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Quizzes > Quizzes for Business > Finance

Mortgage Loan Officer Licensing Knowledge Test

Prepare for Your Mortgage Licensing Exam Now

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting a quiz on Mortgage Loan Officer Licensing Knowledge Test

Prepared to boost your mortgage licensing confidence? This practice quiz mimics the real Mortgage Loan Officer Licensing Knowledge Test and helps candidates review core concepts like loan processing and case management. Whether you're studying for the state exam or brushing up on compliance essentials, this interactive quiz offers targeted questions and instant feedback. Explore related Mortgage Loan Processing Knowledge Test and Loan Case Management Knowledge Test to deepen your expertise. Then customise freely in our quizzes editor to tailor practice just for you.

The SAFE Act was established primarily to:
Register mortgage loan originators through a nationwide licensing system
Provide borrowers with annual percentage rate disclosures
Regulate the residential real estate appraisal process
Set maximum loan-to-value ratios for conventional loans
The SAFE Act mandates the licensing and registration of mortgage loan originators through the NMLS. It does not set APR disclosure requirements, regulate appraisals, or establish LTV limits.
Which federal agency enforces the Truth in Lending Act (TILA) disclosures?
Consumer Financial Protection Bureau (CFPB)
Federal Deposit Insurance Corporation (FDIC)
Department of Housing and Urban Development (HUD)
Federal Housing Administration (FHA)
The CFPB is responsible for enforcing TILA disclosure requirements under federal law. The FDIC, HUD, and FHA have different regulatory roles and do not enforce TILA.
What document must a lender provide within three business days of receiving a loan application under TRID?
Loan Estimate
Closing Disclosure
Good Faith Estimate
HUD-1 Settlement Statement
Under the TILA-RESPA Integrated Disclosure rule (TRID), lenders must provide the Loan Estimate within three business days of application. The Closing Disclosure is provided later, close to consummation.
The Equal Credit Opportunity Act (ECOA) prohibits discrimination based on:
Race
Credit score
Loan purpose
Property value
ECOA bans credit discrimination on protected characteristics such as race, color, religion, sex, and marital status. Credit score, loan purpose, and property value are not protected classes under ECOA.
NMLS is the acronym for:
Nationwide Multistate Licensing System
National Mortgage Lending Service
North American Mortgage Licensing Scheme
National Mortgage Licensing System
The NMLS stands for the Nationwide Multistate Licensing System, which is the platform for registering and tracking mortgage loan originators. The other names are incorrect variations.
Under RESPA, the Closing Disclosure must be provided to the borrower how many days before consummation?
3 business days
1 business day
5 business days
7 calendar days
RESPA requires the Closing Disclosure to be delivered no later than three business days before the loan consummation. This gives borrowers time to review final terms.
A borrower's housing expense ratio (front-end DTI) is calculated by dividing monthly housing expenses by:
Gross monthly income
Net monthly income
Liquid assets
Total monthly debts
Front-end debt-to-income ratio measures housing-related payments divided by gross monthly income. Net income and other figures are not used for the front-end DTI.
How many hours of annual continuing education are required for a licensed mortgage loan originator under the SAFE Act?
8 hours
12 hours
20 hours
4 hours
The SAFE Act mandates eight hours of NMLS-approved continuing education each year for licensed mortgage loan originators. Pre-licensing requires more hours.
Which document finalizes loan terms and must be provided at least three business days before closing?
Closing Disclosure
Loan Estimate
Good Faith Estimate
HUD-1 Settlement Statement
The Closing Disclosure contains the final loan terms and closing costs, and RESPA requires it be delivered three business days before closing. The Loan Estimate is provided earlier.
According to RESPA Section 8, paying a referral fee to a real estate agent for a mortgage lead is:
Prohibited
Allowed if disclosed to the borrower
Permitted when under $50 in value
Allowed if the agent is a licensed originator
RESPA Section 8 prohibits kickbacks or unearned fees, including referral payments to real estate agents. Disclosure or value does not make such payments permissible.
Under ECOA, a creditor must notify an applicant of action taken on a credit application within:
30 days
15 days
45 days
60 days
ECOA requires creditors to notify applicants of approval, counteroffer, or denial within 30 days of receiving a completed application. Other timeframes are not compliant.
Which law mandates appraisal independence by prohibiting coercion or undue influence on appraisers?
TILA Section 129E
RESPA
ECOA
HMDA
TILA Section 129E, added by FIRREA, enforces appraisal independence by banning coercion of appraisers. RESPA, ECOA, and HMDA address other aspects of mortgage regulation.
What is the maximum loan-to-value ratio typically permitted for a standard conventional mortgage without private mortgage insurance?
80%
90%
95%
97%
Conventional mortgages generally cap LTV at 80% to avoid private mortgage insurance. Higher LTVs usually require PMI or special program guidelines.
A borrower applies for a VA loan. Which entity guarantees a portion of the loan?
Department of Veterans Affairs
Federal Housing Administration
Department of Housing and Urban Development
Fannie Mae
The Department of Veterans Affairs guarantees a portion of VA loans, reducing risk for lenders. The FHA insures different loans, and HUD and Fannie Mae have separate roles.
The Home Mortgage Disclosure Act (HMDA) primarily requires lenders to:
Report loan application and origination data to regulators
Provide borrowers with final cost disclosures
Set interest rate caps on high-cost loans
Maintain anti-fraud compliance programs
HMDA obligates lenders to collect and report data such as race, income, and loan amount to regulators for fair lending monitoring. It does not set caps or govern disclosures directly.
When a state law provides stronger consumer protections than TILA, which regulation applies?
State law
TILA
Lender's policy
Local ordinances
TILA includes a saving clause that allows state laws with stronger consumer protections to supersede federal requirements. Lender policies and local ordinances cannot override state statutes.
In verifying fluctuating income from commissions, which documentation is least likely to qualify under automated underwriting?
Verbal verification of income
Two years of tax returns
W-2 forms
Bank statements showing deposits
Automated underwriting systems require written documentation such as tax returns, W-2s, or bank statements. Verbal verification does not meet the documentation standards.
A loan officer refers all borrowers to a title company they own without disclosure. Which ethical principle is violated?
Conflict of interest
Client confidentiality
Due diligence
Professional competency
Referring clients to a business in which the officer has a personal interest without disclosure breaches the conflict of interest principle. Confidentiality and competency are not the primary issues here.
For HMDA reporting, which of the following is not a required data point?
Applicant's credit score
Applicant's race
Loan amount
Property location
HMDA requires collection of race, income, loan amount, and property location among other data. Credit score is not mandated for HMDA reporting.
Under the SAFE Act, which individual is exempt from licensing requirements?
An administrative employee performing clerical tasks
A salaried underwriter reviewing credit files
A branch manager approving loans
A loan officer working remotely
Clerical staff who only perform administrative tasks without negotiating or taking applications are exempt under the SAFE Act. Underwriters and loan officers must be licensed.
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Learning Outcomes

