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This exam contains 120 questions.
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1. 
An ARM has a 6% start rate and is locked for three years. Its adjustment caps are set at 2/1/5. Assuming worst-case scenario, in what year would this loan reach its rate ceiling?

2. 
What is a possible consequence of a short sale?

3. 
A float agreement allows:

4. 
A mortgage processor realizes that an applicant has provided duplicate copies of his paystub. Not needing them, she disposes of the duplicates in her standard trash receptacle. What regulation did she violate?

5. 
A _______ settlement is a settlement whereby funds are issued immediately after closing or, when applicable, immediately after rescission expires. A/an _______ settlement is a settlement whereby funds are issued at the latter of when the documents have been recorded into public record or the rescission expires.

6. 
For what does the NMLS stand?

7. 
A conventional mortgage balance is $275,437 and pays off on the twentieth calendar day of the month. Assuming that the current month's payment was credited on the first and the loan carries a per diem of $64.52, what is the loan's final payoff?

8. 
An individual engages in the business of residential loan origination any time when s/he:

9. 
What constitutes a "covered account" as referenced under the FTC's Red Flags Rule?

10. 
Sally Sprystep is a 63-year-old widow with significant equity in her home. She needs to finance some minor home repairs and supplement her social security to pay her bills. What type of loan might be her best option?

11. 
If a state licensing authority grants a license to an individual who it later learns committed a crime that would normally disqualify the individual from licensing, the state authority:

12. 
All of the following homeowner obligations would be found in a mortgage contract except:

13. 
All of the following loans must contain a right to rescind except:

14. 
A title insurance company gives a computer to a mortgage broker. The computer is used to transmit electronic documents from the mortgage broker's office to the title insurance company. Who is in violation of RESPA?

15. 
Penny Producer receives two voicemails. The first is from an individual inquiring about a $35,000 mortgage. The second caller requests information about a $350,000 loan. Penny calls the callers back in the order in which the calls were received. A week later Penny’s manager is notified by a representative from the Federal Trade Commission that Penny passed a compliance check. The process by which federal regulators check on the behavior of mortgage loan originators is referred to as:

16. 
At Sally and Jason's primary residential refinance settlement on June 25, 2025, Tumultuous Title issued one copy of the RoR document to each of them. What happens next?

17. 
What is one of the primary defenses against fraud?

18. 
If a construction worker earns $3,800 monthly, what is his weekly income?

19. 
Which of the following constitutes a registered loan originator?

20. 
Of which of the following third-party service providers would a lender be prohibited from insisting on the specific use?

21. 
According to fair lending laws, age may be considered a factor in denying a loan application if:

22. 
A state-licensed loan originator:

23. 
Which of the following is a consequence of exercising one’s right to rescind?

24. 
Under FACTA, what must a financial institution do?

25. 
The SAFE Act creates standard guidelines for state legislation to regulate loan originators. In order to meet the standards established under the SAFE Act, state licensing laws must include all of the following except:

26. 
What terminology requires an advertiser to disclose the fine print?

27. 
Which of the following would not be paid through a borrower's escrow account?

28. 
A lien on real property, documented by a signed mortgage contract, gives the lender the right to:

29. 
All of the following are true concerning mortgage fraud except:

30. 
POC stands for:

31. 
The FBI Mortgage Fraud Warning Notice cautions that:

32. 
How could a home be sold when one of the owners is incarcerated?

33. 
Which of the following documents must be issued in accordance with FACTA?

34. 
In a judicial foreclosure:

35. 
An initial ARM rate that, at the time of rate lock, is less than three percent below FIAR is a/an:

36. 
For which of the following reasons would it be permissible to refuse to take an application from a potential borrower?

37. 
Under FACTA, which of the following is not a CRA obligation?

38. 
The maximum LTV permitted through an FHA cash-out refinance is:

39. 
In the practice of warehouse lending, what is used to protect the lender against fraudulent activity?

40. 
A home is purchased for the appraised value of $165,000. The customer puts down 10% on his conventional loan. How much more will the customer have to pay in principal for the PMI to be automatically removed assuming the loan remains consistently current?

41. 
A mortgage lender spends $75.50 on a credit report for which it charges the applicant $125.00. To what does this refer and what regulation, if any, does it violate?

