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NMLS TEST PRACTICE - 20 HOUR SAFE
NMLS TEST PRACTICE - 20 HOUR SAFE
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NMLS TEST PRACTICE - 20 HOUR SAFEAn application must be accompanied by fingerprints when applying for
a. Licensed MLO
b. Registered MLO
c. not required
d. required for both licensed and registered MLO - Answers -d
Quarterly mortgage call reports must be filed
a. within 30 days of the end of the calendar quarter
b. within 30 days of the end of the fiscal quarter
c. within 45 days of the end of the calendar quarter
d. within 45 days of the end of the fiscal quarter - Answers -c. within45 days of the end
of the calendar quarter
Which of the following Government Sponsored Entities does NOT buy mortgage loans
in the secondary market?
a. Fannie Mae
b. Ginnie Mae
c. Freddie Mac
d. All of these GSEs buy loans in the secondary market - Answers -B. Ginnie Mae does
not buy or sell loans - it guarantees principal and interest payment for investors who buy
mortgage pools
Which of the following would be ways that Fannie Mae impacts the primary mortgage
market?
a. it ultimately serves to provide additional funds for the primary market
b. it influences lenders' standards for making mortgage loans
c. both
d. none - Answers -c. Fannie Mae buys mortgages in the secondary mortgage market
which makes more funds available to lenders to make loans in the primary market. It
also sets standards for the qualifying requirements lenders use when they make loans
in the primary market, since they want to be able to sell loans to Fannie Mae
A person who has failed the national portion of the NMLS examination the third attempt:
a. is prohibited from taking the test again
b. must wait one year to retake the test
c. must wait 180 days to retake the test
d. must wait 30 days to retake the test - Answers -c 180 days
A registered LO must complete how many hours of continuing education courses each
year?
a. 20
b. 12
c. 0
,d. 8 - Answers -c
In order to become a state licensed LO, the applicant must complete how many hours of
prelicense education courses
within 30 days of the end of the fiscal quarter
a. 45
b. 30
c. 25
d. 20 - Answers -d
The National Mortgage Licensing System (NMLS) operates under the authority of:
a. The Real Estate Settlement Procedure Act
b. The Truth -in-Lending Act
c. The SAFE Mortgage Licensing Act
d. The Gramm-Leach Bliley Act - Answers -C.
When is an adjustable rate mortgage recalculated (recast):
a. When the underlying index rate is adjusted
b. when the negative amortization cap is reached
c. when the initial cap is reached
d. when the lifetime cap is reached - Answers -B. The loan is recast when the negative
amortization cap is reached. The monthly payment would be recomputed based on the
higher loan amount over the remaining term of the loan
Loan origination fees can be expressed as:
a. Discount points
b. Loan points
c. Either discount points or loan points
d. Neither discount points or loan points - Answers -B. Any point is 1 percent of the loan
amount. Discount points are used only to buydown the interest rates, so origination fees
could be expressed as loan points but not discount points
The FHA's Home Equity Conversion Mortgage (HECM) is a type of
a. Home equity line of credit
b. Reverse Mortgage
c. Home equity loan
d. closed-end mortgage - Answers -b. Reverse mortgage
When is an OPTION ARM recast
a. At regular intervals, typically every fiver years
b. At each adjustment period
c. After each payment
d. At the expiration of the teaser rate - Answers -A. Option ARMs are typically recast
every 5 years. When the loan is recast, the monthly payments are recomputed based
on the current loan balance and the remaining term of the loan
,If an adjustable-rate mortgage is described as a 5/2/6 loan, the firsts number would
indicate the maximum:
a. Initial interest rate adjustment
b. interest rate adjustment after the initial adjustment
c. Lifetime interest rate adjustment over the initial fully-indexed rate
d. interest rate on the loan over its lifetime - Answers -a - The first number indicates the
maximum initial interest rate adjustment
In an FHA loan, what percentage of the purchase price can the seller contribute or loan
towards the buyer's down payment
a. 0%
b. 3%
c. 5%
d. 6% - Answers -A. ZERO - while a seller can contribute up to 6% of the purchase price
towards the closing costs, the seller cannot contribute or loan anything towards the
buyers down payment
ARMs were created to transfer what type of risk
a. credit risk
b. interest rate risk
c. liquidity risk
d. collateral risk - Answers -B - ARMS transfer the lender's risk of rising interest rates to
the borrower
What does Ginnie Mae do? - Answers -guarantees principal and interest payments for
investors who by mortgage pools
The initial interest rate on an adjustable rate loan is 2.5% below its fully-indexed rate.
This rate would most accurately be called a:
a. Teaser rate
b. Discount rate
c. Bait rate
d. Margin rate - Answers -b. Discount Rate - since this rate is less than 3% below the
fully-indexed rate, it is technically a discounted rate, rather than a teaser rate
A loan which is secured by more than one parcel of land is a:
a. Blanket Mortgage
b. Package mortgage
c. Bridge loan
d. Balloon loan - Answers -A. Blanket mortgage
Which of the following statements is true of both home equity loans and home equity
lines of credit:
a. They are open-ended loans
b. They are closed-end loans
c. They are typically subordinate loans
, d. They are revolving lines of credit - Answers -c. Subordinate loans
meaning they would be subordinate to repayment of a first mortgage
Each of the following statements regarding jumbo loans is correct, EXCEPT
a. Jumbo loans typically have somewhat higher interest rates
b. When jumbo loans are difficult to obtain, fixed rate loans are usually easier to obtain
than adjustable rate loans
c. The spread between the interest rates of jumbo loans and other loans will vary
according to market conditions
d. Jumbo loans are considered nonconforming loans - Answers -b. When jumbo loans
are difficult to obtain, fixed rate loans are usually easier to obtain than adjustable rate
loans
When market conditions make jumbo loans difficult to obtain, fixed rate loans are more
difficult to obtain, not easier to obtain. This is because of the interest rate rick the
lenders are investors face
The term "interim loan" would apply to which of the following loans
a. Interest-only loans
b. Construction loans
c. Conventional loans
d. Nonconforming loans - Answers -B. A construction loan would be a an "interim loan,"
in that the loan is in place while construction continues, but must be repaid upon
completion of the construction activities
What is the minimum credit score required to qualify for an FHA loan
a. 500
b. 565
c. 580
d. Non of these - Answers -A. The minimum credit score for FHA is 500. Those with
credit scores between 00-579 need a down payment of 10%. Those with credit scores
of of above 580 need a down payment of 3.5%
/ 6 - what is the second number
a. initial interest rate adjustment
b. Interest rate adjustment after the initial adjustments
c. Lifetime interest rate adjustment over the initial fully-indexed rate
d. Payment cap - Answers -b. interest rate adjustment after the initial adjustment
What is a straight note
a. A fully amortized loan
b. An interest-only loan
c. A partially amortized loan
d. A balloon loan - Answers -B. An interest-only loan
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