies collect, share, and use consumer credit information and gives consumers rights to access and dispute their reports. -
Federal Mortgage Law
Under FCRA, if a lender offers credit on terms less favorable than its best terms because of information in a credit report, it generally must provide a:
Correct — B. FCRA's risk-based pricing rule requires a notice when a consumer receives materially less favorable terms based on a credit report, alerting them to check their report. -
Federal Mortgage Law
The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to:
Correct — A. GLBA requires financial institutions to explain their information-sharing practices, give customers privacy notices, and safeguard nonpublic personal information under the Safeguards and Privacy Rules. -
Federal Mortgage Law
A mortgage company calling consumers to solicit refinances must comply with the Telephone Consumer Protection Act and the:
Correct — B. Telemarketing solicitations must respect the National Do-Not-Call Registry; calling a registered number without an exemption (such as an established business relationship) violates TCPA/Telemarketing rules. -
Federal Mortgage Law
Regulation Z's loan originator compensation rule prohibits paying an MLO based on:
Correct — D. To curb steering, Reg Z bars compensating an MLO based on a loan's terms or conditions (e.g., rate or points). Compensation may be based on loan amount or a fixed fee, but not on terms. -
Federal Mortgage Law
Under Regulation Z, in a single transaction an MLO generally may NOT:
Correct — A. The dual-compensation prohibition bars an MLO from being paid by the consumer and also by the creditor or any other party on the same transaction. -
Federal Mortgage Law
The Ability-to-Repay (ATR) rule under the Dodd-Frank Act and Regulation Z requires a creditor to:
Correct — C. The ATR rule requires creditors to consider and verify factors such as income, assets, debts, and DTI to reasonably conclude the borrower can repay before originating most residential mortgages. -
Federal Mortgage Law
A 'Qualified Mortgage' (QM) under Regulation Z generally prohibits which feature?
Correct — B. QMs cannot have risky features such as negative amortization, interest-only periods, balloon payments (with limited exceptions), or terms over 30 years, and limit points and fees. -
Federal Mortgage Law
Under RESPA, when servicing of a mortgage is transferred, the borrower must receive a:
Correct — B. RESPA requires the transferor to send a goodbye letter and the transferee a hello letter, generally with at least 15 days' advance notice, identifying the new servicer. -
Federal Mortgage Law
Under RESPA, the maximum escrow cushion a servicer may generally require is:
Correct — C. RESPA limits the escrow cushion to two months of escrow payments, equal to one-sixth of the estimated total annual disbursements from the account. -
Federal Mortgage Law
Regulation Z generally applies to consumer credit when which of the following is true?
Correct — A. Reg Z covers consumer credit for personal/family/household purposes that has a finance charge or is payable in more than four installments; business, commercial, and agricultural credit are generally exempt. -
Federal Mortgage Law
The Mortgage Disclosure Improvement Act (MDIA) established a waiting period requiring that consummation occur no earlier than:
Correct — B. MDIA requires early disclosures within 3 business days of application and prohibits consummation until the 7th business day after those disclosures are provided, with a 3-day re-disclosure rule for APR changes.
NMLS Mortgage Loan sample questions
Tap any question below to reveal the answer and a plain-English explanation.
Federal Mortgage Law The federal Fair Housing Act prohibits discrimination in housing-related transactions based on:
A. Credit score and income
B. Employment history
C. Race, color, religion, sex, national origin, familial status, and disability ✓
D. Loan-to-value ratio
Correct — C. The Fair Housing Act protects seven classes in housing and residential lending; note it adds familial status and disability beyond ECOA's list.
General Mortgage Knowledge In a mortgage transaction, the promissory note is the document that:
A. Pledges the property as security for the loan
B. Contains the borrower's promise to repay the debt and the loan terms ✓
C. Transfers title to the lender
D. Lists the closing costs
Correct — B. The promissory note is the borrower's written promise to repay, stating the amount, rate, and terms. The mortgage or deed of trust is the separate instrument that pledges the property as collateral.
Mortgage Products & Programs An FHA loan is:
A. A loan made directly by the federal government
B. A loan insured by the Federal Housing Administration and made by approved lenders ✓
C. A loan only for veterans
D. A loan with no mortgage insurance
Correct — B. FHA does not lend; it insures loans made by FHA-approved lenders, which lets lenders offer lower down payments and more flexible qualifying to borrowers.
Loan Origination Process The standard residential loan application form used in the industry is commonly known as the:
A. HUD-1
B. Uniform Residential Loan Application (Form 1003) ✓
C. Closing Disclosure
D. Form 1098
Correct — B. The Uniform Residential Loan Application (URLA / Fannie Mae Form 1003) collects the borrower's personal, employment, income, asset, and property information to begin underwriting.
Ethics & Fraud Steering a borrower into a loan with less favorable terms to increase the originator's compensation is:
A. A permitted sales technique
B. Prohibited and a violation of loan originator compensation rules ✓
C. Required by RESPA
D. Only an issue for adjustable-rate loans
Correct — B. Steering a borrower toward a costlier loan to boost the MLO's pay violates Regulation Z's anti-steering and loan-originator compensation provisions, which protect consumers from conflicts of interest.
Uniform State Content The Nationwide Multistate Licensing System (NMLS) serves to:
A. Set interest rates nationwide
B. Provide a single system for licensing and registering mortgage companies and loan originators across states ✓
C. Insure mortgage loans
D. Appraise properties
Correct — B. The NMLS is the system of record for state-licensed and federally registered MLOs and companies, streamlining licensing, renewals, and regulatory oversight across jurisdictions.
Disclosures (LE/CD) The TRID rule integrated which earlier disclosures into the Loan Estimate and Closing Disclosure?
A. The 1003 and the appraisal
B. The TILA disclosure and the RESPA Good Faith Estimate/HUD-1 ✓
C. The W-2 and the credit report
D. The promissory note and the deed of trust
Correct — B. TRID (TILA-RESPA Integrated Disclosure) combined the old TILA disclosure and GFE into the Loan Estimate, and the final TILA and HUD-1 into the Closing Disclosure.
Mortgage Math A home appraises for $250,000 and the buyer borrows $200,000. What is the loan-to-value ratio?
A. 75%
B. 80% ✓
C. 85%
D. 90%
Correct — B. LTV = loan / value = 200,000 / 250,000 = 0.80 = 80%. At exactly 80%, PMI is generally not required on a conventional loan.
About the NMLS Mortgage Loan test
Built around Finance & Accounting, this NMLS Mortgage Loan question bank mirrors the real exam format instead of guessing at trick questions. Work through the free sample, read every explanation, then move on to full timed mock exams once you're ready.
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Topics in this question bank
The core topics and terminology you'll be tested on
Rules, standards and best-practice procedures
Real-world scenarios and how to respond
Common mistakes and how to avoid them
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