Pass NMLS MLO exam questions – convert Test Engine to PDF [Q48-Q63]

MLO NMLS

admin -

August 11, 2025

4/5 - (1 vote)

Pass NMLS MLO exam questions – convert Test Engine to PDF

Pass Your MLO Exam Easily – Real MLO Practice Dump Updated Aug 11, 2025

NEW QUESTION 48
How long does Regulation Z of the Truth in Lending Act (TILA) require a mortgage company to retain the Closing Disclosure for a closed mortgage loan?

2 years

3 years

4 years

5 years

Regulation Z requires creditors to retain the Closing Disclosure and all related documents for five years after consummation of the loan.
“A creditor must retain copies of the Closing Disclosure (and all related documents) for five years after consummation.”
– 12 CFR § 1026.25(c)
References:
CFPB, TILA-RESPA Integrated Disclosure Rule Guide
12 CFR § 1026.25(c)

NEW QUESTION 49
A loan that is meant to be offered to prospective borrowers with poor credit history is generally referred to by which of the following terms?

Balloon

Subprime

Fixed-rate

Interest-only

A subprime loan is a type of loan offered to borrowers with low credit scores or other risk factors. These loans typically have higher interest rates to compensate for increased risk.
“Subprime loans are made to borrowers who have poor or limited credit histories and pose a higher risk of default.”
– SAFE MLO National Test Study Guide
References:
CFPB, Subprime Mortgage Definition

NEW QUESTION 50
Which of the following is an example of a non-fluctuating income source?

Salaried W-2 position

Self-employed income

Commission-based W-2 income

Part-time work with irregular hours

A salaried W-2 position is an example of non-fluctuating income because the borrower receives a consistent, fixed salary each pay period. This type of income is easy to verify and predict, making it ideal for mortgage qualification.
Other types of fluctuating income:
* Self-employed income (B) and commission-based income (C) vary based on the nature of work and can fluctuate month to month.
* Part-time work with irregular hours (D) also fluctuates due to varying work hours, making it inconsistent.
References:
* Fannie Mae Selling Guide for income verification
* Freddie Mac’s Loan Product Advisor for employment income documentation

NEW QUESTION 51
Which of the following actions do mortgage companies take to prevent falsified information by a borrower or mortgage loan originator (MLO)?

Accept the documentation supplied by the borrower

Accept the documentation supplied by both the borrower and the MLO

Verify the income information by a settlement service provider

Verify information by third parties not involved in the transaction

To prevent fraud, mortgage companies are required to independently verify information provided in the loan application by contacting third parties not involved in the transaction (e.g., employers, financial institutions).
Relying solely on documents supplied by the borrower or MLO can lead to acceptance of falsified information.
“Verification of income, employment, and other borrower information must be obtained directly from third parties not involved in the transaction.”
– Fannie Mae Selling Guide; SAFE MLO National Test Study Guide
References:
Fannie Mae, Verification of Employment and Income

NEW QUESTION 52
Which of the following documents is required to be issued to a customer when a mortgage loan originator is also a real estate broker on the same transaction?

Loan application

Appraisal disclosure

Special information booklet

Affiliated business arrangement disclosure

Under RESPA Section 8, if a mortgage loan originator has an ownership interest in or refers a customer to a settlement service provider (such as a real estate brokerage), an Affiliated Business Arrangement Disclosure must be provided to the consumer at or before the time of referral.
“A lender or real estate broker referring a consumer to an affiliated settlement service provider must give an Affiliated Business Arrangement Disclosure.”
– 12 CFR § 1024.15(b), Regulation X (RESPA)
References:
CFPB, RESPA Affiliated Business Arrangement Disclosure
SAFE MLO National Test Study Guide

NEW QUESTION 53
A lender will require private mortgage insurance for first lien loans with loan-to-value over what percentage?

70%

75%

78%

80%

Private mortgage insurance (PMI) is typically required for conventional first-lien loans when the loan-to- value (LTV) ratio exceeds 80%. That is, when the borrower puts down less than 20% as a down payment.
“PMI is required by lenders on conventional loans with a loan-to-value ratio greater than 80 percent.”
– Homeowners Protection Act of 1998; CFPB PMI Guidance
References:
CFPB, When can I remove PMI?

