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NMLS SAFE Exam Questions and Answers Practice Questions with
Solutions Newest Complete Questions And Correct Detailed
Answers| Already Graded A+
Where credit institutions originate loans - ANSWER-Primary Mortgage Market
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan - ANSWER-C. The
maximum the rate can increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate - ANSWER-B. The
borrower qualified at the buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
D.Religion - ANSWER-A. Age
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Claim against property held by one who is not the legal owner - ANSWER-Encrumbrance
Advertised term that requires additional disclosures - ANSWER-Trigger Term
An advertisement must be presented "clearly and conspicuously" to keep from being deceptive,
unfair, or otherwise violate a Commission rule - ANSWER-Advertising Disclosure
Extenuating circumstances such as "bona fide personal financial emergency - ANSWER-Waving
Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing - ANSWER-Right of Rescission
When creditors office is open to the public, a calendar working day except Sunday or a federal
holiday - ANSWER-Business Day
Financial information used for purposes of obtaining an extension of credit - ANSWER-
Application
The act of making new information known - ANSWER-Disclosure
Mission is to promote consumer protection and eliminate and prevent anticompetitive business
practices - ANSWER-FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products and services offered to consumers
- ANSWER-CFPB
Consumer Financial Protection Bureau
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Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about terms
and costs and standardizes the manner in which costs with borrowing are calculated and
disclosed - ANSWER-TILA
Truth in Lending Act
Interest charged on a loan for one or more days - ANSWER-Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - ANSWER-Annual Interest Rate Formula
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period - ANSWER-Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down the interest rate for the life of
the mortgage note - ANSWER-Permanent Buydown
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion until a
permanent interest rate is reached - ANSWER-2/1 Buydown
A form of pre-paid interest which effectively increases the yield on the loan above the amount of
the stated interest rate - ANSWER-Discount Point
An amount in addition to the Loan to Value, which simply represents the first position mortgage
or loan as a percentage of the property's value - ANSWER-CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - ANSWER-LTV
Loan to Value
Principal, Interest, Taxes, Insurance
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Refers to the components of a mortgage payment - ANSWER-PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts -
ANSWER-DIF
Agreement between the lender and the borrower to delay foreclosure - ANSWER-Forbearance
A permanent restructuring of the mortgage where one or more of the terms of a borrower's loan
are changed to provide a more affordable payment - ANSWER-Loan Modification
Legal process to collect debt on mortgaged property - ANSWER-Foreclosure
Document generated and signed by a mortgage lender, acknowledging that the borrower has paid
off the mortgage loan in full and the mortgage is not a lien on the property - ANSWER-
Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
ANSWER-Subordination Agreement
Provides homeowner proof the mortgage is paid off - ANSWER-Payoff Statement
Legal presumption that anything recorded in a public record can be known by anyone -
ANSWER-Constructive Note
Direct knowledge that one has of the property - ANSWER-Actual Note
Information that should compel a reasonable person to make further inquiries about some aspect
of the property - ANSWER-Inquiry Note
NMLS SAFE Exam Questions and Answers Practice Questions with
Solutions Newest Complete Questions And Correct Detailed
Answers| Already Graded A+
Where credit institutions originate loans - ANSWER-Primary Mortgage Market
When an ARM has rate caps of 5/2/6, the 6 refers to what?
A. The maximum rate increase at the initial adjustment
B. The start rate for the loan
C. The maximum the rate can increase over the life of the loan
D. The rate maximum the rate can decrease over the life of the loan - ANSWER-C. The
maximum the rate can increase over the life of the loan
When utilizing a temporary buydown to lower the interest rate on a FHA loan, which of the
following are correct
A. The borrower qualified at the note rate
B. The borrower qualified at the buydown rate
C. The rate cannot be more than 2% below the note rate
D. Seller or builder can pay the discount points to buydown the rate - ANSWER-B. The
borrower qualified at the buydown rate
All of the following are violations of the Fair Housing Act EXCEPT
A. Age
B. National Origin
C. Disability
D.Religion - ANSWER-A. Age
,2|Page
Claim against property held by one who is not the legal owner - ANSWER-Encrumbrance
Advertised term that requires additional disclosures - ANSWER-Trigger Term
An advertisement must be presented "clearly and conspicuously" to keep from being deceptive,
unfair, or otherwise violate a Commission rule - ANSWER-Advertising Disclosure
Extenuating circumstances such as "bona fide personal financial emergency - ANSWER-Waving
Right of Rescission
Right that borrowers have to cancel a loan or line of credit with a lender within three days of
closing - ANSWER-Right of Rescission
When creditors office is open to the public, a calendar working day except Sunday or a federal
holiday - ANSWER-Business Day
Financial information used for purposes of obtaining an extension of credit - ANSWER-
Application
The act of making new information known - ANSWER-Disclosure
Mission is to promote consumer protection and eliminate and prevent anticompetitive business
practices - ANSWER-FTC
Federal Trade Commission
Regulatory agency charged with overseeing financial products and services offered to consumers
- ANSWER-CFPB
Consumer Financial Protection Bureau
,3|Page
Enacted 1968 promotes the informed use of consumer credit by requiring disclosures about terms
and costs and standardizes the manner in which costs with borrowing are calculated and
disclosed - ANSWER-TILA
Truth in Lending Act
Interest charged on a loan for one or more days - ANSWER-Per Diem Interest
Principal (X) Interest Rate = Annual Interest Rate - ANSWER-Annual Interest Rate Formula
Mortgage where the mortgagor is only required to pay off the interest that arises from the
principal that is borrowed for a set period - ANSWER-Interest Only Mortgage
Borrower chooses to pay additional "discount points" to buy down the interest rate for the life of
the mortgage note - ANSWER-Permanent Buydown
Used on fixed rate loans over two years
Set of two initial temporary-start interest rates that increase in stair-step fashion until a
permanent interest rate is reached - ANSWER-2/1 Buydown
A form of pre-paid interest which effectively increases the yield on the loan above the amount of
the stated interest rate - ANSWER-Discount Point
An amount in addition to the Loan to Value, which simply represents the first position mortgage
or loan as a percentage of the property's value - ANSWER-CLTV
Combined Loan to Value
Ratio of a loan to the value of an asset purchased - ANSWER-LTV
Loan to Value
Principal, Interest, Taxes, Insurance
, 4|Page
Refers to the components of a mortgage payment - ANSWER-PITI
Housing to Debt
Ratio that measures an individual's ability to manage monthly payment and repay debts -
ANSWER-DIF
Agreement between the lender and the borrower to delay foreclosure - ANSWER-Forbearance
A permanent restructuring of the mortgage where one or more of the terms of a borrower's loan
are changed to provide a more affordable payment - ANSWER-Loan Modification
Legal process to collect debt on mortgaged property - ANSWER-Foreclosure
Document generated and signed by a mortgage lender, acknowledging that the borrower has paid
off the mortgage loan in full and the mortgage is not a lien on the property - ANSWER-
Satisfaction of Mortgage Letter
When two mortgages are on a property, this specifies which mortgage takes precedence -
ANSWER-Subordination Agreement
Provides homeowner proof the mortgage is paid off - ANSWER-Payoff Statement
Legal presumption that anything recorded in a public record can be known by anyone -
ANSWER-Constructive Note
Direct knowledge that one has of the property - ANSWER-Actual Note
Information that should compel a reasonable person to make further inquiries about some aspect
of the property - ANSWER-Inquiry Note
