FREE NMLS Mortgage Loan Origination Activities Questions and Answers

Question 1

An MLO is working on a loan application for a borrower who is purchasing a new primary residence.
The only fee collected from the borrower at the time of application is for a credit report.
Which of the following actions is permissible before the borrower has received a Loan Estimate and expressed their intent to proceed?

Accepted Answer

Requiring verification of income and assets.

Answer

Charging an appraisal fee.

Answer

Charging a loan application fee.

Answer

Collecting the borrower's credit card number for future fees.

Question 2

A mortgage loan originator's advertisement for a fixed-rate mortgage prominently features an attractive monthly payment amount. Under Regulation Z (TILA), which of the following is also required to be included in the advertisement, and with equal prominence?

Accepted Answer

The total of payments over the life of the loan and the repayment period.

Answer

The loan originator's unique identifier (NMLS ID).

Answer

A statement that the borrower should consult a tax advisor.

Answer

The lender's contact information and business hours.

Question 3

Under the Ability-to-Repay (ATR) rule, which of the following is NOT one of the eight specific underwriting factors a lender must consider and verify when making a reasonable, good-faith determination of a borrower's ability to repay a mortgage loan?

Accepted Answer

The borrower's potential for future income growth.

Answer

The borrower's credit history.

Answer

The borrower's current or reasonably expected income or assets.

Answer

The monthly payment for mortgage-related obligations.

Question 4

An MLO is originating a first-lien mortgage that qualifies as a Higher-Priced Mortgage Loan (HPML). Under Regulation Z, for which of the following transaction types would an escrow account for property taxes and insurance NOT be required?

Accepted Answer

A temporary or 'bridge' loan with a term of 12 months or less.

Answer

A loan to purchase a condominium that will be the borrower's principal dwelling.

Answer

A loan to refinance an existing mortgage on a manufactured home used as a principal dwelling.

Answer

A regular purchase loan for a single-family home with a 30-year term.

Question 5

An individual loan originator is compensated based on a percentage of the loan amount for every loan they close. According to the Loan Originator Compensation Rule, which of the following compensation practices is prohibited?

Accepted Answer

Receiving a higher percentage of the loan amount for loans with higher interest rates.

Answer

Receiving a bonus from a profit pool that is not based on the terms of individual transactions.

Answer

Being paid an hourly rate based on the actual number of hours worked.

Answer

Receiving a fixed percentage of the loan amount for all closed loans, regardless of the loan terms.

Question 6

A borrower is completing the Uniform Residential Loan Application (URLA). In the 'Information for Government Monitoring Purposes' section, the borrower declines to provide information on their ethnicity, race, and sex. What is the loan originator's responsibility in this situation?

Accepted Answer

Complete the section on the basis of visual observation or surname if the application is taken in person.

Answer

Inform the borrower that the application cannot be processed without this information.

Answer

Leave the section blank and submit the application as is.

Answer

Make a note in the file that the borrower was uncooperative.