TheoryFree NMLS Mortgage Loan Practice Test
Take a free NMLS Mortgage Loan practice test for 2026 with questions, answers, explanations, PDF download and timed mock exam links.
NMLS Mortgage Loan Questions
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Q1What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?
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✓ Correct answer: To require disclosure of settlement costs and to prohibit kickbacks for referrals
RESPA is a consumer-protection statute focused on settlement-cost transparency and on banning kickbacks and unearned fees for the referral of settlement-service business. It does not cap interest rates.
Q2A title company gives a loan originator a $200 gift card each time the originator refers a borrower for title insurance. Under RESPA, this arrangement is:
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✓ Correct answer: A prohibited kickback for the referral of settlement-service business
RESPA Section 8 bans giving or accepting any thing of value pursuant to an agreement to refer settlement-service business. There is no de-minimis dollar exception and disclosure does not cure an illegal kickback.
Q3The Truth in Lending Act (TILA) is primarily designed to:
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✓ Correct answer: Promote informed credit use through disclosure of credit terms and cost
TILA, implemented by Regulation Z, promotes the informed use of consumer credit by requiring meaningful disclosure of credit terms, most notably the Annual Percentage Rate (APR) and finance charge.
Q4The Annual Percentage Rate (APR) differs from the note rate because the APR:
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✓ Correct answer: Reflects the total cost of credit as a yearly rate, including certain finance charges and fees
The APR expresses the cost of credit as an annual percentage that folds in interest plus prepaid finance charges (such as certain origination fees and mortgage insurance), so it is typically higher than the note rate.
Q5Under TILA, the right of rescission applies to which type of transaction?
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✓ Correct answer: A refinance with a new lender or a home-equity loan on a primary residence
The TILA right of rescission applies to non-purchase loans secured by the consumer's principal dwelling (e.g., refinances with a new creditor, HELOCs). Purchase-money loans are not rescindable.
Q6How long is the TILA rescission period for a qualifying refinance on a principal residence?
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✓ Correct answer: Three business days after the latest of consummation, delivery of the disclosures, or delivery of the notice of right to rescind
The borrower may rescind until midnight of the third business day after the latest of consummation, delivery of the material TILA disclosures, or delivery of the two copies of the rescission notice.
Q7The Equal Credit Opportunity Act (ECOA) prohibits discrimination in credit transactions on the basis of which factor?
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✓ Correct answer: Race, color, religion, national origin, sex, marital status, age, or receipt of public assistance
ECOA, implemented by Regulation B, bars discrimination based on the listed protected classes. Legitimate creditworthiness factors such as credit score and DTI may still be used.
Q8Under ECOA/Regulation B, when a lender denies a loan application, it must provide the applicant with:
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✓ Correct answer: A notice of adverse action stating the specific reasons for denial or how to obtain them
Regulation B requires an adverse-action notice that gives the principal reasons for the credit denial (or tells the applicant how to request them), generally within 30 days.
Q9Under ECOA, a creditor evaluating an individual credit application from a qualified applicant may NOT:
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✓ Correct answer: Require a creditworthy applicant's spouse to co-sign solely because the applicant is married
ECOA prohibits requiring a spouse's signature when the applicant individually qualifies; a creditor may not condition credit on a spouse co-signing absent a legitimate need such as securing jointly owned collateral.
Q10The Home Mortgage Disclosure Act (HMDA) requires covered lenders to:
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✓ Correct answer: Collect and report data about mortgage applications and originations, including certain applicant demographics
HMDA requires covered institutions to collect, report, and disclose loan-level data (including race, ethnicity, and sex of applicants) so regulators can detect discriminatory patterns and assess community credit needs.
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