42. 

The initial Loan Estimate (LE) must be issued within 

_______
general business days of receiving a loan application and the non-interest-related fees appearing on it must be good for a minimum of 
_______
business days from the date it was presented or mailed to the borrower.

43. 
Fumbling Finance originates the purchase of a three-family primary residential property. Prior to closing, they issue one Closing Disclosure to the primary borrower. What regulation, if any, did Fumbling Finance violate?

44. 
All but which of the following is a net tangible benefit that justifies refinancing?

45. 
Nathan Neuhaus wishes to own a newly-built home. He needs to secure financing along with a builder to build it. His best option would be to pursue a/an:

46. 
What is the number appearing on the COE that indicates full VA entitlement?

47. 
A 21-year old applicant presents a 401(k) statement reflecting an available balance of $75,000. During the application, he discloses a $15,000 loan against the 401(k) that he finalized after the presented statement’s issuance. At what value do you reflect the 401(k)?

48. 
What was the primary consideration for prohibiting loan originators from earning YSP as compensation?

49. 
Which of the following is not a part of mortgage licensee background checks?

50. 
All but which of the following constitutes duties for which a mortgage license is not required?

51. 
When you divide PITI by the amount of a borrower’s monthly gross income, you are calculating the:

52. 
Which loan(s) require(s) the issuance of the Homeownership Counseling Disclosure?

53. 
Which of the following is not an event that triggers an automatic reissuance of the Closing Disclosure?

54. 
A disclosure is issued on Wednesday in response to a mortgage application taken by a bank on the previous Friday. Which disclosure was issued?

55. 
A unique identifier:

56. 
Your customer inquires about applying for a reverse mortgage. During the interview you learn that, although he is 64 years old, his girlfriend, who is also listed on the deed, is 26. What do you advise?

57. 
All, but which, are types of Qualified Mortgages?

58. 
The reconveyance clause:

59. 
Your mortgage applicant presents a picture ID at the time of application that does not closely resemble him. What action, if any, must you take?

60. 
An applicant earns $1,000 per month in social security disability. This income is untaxed. With what amount do you credit her?

61. 
An originator uses the services of a contract processor who charges $500 per file. The fee disclosed to the borrower for processing is $800, the difference of which the originator keeps for himself ($300). This is:

62. 
Francis Formerrenter is closing on the purchase of her first single-family home which she intends to use as her primary residence. If the closing occurs on a Monday, on what day does her right of rescission end?

63. 
When must a Victim's Notice of Rights be issued to a consumer?

64. 
All of the following are responsibilities of the closing agent except:

65. 
Which of the following is an example of a standard ARM?

66. 
Shady Deals decides to decline a mortgage application because the applicant, who happens to earn her income through public assistance, cannot demonstrate that she is going to continue receiving the income for at least 36 more months. The adverse action notice that Shady Deals sends to the applicant simply states that the reason for declining her application was, “Receipt of public assistance.” Which regulation, if any, did Shady Deals violate?

67. 
The Mortgage Acts and Practices Rule (MAPs) applies to those primarily governed by ...

68. 
An option loan affords all but which of the following four payment options:

69. 
Honest Abe Lending retains secret shoppers to pose as customers to check on whether its loan originators remain compliant throughout the lending process. Honest Abe Lending is conducting:

70. 
A property’s purchase price is $456,000. The home appraises for $475,000. The loan amount is $315,000. What is the LTV?

71. 
An interest-only loan:

72. 
What is the borrower's total PITI if they borrow $250,000 at 6% interest on a 30-year fixed rate loan (the monthly payment factor is $600 for every $100,000 borrowed), their property taxes are $900 per quarter, their hazard insurance is $2,000 every six months and their mortgage insurance premium is $125 per month?

73. 
What is the maximum fine that a State Commissioner may issue?

74. 
An applicant earns $575 bi-weekly. What is her annual income?

75. 
A barista earns $1,750 per month at a coffee shop. She is paid bi-weekly and works a 40-hour work week. What is her bi-weekly rate of pay?