NEW QUESTION 54
A second (subordinate) mortgage loan includes:

government home purchase loan.

conventional home purchase loan.

home equity conversion mortgage.

home equity lines of credit (HELOCs;

A second (subordinate) mortgage loan refers to a mortgage taken out after the primary mortgage and is subordinate to the first in priority of claims on the property in case of default or foreclosure. One of the most common types of subordinate mortgages is a home equity line of credit (HELOC).
* HELOC allows homeowners to borrow against the equity in their home, typically after the first mortgage, making it a subordinate loan.
Other options:
* Government home purchase loans (A) and conventional home purchase loans (B) are typically first mortgages.
* A home equity conversion mortgage (C) is a type of reverse mortgage, which is also typically a primary loan, not a subordinate one.
References:
* Fannie Mae Selling Guide on subordinate financing
* HELOC regulations under Regulation Z

NEW QUESTION 55
Which of the following must be included on all residential mortgage loan application forms?

A mortgage loan originator’s unique identifier

A borrower’s driver’s license number

The maiden name of the borrower’s mother

The borrower’s previous five year employment history

Regulation Z (TILA) and the SAFE Act require that all mortgage loan applications include the MLO’s unique identifier, which allows regulators and consumers to identify the MLO involved in the transaction.
“Each loan application must include the mortgage loan originator’s name and unique identifier.”
– 12 CFR § 1026.36(g); SAFE Act
Other listed information is not federally required on every mortgage application.
References:
CFPB, Loan Originator Identifier Requirements
SAFE MLO National Test Study Guide

NEW QUESTION 56
Which of the following actions should a mortgage loan originator (MLO) take if a real estate broker offers the MLO $500 to obtain a purchase-money mortgage for the real estate broker’s client?

Decline the money

Apply the $500 towards the downpayment

Receive the $500 fee and include it on the Closinq Disclosure

Accept the money after obtaining the requested loan for the client

The Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks, referral fees, and unearned fees in any transaction involving a federally related mortgage loan. If a real estate broker offers the MLO $500 to obtain a purchase-money mortgage for the broker’s client, the MLO must decline the money. Accepting payment for a referral is illegal under Section 8 of RESPA.
* Options such as applying the money toward the down payment (B) or including it on the Closing Disclosure (C)** do not make the payment legal, as it would still violate RESPA.
References:
* RESPA Section 8 – Prohibition on kickbacks and referral fees
* CFPB Guidelines on RESPA compliance

NEW QUESTION 57
A written agreement guaranteeing a specific rate is called:

A loan application

A lock-in agreement

A preapproval letter

An intent to proceed agreement

A lock-in agreement (rate lock) is a written commitment by a lender to hold a specific interest rate for a borrower for a certain period, usually prior to closing.
“A lock-in agreement is a written agreement guaranteeing the applicant a specified interest rate for a designated period.”
– SAFE MLO National Test Study Guide; CFPB Mortgage Glossary
References:
CFPB, Rate Lock
SAFE MLO National Test Study Guide

NEW QUESTION 58
An easement:

is a mortgage modification.

is a right to cross or otherwise use someone else’s land for a specified purpose.

allows a loan applicant to close on a loan even if all the stipulations have not been met.

allows a borrower to make less than the required payments without going through a full mortgage modification.

An easement is a legal right granted to one party to cross or use another party’s land for a specific purpose, such as for utility lines, access roads, or water drainage. Easements are commonly granted in property transactions and are recorded in the public records.
* Easements are unrelated to mortgage modifications (A) or payment reductions (D).
References:
* Real Estate Law on property easements
* HUD Guidelines on easements in property transactions

NEW QUESTION 59
A mortgage loan originator (MLO) closes a high-cost mortgage for a borrower. Seven months later, the borrower returns to the MLO to apply for a cash-out refinance as the borrower intends to use the cash to purchase a collector car. The MLO determines that the only loan the borrower qualifies for is a high-cost mortgage at a higher interest rate. In which of the following ways should the MLO proceed?

