NMLS SAFE ACT MLO Exam 2024/2025
WITH QUESTIONS AND ALL CORRECT
ANSWERS
What is the purpose of an escrow account suggested by the lender?
A. Escrow accounts hold the borrower's money and pay it when expenses such as
property taxes and homeowners insurance are due.
B. The lender deposits reward payments as a reward for on-time payments.
C. The realtor's commissions are paid through the escrow account on an on-going
basis.
D. An amount equal to two years of mortgage payments is held in case of default. -
CORRECT ANSWERA. Escrow accounts hold the borrower's money and pay it when
expenses such as property taxes and homeowners insurance are due.
What federal legislation specifically addresses the sharing of non-public information
between financial institutions?
A. Fair Credit Reporting Act
B. Truth in Lending Act
C. Gramm-Leach-Bliley Act
D. Equal Credit Opportunity Act - CORRECT ANSWERC. Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act sets specific guidelines for the sharing of confidential non-
public information between financial institutions.
A fraud detection system comprises which of the following?
A. Notary agents
B. Doors and locks
C. A database and operator
D. A security guard - CORRECT ANSWERC. A database and operator
If a lender increased the interest rates 1/8% on a loan due to the fact that the borrower
did not speak English this would be:
A. It would be illegal to increase the interest rate 1/8% no matter what the reason.
B. It would be illegal because you can not base a loan amount upon a borrower's ability
to communicate in a certain language
C. Perfectly ethical because of the extra labor involved in translating
,D. The increase is expected because new loan documents must be prepared in the
borrower's language - CORRECT ANSWERB. It would be illegal because you can not
base a loan amount upon a borrower's ability to communicate in a certain language
It would be illegal for a lender to increase the interest rate 1/8% on a loan merely
because English is not the primary language of the borrower
Ethical practices of a real estate licensee most nearly means:
A. Being held in the high esteem by the peers and the public
B. Efficient and effective business practices
C. The licensee's honesty and fairness in dealing with the public, clients and associates
and customers.
D. Knowledge and respect for the law - CORRECT ANSWERC. The licensee's honesty
and fairness in dealing with the public, clients and associates and customers.
Ethical practices is the utilization of honesty, integrity, fairness, and responsibility when
working with not only clients, but with associates, customers, and the public in general
Advertising by licensees cannot be
A. vague or useless.
B. false or misleading.
C. threatening or overbearing.
D. ambiguous or confounding. - CORRECT ANSWERB. false or misleading.
Advertisements cannot be false, misleading or deceptive.
A lender who refuses to make loans on property in certain neighborhoods is
demonstrating the discriminatory practice of
A. servicing.
B. redlining.
C. blockbusting.
D. steering. - CORRECT ANSWERB. redlining.
During a telephone application, David states he has 10% down to work with to buy a
home in the mountains. He may use it occasionally as he loves to ski, but plans to use it
for weekly rentals when he is not there. The MLO can only offer 75% LTV for a rental
property, but 90% for a vacation/second home. The MLO decides to call this property a
second home on the application. What type of fraud is this?
A. fraud in inducement
B. fraud by deception
C. material misstatement
D. material omission - CORRECT ANSWER
, Which is an example of steering?
A. A property manager suggests that an applicant would be happier in a more diverse
building.
B. A seller tells his listing agent to find only Muslim buyer prospects.
C. A real estate agent tells homeowners that their property values will drop when an
Asian family moves in.
D. A mortgage banker refuses to make loans for a particular inner city neighborhood.
You - CORRECT ANSWERA. A property manager suggests that an applicant would be
happier in a more diverse building.
The lender is required, under RESPA, to provide a detailed "GOOD FAITH ESTIMATE"
statement at the time of loan application or within three business days to:
A. neither the buyer nor the seller.
B. the buyer.
C. the seller.
D. the buyer and seller.
Your - CORRECT ANSWERB. the buyer.
The "good faith" part of this requirement is the key element to consumers. By
standardizing the forms and disclosures used by lenders, borrowers are no longer
surprised by substantial and hidden costs at the time of closing.
What should make you suspect that you might be talking to someone who practices
predatory lending?
A. The company name or description has either the word predatory or predator in it.
B. You are asked to set up an escrow account.
C. A reverse mortgage is required to complete the sale.
D. The potential lender asks you to provide inflated income or incomplete information on
your loan application. - CORRECT ANSWERD. The potential lender asks you to provide
inflated income or incomplete information on your loan application.
predatory lending is a abusive lending practices including providing mortgage loans with
terms requiring a person to pay more than they can afford, with unreasonable interest
rates or prepayments or with unreasonable or unwarranted charges
Which of the following is NOT likely to increase the risk of mortgage loan default?
A. Using a home as an investment property.
B. Living with 3 or 4 other people in a home.
C. Having a credit score of less than 740
D. Living in a condo with less than 25% equity in the home. - CORRECT ANSWERB.
Living with 3 or 4 other people in a home.
