NMLS MLO EXAM QUESTIONS WITH
VERIFIED ANSWERS
What is the purpose of Consumer Financial Protection Bureau (CFPB) regulations in the
mortgage industry? - Answer-To ensure that lenders operate fairly and transparently
Under the Fair Debt Collection Practices Act (FDCPA), which of the following is not a
prohibited practice? - Answer-Sending excessive collection notices to a borrower
Which of the following best defines predatory lending? - Answer-Lenders charging
higher interest rates to higher-risk borrowers without consideration for the borrower's
ability to repay
Which of the following is required by the Dodd-Frank Act? - Answer-Lenders must verify
a borrower's ability to repay before offering a mortgage loan
What is typically the first step in the mortgage loan application process? - Answer-
Completing the loan application
Which of the following is required for a borrower's loan application under the Equal
Credit Opportunity Act (ECOA)? - Answer-Lenders must provide borrowers with an
explanation if their loan is denied.
When a borrower applies for a mortgage loan, the lender evaluates the borrower's
ability to repay the loan. Which of the following documents is most commonly used to
verify the borrower's income? - Answer-Pay stubs and W-2 forms
Which of the following is typically included in the underwriting process to determine a
borrower's eligibility for a mortgage? - Answer-The borrower's credit history and score
Which of the following describes a debt-to-income ratio (DTI) in the loan application
process? - Answer-The total amount of debt the borrower owes relative to their income.
Which of the following best defines the loan-to-value (LTV) ratio? - Answer-The
percentage of the loan amount compared to the value of the property.
In underwriting, which of the following is most important when evaluating a borrower's
ability to repay a mortgage loan? - Answer-The borrower's income, The borrower's
current employment status, The borrower's credit score
, What is the typical purpose of the appraisal in the mortgage application process? -
Answer-To determine the market value of the property
Which of the following is an example of compensating factors in mortgage underwriting?
- Answer-A borrower having a large down payment or additional assets
What is the role of the credit report in the mortgage underwriting process? - Answer-To
identify the borrower's credit history and outstanding debts
In the underwriting process, what is a common reason for a loan to be denied? -
Answer-The borrower has an excessive amount of debt relative to their income
What is the primary goal of underwriting in the mortgage process? - Answer-To evaluate
the borrower's ability to repay the loan and assess the risk to the lender
Which of the following is required by the Truth in Lending Act (TILA)? - Answer-Lenders
must disclose the total cost of the loan, including interest and fees.
Which of the following documents is required under the Real Estate Settlement
Procedures Act (RESPA)? - Answer-Loan Estimate, Closing Disclosure, Good Faith
Estimate (GFE)
Under the Home Mortgage Disclosure Act (HMDA), which of the following information is
not required to be disclosed by lenders? - Answer-The borrower's credit score
The Loan Estimate is required to be provided to the borrower within how many business
days of receiving a completed loan application? - Answer-3 business days
Which of the following federal laws requires lenders to disclose the cost of credit to
consumers, including the annual percentage rate (APR) and finance charges? -
Answer-Truth in Lending Act (TILA)
Which of the following is NOT typically included in the loan application process for a
conventional loan? - Answer-A government-issued certificate of eligibility
Which of the following documents must be provided to a borrower within 3 business
days after they submit a loan application? - Answer-Loan Estimate (LE) (Under TRID,
the Loan Estimate must be given within 3 business days of receiving a loan application.)
Which of the following is an example of a violation of the Equal Credit Opportunity Act
(ECOA)? - Answer-Refusing a loan application based on a borrower's marital status
Which of the following would most likely be regulated by state law rather than federal
law? - Answer-Mortgage loan officer licensing requirements
VERIFIED ANSWERS
What is the purpose of Consumer Financial Protection Bureau (CFPB) regulations in the
mortgage industry? - Answer-To ensure that lenders operate fairly and transparently
Under the Fair Debt Collection Practices Act (FDCPA), which of the following is not a
prohibited practice? - Answer-Sending excessive collection notices to a borrower
Which of the following best defines predatory lending? - Answer-Lenders charging
higher interest rates to higher-risk borrowers without consideration for the borrower's
ability to repay
Which of the following is required by the Dodd-Frank Act? - Answer-Lenders must verify
a borrower's ability to repay before offering a mortgage loan
What is typically the first step in the mortgage loan application process? - Answer-
Completing the loan application
Which of the following is required for a borrower's loan application under the Equal
Credit Opportunity Act (ECOA)? - Answer-Lenders must provide borrowers with an
explanation if their loan is denied.
When a borrower applies for a mortgage loan, the lender evaluates the borrower's
ability to repay the loan. Which of the following documents is most commonly used to
verify the borrower's income? - Answer-Pay stubs and W-2 forms
Which of the following is typically included in the underwriting process to determine a
borrower's eligibility for a mortgage? - Answer-The borrower's credit history and score
Which of the following describes a debt-to-income ratio (DTI) in the loan application
process? - Answer-The total amount of debt the borrower owes relative to their income.
Which of the following best defines the loan-to-value (LTV) ratio? - Answer-The
percentage of the loan amount compared to the value of the property.
In underwriting, which of the following is most important when evaluating a borrower's
ability to repay a mortgage loan? - Answer-The borrower's income, The borrower's
current employment status, The borrower's credit score
, What is the typical purpose of the appraisal in the mortgage application process? -
Answer-To determine the market value of the property
Which of the following is an example of compensating factors in mortgage underwriting?
- Answer-A borrower having a large down payment or additional assets
What is the role of the credit report in the mortgage underwriting process? - Answer-To
identify the borrower's credit history and outstanding debts
In the underwriting process, what is a common reason for a loan to be denied? -
Answer-The borrower has an excessive amount of debt relative to their income
What is the primary goal of underwriting in the mortgage process? - Answer-To evaluate
the borrower's ability to repay the loan and assess the risk to the lender
Which of the following is required by the Truth in Lending Act (TILA)? - Answer-Lenders
must disclose the total cost of the loan, including interest and fees.
Which of the following documents is required under the Real Estate Settlement
Procedures Act (RESPA)? - Answer-Loan Estimate, Closing Disclosure, Good Faith
Estimate (GFE)
Under the Home Mortgage Disclosure Act (HMDA), which of the following information is
not required to be disclosed by lenders? - Answer-The borrower's credit score
The Loan Estimate is required to be provided to the borrower within how many business
days of receiving a completed loan application? - Answer-3 business days
Which of the following federal laws requires lenders to disclose the cost of credit to
consumers, including the annual percentage rate (APR) and finance charges? -
Answer-Truth in Lending Act (TILA)
Which of the following is NOT typically included in the loan application process for a
conventional loan? - Answer-A government-issued certificate of eligibility
Which of the following documents must be provided to a borrower within 3 business
days after they submit a loan application? - Answer-Loan Estimate (LE) (Under TRID,
the Loan Estimate must be given within 3 business days of receiving a loan application.)
Which of the following is an example of a violation of the Equal Credit Opportunity Act
(ECOA)? - Answer-Refusing a loan application based on a borrower's marital status
Which of the following would most likely be regulated by state law rather than federal
law? - Answer-Mortgage loan officer licensing requirements
