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NMLS Mortgage Loan Origination (SAFE MLO) - MLO Exam Practice Test

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Total 232 questions

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Question 1

Which of the following statements is true regarding a fixed-rate mortgage?

A. The rate is fixed for 15 years and is followed by a single balloon payment. B. The rate is fixed for 30 years with no adjustment. C. The rate is fixed for 10 years and then adjusts every year thereafter. D. The rate is fixed for 5 years and is followed by a step-up for 5 years.

Discussion 0

Correct Answer: B Vote an answer

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Question 2

Which of the following statements describes an advantage of a purchase money second mortgage?

A. The borrower's loan closes faster than a regular mortgage. B. The borrower avoids paying into the escrow account. C. The borrower pays two mortgage payments. D. The borrower avoids paying private mortgage insurance

Discussion 0

Correct Answer: D Vote an answer

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Question 3

A borrower visits a mortgage loan originator (MLO) for Mortgage ABC to discuss getting a home equity line of credit (HELOC) loan from Bank LMN. The MLO encourages the borrower to apply with Bank XYZ instead because ABC does not provide HELOC loans. When the borrower submits an application directly to XYZ, XYZ pays the MLO $100 from the 1% origination fee that it collected from the borrower. Is this fee permissible?

A. The fee is permitted if the fee is disclosed on the final settlement statement. B. The fee is permitted as the MLO performed origination services for the borrower. C. The fee is not permitted as the MLO did not perform any actual origination services for the borrower, unless the fee was paid directly by the borrower. D. The fee is not permitted as the MLO did not perform any actual origination services for the borrower.

Discussion 0

Correct Answer: D Vote an answer

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Question 4

A person paying or receiving a portion of a fee that has not been earned in connection with the settlement statement is which of the following practices?

A. Third-party fees B. Splitting fees C. Actual fees D. Average fees

Discussion 0

Correct Answer: B Vote an answer

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Question 5

A real estate broker overhears her buyer discussing what she believes to be illegal activities while on a phone conversation. The real estate broker notifies the buyer's mortgage loan originator (MLO) that the borrower may be using illegally acquired funds as down payment for this property. The MLO decides to report some suspicious cash deposit transactions found in the borrower's bank records. Under the Patriot Act, the MLO may discuss the filing of this report with which of the following parties, if any?

A. All parties involved in the transaction B. The buyer's agent C. His loan processor D. The report Is not permitted to be discussed with any parties involved in the transaction.

Discussion 0

Correct Answer: D Vote an answer

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Question 6

The debt-to-income analysis should assess a borrower's total monthly housing related payments as a percentage of the:

A. net monthly income B. gross monthly income. C. loan amount. D. taxable income.

Discussion 0

Correct Answer: B Vote an answer

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Question 7

The purpose of the Patriot Act is to deter and punish:

A. Lending to foreign nationals B. Mortgage broker fraud C. Appraisal fraud D. Terrorist acts

Discussion 0

Correct Answer: D Vote an answer

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Question 8

A mortgage loan originator (MLO) received a salary of 1% per loan plus a bonus of $5,000 for closing the most loans in the office last year. In addition, he received a trip to Hawaii based on closing 100 or more transactions with an interest rate of 5% or higher. Is the MLO's compensation prohibited?

A. His compensation is permitted as compensation only includes salary and bonuses and his salary and bonus is not based on loan terms. B. His compensation is not permitted as compensation includes all financial incentives and his trip was awarded based on closing the most loans with certain loan terms. C. His compensation is permitted as compensation only includes salary and his salary is not based on loan terms. D. His compensation is not permitted as compensation only includes salary and his salary is based on loan terms.

Discussion 0

Correct Answer: B Vote an answer

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Question 9

Which of the following responses best defines a red flag?

A. Proof that specific activity shows identity theft B. A pattern, practice or specific activity that indicates the possible existence of identity theft C. Effective oversight by lenders to prevent borrower identity theft D. Reasonably foreseeable risk taken by borrowers to prevent identity theft

Discussion 0

Correct Answer: B Vote an answer

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Question 10

A lender is permitted to accept the employment information provided by the borrower on the initial loan application without asking for a letter of explanation in which of the following circumstances?

A. The borrower has been employed by the same company for three years. B. The borrower lacks a history in an industry that requires specific skills. C. A recent college graduate holds a high-level position in the organization. D. The residence is more than 120 miles from the work location on a refinance.

Discussion 0

Correct Answer: A Vote an answer

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Question 11

A loan applicant inquires about refinancing his primary residence. He reports receiving a competitor's quote of a 3.5% interest rate with no points. The mortgage loan originator (MLO) discovers that the best interest rate available at this time is 3.75% with no points. To get the applicant a 3.5% interest rate, the applicant needs to pay a 1.00% discount point. Which of the following interest rates is the MLO permitted to offer to the applicant?

A. 3.25% interest rate with no points B. 3.00% interest rate with a 0.50% discount point C. 3.50% interest rate with no points D. 3.50% interest rate with a 1.00% discount point

Discussion 0

Correct Answer: D Vote an answer

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Question 12

Which of the following statements defines the term "business day" in a mortgage rescission under the Truth in Lending Act (TILA)?

A. Any days except Saturdays and Sundays B. Any days that employees may access the office to work C. Every day except Sunday and legal holidays D. Every day from 9 a.m. to 5 p.m.

Discussion 0

Correct Answer: C Vote an answer

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Total 232 questions

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