WITH QUESTIONS AND ALL CORRECT
ANSWERS
What is the purpose of an escrow account suggested by the lender?
A. Escrow accounts hold the borrower's money and pay it when expenses such as
property taxes and homeowners insurance are due.
B. The lender deposits reward payments as a reward for on-time payments.
C. The realtor's commissions are paid through the escrow account on an on-going
basis.
D. An amount equal to two years of mortgage payments is held in case of default. -
CORRECT ANSWERA. Escrow accounts hold the borrower's money and pay it when
expenses such as property taxes and homeowners insurance are due.
What federal legislation specifically addresses the sharing of non-public information
between financial institutions?
A. Fair Credit Reporting Act
B. Truth in Lending Act
C. Gramm-Leach-Bliley Act
D. Equal Credit Opportunity Act - CORRECT ANSWERC. Gramm-Leach-Bliley Act
The Gramm-Leach-Bliley Act sets specific guidelines for the sharing of confidential non-
public information between financial institutions.
A fraud detection system comprises which of the following?
A. Notary agents
B. Doors and locks
C. A database and operator
D. A security guard - CORRECT ANSWERC. A database and operator
If a lender increased the interest rates 1/8% on a loan due to the fact that the borrower
did not speak English this would be:
A. It would be illegal to increase the interest rate 1/8% no matter what the reason.
B. It would be illegal because you can not base a loan amount upon a borrower's ability
to communicate in a certain language
C. Perfectly ethical because of the extra labor involved in translating
,D. The increase is expected because new loan documents must be prepared in the
borrower's language - CORRECT ANSWERB. It would be illegal because you can not
base a loan amount upon a borrower's ability to communicate in a certain language
It would be illegal for a lender to increase the interest rate 1/8% on a loan merely
because English is not the primary language of the borrower
Ethical practices of a real estate licensee most nearly means:
A. Being held in the high esteem by the peers and the public
B. Efficient and effective business practices
C. The licensee's honesty and fairness in dealing with the public, clients and associates
and customers.
D. Knowledge and respect for the law - CORRECT ANSWERC. The licensee's honesty
and fairness in dealing with the public, clients and associates and customers.
Ethical practices is the utilization of honesty, integrity, fairness, and responsibility when
working with not only clients, but with associates, customers, and the public in general
Advertising by licensees cannot be
A. vague or useless.
B. false or misleading.
C. threatening or overbearing.
D. ambiguous or confounding. - CORRECT ANSWERB. false or misleading.
Advertisements cannot be false, misleading or deceptive.
A lender who refuses to make loans on property in certain neighborhoods is
demonstrating the discriminatory practice of
A. servicing.
B. redlining.
C. blockbusting.
D. steering. - CORRECT ANSWERB. redlining.
During a telephone application, David states he has 10% down to work with to buy a
home in the mountains. He may use it occasionally as he loves to ski, but plans to use it
for weekly rentals when he is not there. The MLO can only offer 75% LTV for a rental
property, but 90% for a vacation/second home. The MLO decides to call this property a
second home on the application. What type of fraud is this?
A. fraud in inducement
B. fraud by deception
C. material misstatement
D. material omission - CORRECT ANSWER
, Which is an example of steering?
A. A property manager suggests that an applicant would be happier in a more diverse
building.
B. A seller tells his listing agent to find only Muslim buyer prospects.
C. A real estate agent tells homeowners that their property values will drop when an
Asian family moves in.
D. A mortgage banker refuses to make loans for a particular inner city neighborhood.
You - CORRECT ANSWERA. A property manager suggests that an applicant would be
happier in a more diverse building.
The lender is required, under RESPA, to provide a detailed "GOOD FAITH ESTIMATE"
statement at the time of loan application or within three business days to:
A. neither the buyer nor the seller.
B. the buyer.
C. the seller.
D. the buyer and seller.
Your - CORRECT ANSWERB. the buyer.
The "good faith" part of this requirement is the key element to consumers. By
standardizing the forms and disclosures used by lenders, borrowers are no longer
surprised by substantial and hidden costs at the time of closing.
What should make you suspect that you might be talking to someone who practices
predatory lending?
A. The company name or description has either the word predatory or predator in it.
B. You are asked to set up an escrow account.
C. A reverse mortgage is required to complete the sale.
D. The potential lender asks you to provide inflated income or incomplete information on
your loan application. - CORRECT ANSWERD. The potential lender asks you to provide
inflated income or incomplete information on your loan application.
predatory lending is a abusive lending practices including providing mortgage loans with
terms requiring a person to pay more than they can afford, with unreasonable interest
rates or prepayments or with unreasonable or unwarranted charges
Which of the following is NOT likely to increase the risk of mortgage loan default?
A. Using a home as an investment property.
B. Living with 3 or 4 other people in a home.
C. Having a credit score of less than 740
D. Living in a condo with less than 25% equity in the home. - CORRECT ANSWERB.
Living with 3 or 4 other people in a home.