Deny the loan, unless it is in the best interest of the borrower

Close the loan as normal with no further action required

Close the loan as normal and take the vehicle as additional collateral

Close the loan as normal, as the borrower can refinance a high-cost mortgage after six months

Under HOEPA (Home Ownership and Equity Protection Act) rules for high-cost mortgages, a creditor may not refinance a high-cost mortgage into another high-cost mortgage within 12 months of the previous transaction unless the new loan is in the borrower’s best interest. This is to prevent loan flipping and predatory lending.
“A creditor may not refinance a high-cost mortgage into another high-cost mortgage within one year unless the new loan is in the borrower’s best interest.”
– 12 CFR § 1026.34(a)(3)
Since the purpose here is a cash-out for a collector car (not generally a “best interest” purpose), the MLO should deny the loan unless a strong case can be made that it is in the borrower’s best interest.
References:
CFPB, High-Cost Mortgages (HOEPA)
12 CFR § 1026.34(a)(3)

NEW QUESTION 60
When two borrowers are refinancing a mortgage loan, the notice of the right to rescind:

must be given to both borrowers, but either borrower is permitted to rescind the loan.

must be given to both borrowers, and both borrowers must agree to rescind the loan.

is permitted to be given to either of the borrowers, and only one borrower is needed to rescind the loan.

is permitted to be given to either of the borrowers, but both borrowers need to sign the notice to rescind the loan.

Under TILA’s right of rescission, when there are multiple borrowers with an ownership interest in the property, each owner must receive notice of the right to rescind. If any one of them exercises the right, the loan is rescinded.
“When more than one consumer has the right to rescind, the exercise of the right by one consumer is effective as to all.”
– 12 CFR § 1026.23(a)(4), Regulation Z
References:
CFPB, Right of Rescission
12 CFR § 1026.23(a)(4)

NEW QUESTION 61
Which of the following responses best describes redlining?

The identification of minority census tracts

The identification of low and moderate income census tracts

The identification of locations in which the lender will not lend

The analysis of the points and fees charged on loan transactions

Redlining is the illegal practice of refusing to lend or offering less favorable terms to residents of certain geographic areas, often based on the racial or ethnic composition of those areas.
“Redlining is the practice of denying or restricting financial services to certain neighborhoods based on race or ethnicity.”
– CFPB, What is redlining?
References:
CFPB, What is redlining?
SAFE MLO National Test Study Guide

NEW QUESTION 62
Which of the following acts or practices violates appraisal independence?

The mortgage loan originator (MLO) asks the appraiser to correct errors on the appraisal.

The MLO asks the appraiser for a minimum valuation of the property so that the loan-to-value meets lending requirements.

The MLO asks the appraiser to consider additional comparable properties to make or support an appraisal.

The MLO asks the appraiser to provide further detail or explanation for the appraiser’s value conclusion.

Under TILA (Regulation Z) Appraisal Independence Requirements, it is a violation for anyone (including an MLO) to influence an appraiser to obtain a minimum or target value. This includes asking for a minimum value needed to approve a loan. Requesting corrections of errors or additional information is allowed as long as it does not attempt to influence the appraiser’s value conclusion.
“It is prohibited for any person to influence, coerce, or otherwise encourage an appraiser to misstate or misrepresent the value of the property.”
– 12 CFR § 1026.42(c), Appraisal Independence Requirements (AIR)
References:
CFPB, Appraisal Independence Requirements
Fannie Mae, Appraiser Independence Requirements

NEW QUESTION 63
A borrower’s monthly debt-to-income ratio is calculated by taking the:

borrower’s gross monthly housing expense divided by the principal, interest, and appraised value.

eligible total monthly debt obligations, including the monthly housing expense, divided by the borrower’s gross monthly income.

eligible total monthly debt obligations for trade lines greater than 12 months multiplied by the borrower’s net monthly income.
D eligible total monthly debt obligations excluding the monthly housing expense divided by the borrower’s net monthly income

The debt-to-income (DTI) ratio is a key metric used by lenders to assess a borrower’s ability to manage monthly payments and repay a mortgage. It is calculated by dividing the borrower’s total monthly debt obligations, including:
* Monthly housing expenses (principal, interest, taxes, and insurance, also known as PITI).
* Any other recurring debt obligations (car loans, student loans, credit card payments, etc.).
This total is divided by the borrower’s gross monthly income (before taxes and deductions). This calculation helps determine whether the borrower meets lending standards, with most lenders preferring a DTI ratio below 43% for qualified mortgages.
References:
* Fannie Mae and Freddie Mac guidelines on debt-to-income ratio
* CFPB Qualified Mortgage Rules

Loading …