76. 
The term encumbrance means:

77. 
Which of the following is not a type of reverse mortgage?

78. 
When considering insurance, all of the following are included in the PITI except:

79. 
Which of the following would be prohibited by ECOA?

80. 
Alan and his wife Raeghan are pursuing a cash-out refinance of their primary residential, three family property. Although they're not obligated to the debt, for estate-planning purposes, Alan's parents are both listed on the property's title. Who, if anyone, must be issued the right of rescission documents at settlement?

81. 
Which of the following fees is not considered when calculating the APR?

82. 
Matthew wants to refinance his first mortgage but leave his HEQ alone. What must Matthew pursue?

83. 
Which of the following is not a federal banking agency?

84. 
Which of the following constitutes a valid change of circumstance under TRID?

85. 
A buyer pays $200,000 for a home and gets a fixed-rate loan from his lender at 5.75%. He puts $40,000 down. What is the LTV on this loan and does the buyer have to pay PMI?

86. 
Appraiser Independence Requirements (AIR) state that lenders must:

87. 
Which of the following would not constitute a red flag?

88. 
An ARM has a 4% start rate at its time for the first adjustment to be made. It has a periodic CAP of 1% and a lifetime CAP of 5%. Assuming worst-case scenario, what would the new rate be after the first adjustment?

89. 
What is an "active duty" alert?

90. 
A customer applies for a loan amount of $250,000. What would his minimum down payment have to be in order to avoid PMI?

91. 
Deferment is to _______ as forbearance is to _____.

92. 
Which of the following would constitute a red flag?

93. 
In January, 2023, Wanda Whiner unsuccessfully lodged a CFPB complaint against Marvelous Mortgage alleging that they declined her mortgage application without appropriate cause. In March, 2024, Wanda called Marvelous Mortgage to reapply. Having heard all about the issue that occurred back in January, 2023, Marvelous Mortgage’s MLO Lenny Loanoriginator, desiring to avoid any potential issues, refused to work with Wanda referring her elsewhere. This time, Wanda’s complaint to the CFPB had merit. What regulation did Lenny violate by refusing to work with Wanda?

94. 
Which of the following statements is considered permissible when communicating with an appraiser?

95. 
A loan originator answers a telephone call from a potential client who requests financing on a property located in a state in which her company is licensed but she is not. What may she do?

96. 
When is it allowable for an originator to provide a real estate agent with a $50 gift card in exchange for a referral?

97. 
Nontraditional credit includes all of the following except:

98. 
What is the key difference between a lien theory state and a title theory state?

99. 
Which form of mortgage fraud results in much greater losses to the mortgage industry?

100. 
At a mortgage closing, the settlement agent issues a single copy of the right of rescission to all parties. What is the rescission period?

101. 
Which of the following individuals would not be required to possess a unique identifier?

102. 
A title search typically involves each of the following except:

103. 
When a credit report shows only a balance on a revolving debt and does not include a payment, the loan originator should:

104. 
A firefighter earns $56 per hour plus a 7% shift differential. What is her hourly rate of pay?

105. 
A Realtor calls an attorney and asks him to represent her client for free. In turn, the Realtor will refer other paying clients to that attorney. The attorney agrees. Who, if anyone, has violated RESPA?

106. 
A mortgage originator sends a thank-you note to a Realtor for referring a client. Who, if anyone, violated RESPA?

107. 
Collateralizing something while allowing the debtor to retain possession of that item is referred to as ...

108. 
A bridge loan must be repaid …

109. 
One primary purpose of securitization is:

110. 
Which of the following is true regarding the funding of a wet-closing-state refinance?

111. 
Of the following individuals, which one is exempt from licensure as an MLO?

112. 
What is the primary purpose of title insurance?

113. 
Referring to an adjustable interest rate as fixed in an advertisement violates which regulation?

114. 
According to RESPA Section 8, which is an acceptable reason for compensation?

115. 
An ARM is at the start rate of 3.75%. The index is currently 1.5% and the margin is 3.5%. The caps are 2/6 and the interest rate is at its first adjustment period. To what rate does the interest rate adjust?

116. 
Which of the following is permitted as a result of a referral?

117. 
Not considering any required up-front mortgage insurance premium, the maximum LTV through FHA purchase financing is:

118. 
A right of rescission may be waived ...


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