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MLO Practice Test Questions with Answers (100%
Correct Answers)
An Approve/Eligible determination:
1. Is an indication that a property appraised for its sales price
2. Authorization to release funds in a refinance transaction
3. An automated loan approval from the Fannie Mae Du system
4. A recommendation that is received by the Freddie Mac loan
prospector automated underwriting system.— Answer: 3. An
automated loan approval from the Fannie Mae Du system.. this means
that the borrower meets the credit requirements and all other loan
factors are acceptable. The LP recommendations are mostly one word
answers and the equivalent recommendation under LP would be
Accept.
If a lender agrees to subordinate a loan, what has occurred?
1. The borrower has a first and second and has refinanced the first.
2. The loan has been denied
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3. The second has been paid off
4. The borrower is in foreclosure— Answer: 1. The borrower has a first
and second and has refinanced the first...when the borrowed
refinanced a first and there is an existing second the second becomes
the first when the old loan is paid off. To avoid this from happening
the second position lender will subordinate and remain in second
position.
Which of the following are you permitted to ask loan applicants under
the fair lending laws?
1. Their race
2. Their religion
3. If they plan to have additional children
4. Will they continue to work after they have children— Answer: 1.
Their race, a HMDA requirement.
The National Credit Score Disclosure Form provides the following:
1. Statement that the credit score determines loan approval
2. Four reason codes for the credit score
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3. A reason for the loan approval status
4. The reason for the loan denial— Answer: 2. Four reason codes for
the credit score.
The income approach used in valuing property during an appraisal
considers the following:
1. The replacement cost of the property
2. The average meridian income levwels of the community
3. The fair market rental earnings of similar homes
4. The qualifying income potential borrowers— Answer: 3. The fair
market rental earnings of similar homes
A mortgage broker decides to solicit business from a previous
customer who closed on a home purchase. Which action could result in
a $16,000 fine?
1. Contacting the customer 17 months after the purchase transaction
closed
2. Verifying that the customer is not in the no-call-registry before
making a sales call 2 years after the purchase transaction closed
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3. The client is listed on the company no-call list and the loan
originator calls the customer just shy of 18 months after the purchase
transa— Answer: 3. The client is listed on the company no-call list and
the loan originator calls the customer just shy of 18 months after the
purchase transaction closed. If the customer has requested not to be
called then it is a violation to call the customer.
Which of the following is not a factor in determining an interest rate?
1. Age
2. Time
3. Points
4. Margin— Answer: 1. Age..age is a prohibited basis under ECOA
and can't be used to determine interest rates. Points are discount fees
that are charged to lower the rate, the longer the time generally higher
the rate and margin is the lenders profit built into the rate
Interest-only mortgages can be all of the following EXCEPT:
1. Can be fixed rate mortgages
2. Can be adjustable rate mortgages
© 2025 All rights reserved
MLO Practice Test Questions with Answers (100%
Correct Answers)
An Approve/Eligible determination:
1. Is an indication that a property appraised for its sales price
2. Authorization to release funds in a refinance transaction
3. An automated loan approval from the Fannie Mae Du system
4. A recommendation that is received by the Freddie Mac loan
prospector automated underwriting system.— Answer: 3. An
automated loan approval from the Fannie Mae Du system.. this means
that the borrower meets the credit requirements and all other loan
factors are acceptable. The LP recommendations are mostly one word
answers and the equivalent recommendation under LP would be
Accept.
If a lender agrees to subordinate a loan, what has occurred?
1. The borrower has a first and second and has refinanced the first.
2. The loan has been denied
© 2025 All rights reserved
,2
3. The second has been paid off
4. The borrower is in foreclosure— Answer: 1. The borrower has a first
and second and has refinanced the first...when the borrowed
refinanced a first and there is an existing second the second becomes
the first when the old loan is paid off. To avoid this from happening
the second position lender will subordinate and remain in second
position.
Which of the following are you permitted to ask loan applicants under
the fair lending laws?
1. Their race
2. Their religion
3. If they plan to have additional children
4. Will they continue to work after they have children— Answer: 1.
Their race, a HMDA requirement.
The National Credit Score Disclosure Form provides the following:
1. Statement that the credit score determines loan approval
2. Four reason codes for the credit score
© 2025 All rights reserved
,3
3. A reason for the loan approval status
4. The reason for the loan denial— Answer: 2. Four reason codes for
the credit score.
The income approach used in valuing property during an appraisal
considers the following:
1. The replacement cost of the property
2. The average meridian income levwels of the community
3. The fair market rental earnings of similar homes
4. The qualifying income potential borrowers— Answer: 3. The fair
market rental earnings of similar homes
A mortgage broker decides to solicit business from a previous
customer who closed on a home purchase. Which action could result in
a $16,000 fine?
1. Contacting the customer 17 months after the purchase transaction
closed
2. Verifying that the customer is not in the no-call-registry before
making a sales call 2 years after the purchase transaction closed
© 2025 All rights reserved
, 4
3. The client is listed on the company no-call list and the loan
originator calls the customer just shy of 18 months after the purchase
transa— Answer: 3. The client is listed on the company no-call list and
the loan originator calls the customer just shy of 18 months after the
purchase transaction closed. If the customer has requested not to be
called then it is a violation to call the customer.
Which of the following is not a factor in determining an interest rate?
1. Age
2. Time
3. Points
4. Margin— Answer: 1. Age..age is a prohibited basis under ECOA
and can't be used to determine interest rates. Points are discount fees
that are charged to lower the rate, the longer the time generally higher
the rate and margin is the lenders profit built into the rate
Interest-only mortgages can be all of the following EXCEPT:
1. Can be fixed rate mortgages
2. Can be adjustable rate mortgages
© 2025 All rights reserved
