Mortgage Loan Origination (SAFE MLO) Exam (MLO) Free Practice Test

Question 1

The SAFE Act mandates that state regulatory authorities must have legal mechanisms to impose civil money penalties for which of the following activities?

A. Charging fees in excess of allowable tolerances

B. Discriminating against applicants based on their race

C. Acting as a mortgage loan originator without a valid license or registration

D. Paying or receiving referral fees

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 2

If a borrower only receives commission pay for 18 months, which of the following actions should a mortgage loan originator (MLO) take?

A. Take the application because positive factors may offset the short income history

B. Tell the borrower they need a steady income and not one that fluctuates

C. Tell the borrower to come back in 6 months when they will have 24 months of commission pay

D. Take the application but tell the borrower that they will need a cosigner

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 3

If a borrower believes that there is incorrect information on their credit report, which of the following actions should they take?

A. Call the credit bureau to report the error

B. Ask the company that is reporting the error to the credit bureau to fix the error

C. Make a written notification to the credit bureau to report the error

D. Ask the lender to fix the error

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 4

The purpose of a Suspicious Activity Report (SAR) is to report known or suspected violations or suspicious activity observed by financial institutions subject to the:

A. Gramm-Leach-Bliley Act(GLBA).

B. Truth in Lending Act (TILA).

C. Bank Secrecy Act (BSA).

D. Real Estate Settlement Procedures Act(RESPA).

Correct Answer: C

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 5

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

A. 75%

B. 80%

C. 78%

D. 70%

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 6

Which of the following statements describes the purpose of the TILA-RESPA Integrated Disclosure (TRID)?

A. It ensures that the terms and fees that are quoted at the time of application do not change.

B. It aids borrowers in understanding the loan transaction process by utilizing readily understandable language.

C. It provides a three-day cooling-off period for all loans

D. It allows borrowers five days to review the final amount needed for settlement.

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 7

Which of the following fees must remain the same unless a valid changed circumstance occurs?

A. Fees paid to an affiliate of the lender

B. Owner's title insurance premium

C. Total per diem interest

D. Homeowner's insurance

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 8

The Red Flags Rule under the Fair and Accurate Credit Transactions Act (FACTA) require lenders to:

A. adopt best practices for property evaluations as stipulated in the Home Valuation Code of Conduct.

B. implement a written program to detect warning signs of identity theft.

C. adopt a credit score evaluation method utilizing the middle of three repository scores and the lowest of all borrowers' scores.

D. implement an internal watch system to prevent the misrepresentation of occupancy status

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 9

Which of the following is an example of a loan expense that is permitted to change without any tolerance restrictions?

A. An escrow fee that is paid by the borrower and the borrower did not shop for the fee

B. A lender's tax service fee that is paid by the borrower

C. A lender's processing fee that is paid by the borrower

D. Property taxes paid by the borrower

Correct Answer: D

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 10

The practice of denying a creditworthy applicant a loan for housing because of the location of the property is sometimes referred to as:

A. redlining.

B. low balling.

C. appraising.

D. steering.

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 11

Under which of the following programs is a creditor required to provide disclosures to the consumer that fully describe each of the creditor's variable-rate loan programs in which the consumer expresses an interest?

A. ARM

B. FHA

C. Construction

D. Fixed

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 12

A mortgage loan originator is not required to provide an applicant with an initial Loan Estimate within the three business day period requirement if the applicant does which of the following?

A. Withdraws the application within three business days

B. Has not selected a loan program

C. Waives the right to receive a Loan Estimate

D. Signs a Truth in Lending statement

Correct Answer: A

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Question 13

Which of the following individuals is required to be licensed as a mortgage loan originator (MLO)?

A. An underwriter presenting a revised loan offer to a borrower under the direction and supervision of a licensed lender

B. A seller providing financing to the purchaser of a dwelling owned by the seller

C. A loan processor performing clerical duties under the direction and supervision of a licensed broker

D. An MLO's assistant explaining and describing the steps that a borrower will need to take in order to obtain a loan

Correct Answer: B

Explanation: Only visible for TestSimulate members. You can sign-up / login (it's free).

Welcome to TestSimulate

NMLS Mortgage Loan Origination (SAFE MLO) (MLO) Free Practice Test