SAFE Mortgage Loan Originator Test (National Test with Uniform State Content)
Federal mortgage-related laws: practice questions
Our SAFE MLO Test (NMLS) bank has 99 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
The Gramm-Leach-Bliley Act's privacy rule (Regulation P) requires a financial institution to give a customer:
- A free credit report every month for as long as the customer relationship lasts
- A copy of its tax returns
- A list of every employee who saw the file
- A privacy notice and, before NPI goes to nonaffiliates, an opt-out
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D. A privacy notice and, before NPI goes to nonaffiliates, an opt-out — Regulation P requires an initial privacy notice for customers and an opt-out notice and reasonable opportunity to opt out before disclosing NPI to nonaffiliated third parties outside the exceptions.
Question 2
The creditor must deliver or mail the Loan Estimate no later than:
- The seventh business day after the application, or at closing if earlier
- Three business days before closing
- The third business day after application
- The day of closing
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C. The third business day after application — Section 1026.19(e)(1)(iii)(A): the Loan Estimate is due within three business days of application. For this rule, business day means a day the creditor is open for carrying on substantially all its business.
Question 3
Under Regulation Z, a creditor may not finance single-premium credit insurance in a closed-end loan secured by a dwelling. This means:
- The borrower cannot buy any life insurance
- The lender must provide free credit life insurance to every borrower
- Hazard insurance cannot be escrowed
- A lump-sum credit insurance premium can't be added to the loan
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D. A lump-sum credit insurance premium can't be added to the loan — Section 1026.36(i) prohibits financing single-premium credit insurance; premiums calculated and paid monthly are not covered.
Question 4
If the required rescission notice or material disclosures are never delivered, the right to rescind expires:
- Never
- 3 years after consummation, or earlier sale or transfer
- One year after consummation
- Five years after consummation, or ten years if the loan is a high-cost mortgage
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B. 3 years after consummation, or earlier sale or transfer — The extended right of rescission ends three years after consummation, on transfer of all the consumer's interest in the property, or on sale, whichever occurs first.
Question 5
Under Regulation B, alimony, child support and separate maintenance income:
- May never be considered because it is not earned from employment or self-employment
- Must be considered if relied on, to the extent it is likely to be consistently made
- Must be discounted by 50%
- Counts only if paid for more than 10 years
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B. Must be considered if relied on, to the extent it is likely to be consistently made — A creditor may not discount income from alimony or child support because of its source, but may consider how likely it is to be consistently received.