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MLO Exam Questions

Q 1 / 15

Question 1

Government mortgage insurance is required to be purchased if a borrower places a 20% down payment on:

Rationale

FHA mortgages (B) require mortgage insurance regardless of down payment. VA (A) and conventional (C) loans with 20% down typically don"t, and nonconventional (D) is vague.

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Question 2

The income approach to value for appraisals must be used on which of the following types of properties?

Rationale

The income approach is required for two- to four-unit properties (D) due to rental income potential.

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Question 3

According to the SAFE Act, to qualify for annual license renewal, mortgage loan originators must complete a minimum of how many hours of continuing education?

Rationale

The SAFE Act requires 8 hours of continuing education annually (C) for MLO license renewal.

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Question 4

Which of the following pieces of information could indicate income fraud?

Rationale

An employer"s address as a P.O. Box only (C) could indicate income fraud, as it may suggest a fictitious employer. Employment gaps (A), promotions (B), or slightly higher income (D) are not inherently fraudulent.

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Question 5

A borrower informs a mortgage loan originator (MLO) that he will receive an annual raise of $2,400 just prior to the loan closing. The MLO should:

Rationale

The MLO should use current, verified income (A). Future raises (C) are speculative, prorating (B) is incorrect, and tax returns (D) don"t verify future raises.

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Question 6

When submitting documentation for a customer's credit report dispute, the dispute notice must include which of the following pieces of information?

Rationale

Dispute notices must include the specific information disputed and the basis for the dispute (D). Bank statements (A), credit location (B), and spouse details (C) are not required.

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Question 7

Which of the following telemarketing policies is compliant with the National Do Not Call Registry rules?

Rationale

Documenting consumer consent (B) complies with Do Not Call rules. Requiring a separate call (A), selling numbers (C), or using an outdated list (D) violate the rules.

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Question 8

If a cash-out refinance closes on Thursday, on which of the following days will the loan disburse?

Rationale

For a cash-out refinance with a three-business-day rescission period, a Thursday closing disburses on Tuesday (C), as Friday, Monday, and Saturday count as business days.

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Question 9

Nonqualified mortgages offer more options for borrowers who:

Rationale

Nonqualified mortgages provide flexibility for self-employed borrowers (B) with irregular income. Unemployment (A), no down payment (C), or living with parents (D) are not specific qualifiers.

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Question 10

The Real Estate Settlement Procedures Act (RESPA) is applicable to which of the following loans?

Rationale

RESPA applies to federally related mortgage loans (B). Construction loans (A), secondary market transfers (C), and business loans (D) are exempt.

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Question 11

According to Regulation Z, consumers have how many days to rescind a transaction?

Rationale

Regulation Z provides a 3-business-day rescission period (D) for certain loans. Calendar days (C) and other options (A, B) are incorrect.

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Question 12

When providing documents to a state regulator regarding a consumer complaint that was submitted to the state regulator, a licensed company should:

Rationale

Companies should provide documents with an explanation of the complaint (C). U.S. mail (A) isn"t required, consumer authorization (B) isn"t needed for regulators, and redacting personal info (D) may hinder investigations.

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Question 13

According to the Truth in Lending Act (TILA), if an advertisement for a mortgage loan states a specific payment amount, the advertisement must also include the:

Rationale

TILA requires APR, down payment amount or percentage, and repayment terms (D) when a payment amount is advertised. Other combinations (A, B, C) are incomplete.

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Question 14

Income that is specifically protected from discrimination by Regulation B is income from:

Rationale

Regulation B protects income from public assistance programs (D) from discrimination. Self-employment (A), part-time (B), and non-applicant income (C) are not specifically protected.

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Question 15

Which of the following statements describes an advantage of a purchase money second mortgage?

Rationale

A purchase money second mortgage (e.g., 80/20 loan) avoids PMI (C) by keeping the first loan at 80% LTV. Two payments (A), no escrow (B), and faster closing (D) are not advantages.

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