SAFE Mortgage Loan Originator Test (National Test with Uniform State Content)
Ethics: practice questions
Our SAFE MLO Test (NMLS) bank has 51 questions on this topic. Here are 5 of them with answers; the full mock exam draws from every topic, like the real one.
Question 1
Under ECOA, a creditor may not refuse to consider income from:
- A future raise the employer has not confirmed
- A lottery ticket the borrower hopes to win
- Social Security or a pension, because of its source
- An unverified side job
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C. Social Security or a pension, because of its source — Regulation B forbids discounting income because it derives from a pension, annuity or retirement benefit or from part-time work.
Question 2
To use the anti-steering safe harbor, an MLO presents loan options that include:
- Only the loan that pays the MLO most
- The lowest rate, lowest points and fees, and lowest rate without risky features
- Only one loan from one lender
- Only adjustable-rate loans
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B. The lowest rate, lowest points and fees, and lowest rate without risky features — Section 1026.36(e)(3) describes the safe harbor options for each type of transaction the consumer is interested in.
Question 3
Steering a borrower into a subprime loan when they qualify for a prime loan, to earn more, is:
- Allowed if the APR is disclosed
- Good salesmanship
- Required by ECOA
- Prohibited steering
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D. Prohibited steering — Section 1026.36(e) bars steering consumers to transactions because the originator gets more compensation, unless the loan is in the consumer's interest.
Question 4
Under Regulation Z, an advertisement may not describe a loan as a 'government loan program' or 'government-supported loan' unless:
- The loan has a low rate
- The lender is a bank
- The MLO is licensed
- It is a government-backed program loan
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D. It is a government-backed program loan — Section 1026.24(i)(3) prohibits misrepresenting government endorsement.
Question 5
A borrower's income varies widely month to month (commissions). The ethical approach is to:
- Use the single highest month
- Average and verify it over a suitable period
- Ignore the commissions entirely
- Let the borrower state any figure
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B. Average and verify it over a suitable period — The ability-to-repay rule requires verified income; fluctuating income is typically averaged and documented.