  1. Analyse federal and state mortgage regulations
  2. Identify core loan origination and underwriting steps
  3. Apply licensing standards to practical mortgage scenarios
  4. Evaluate ethical practices in mortgage lending
  5. Demonstrate knowledge of key compliance requirements

Cheat Sheet

  1. Key Federal Mortgage Regulations - Explore how the Fair Housing Act, Equal Credit Opportunity Act, and Dodd-Frank Act work together to protect borrowers and keep lenders honest. These cornerstone laws prevent discrimination, curb unfair practices, and help maintain market stability. Discover the full scoop
  2. Mortgage Origination Process - Get familiar with every step from application and processing to underwriting and closing, so you can confidently guide clients through the home-buying journey. Knowing the timeline and paperwork keeps surprises at bay and deals moving smoothly. Dive into details
  3. TRID (TILA-RESPA Integrated Disclosure) - Learn how TRID combines the old Good Faith Estimate and HUD-1 into the Loan Estimate and Closing Disclosure, making costs crystal clear for borrowers. This simplification boosts transparency and reduces surprise fees at closing. Read more on TRID
  4. Home Mortgage Disclosure Act (HMDA) - Study why lenders must report public loan data under HMDA to show they're meeting community needs. These reports shine a light on lending patterns and help regulators spot trends. Learn about HMDA
  5. Equal Credit Opportunity Act (ECOA) - Understand how ECOA bans discrimination in credit based on race, color, religion, national origin, sex, marital status, or age. It's all about ensuring everyone has a fair shot at financing. Explore ECOA
  6. Fair Housing Act - Dive into the protections that make it illegal to refuse to sell, rent, or negotiate with anyone in a protected class. This law promotes equal access to housing for all. Discover the Fair Housing Act
  7. Dodd-Frank Act - Learn how the Dodd-Frank Wall Street Reform and Consumer Protection Act reshaped financial regulation after the 2007 - 08 crisis. It introduced new oversight, consumer protections, and stricter rules for banks. Unpack Dodd-Frank
  8. Truth in Lending Act (TILA) - See why TILA requires clear disclosures of loan terms and costs, so borrowers can compare offers apples-to-apples. Standardizing how fees are calculated keeps lenders accountable. Read about TILA
  9. Real Estate Settlement Procedures Act (RESPA) - Review how RESPA educates homeowners on real estate service shopping and eliminates hidden fees, kickbacks, and referral schemes. It's all about transparency at closing. Learn about RESPA
  10. Licensing Standards & Ethical Practices - Familiarize yourself with the education, testing, and conduct rules mortgage loan officers must follow to stay compliant and professional. Ethics and proper licensing build trust and credibility with clients. Study licensing requirements
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