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NMLS Certification
MLO Exam
NMLS.MLO.v2025-09-30.q84 Dumps

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Question 21

Which of the following applicant characteristics is legally permitted to be considered in evaluating credit risk?

A.Whether the applicant seems likely to have children
B.Whether the applicant has a phone number listing in their name
C.Whether the applicant's age makes them ineligible for credit-related insurance
D.Whether the alimony payments the applicant relies on for income are likely to continue and to be consistently made

Correct Answer: D

When evaluating credit risk, lenders are legally permitted to consider whether alimony payments that the applicant relies on for income are likely to continue and be consistently made. Lenders need to assess the reliability of income sources, and documented alimony that is expected to continue is a valid consideration under ECOA (Equal Credit Opportunity Act) guidelines.
* Factors like the applicant's likelihood of having children (A), phone listing (B), and age (C) are not permissible criteria for evaluating creditworthiness under ECOA, as these would constitute discrimination.
References:
* Equal Credit Opportunity Act (ECOA), 15 U.S.C. §1691
* CFPB ECOA Guidelines

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Question 22

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.adopt a credit score evaluation method utilizing the middle of three repository scores and the lowest of all borrowers' scores.
C.implement a written program to detect warning signs of identity theft.
D.implement an internal watch system to prevent the misrepresentation of occupancy status

Correct Answer: C

The Red Flags Rule, under the Fair and Accurate Credit Transactions Act (FACTA), requires lenders and other financial institutions to develop and implement a written Identity Theft Prevention Program. This program must detect, prevent, and mitigate identity theft by identifying "red flags" that signal potential fraud, such as:
* Unusual account activity
* Inconsistent or mismatched identification information
* Suspicious patterns in credit applications
Lenders are required to take steps to verify identities, monitor transactions, and respond to signs of identity theft to protect consumers and minimize fraud risk.
References:
* Fair and Accurate Credit Transactions Act (FACTA)
* Red Flags Rule under 16 CFR 681.2

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Question 23

Which of the following occupancy types are listed on the Uniform Residential Loan Application?

A.Primary residence, duplex residence, business
B.Primary residence, multiunit residence, commercial
C.Primary residence, secondary residence, investment
D.Primary residence, vacation residence, multifamily residence

Correct Answer: C

The Uniform Residential Loan Application (URLA/Fannie Mae Form 1003) allows the applicant to select one of the following occupancy types: primary residence, secondary residence, or investment property.
"Occupancy types on the URLA are: Primary Residence, Secondary Residence, Investment Property."
- Fannie Mae Form 1003: Uniform Residential Loan Application
References:
Fannie Mae, Form 1003 Instructions

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Question 24

How many continuing education hours must mortgage loan originators complete every year to renew their license?

A.3 hours
B.8 hours
C.16 hours
D.20 hours

Correct Answer: B

Mortgage loan originators (MLOs) are required to complete 8 hours of continuing education (CE) annually to maintain their license under the SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act).
This is mandatory to ensure that MLOs stay updated with changing regulations, compliance requirements, and industry practices.
* The 8 hours must include specific coursework, typically:
* 3 hours of federal law and regulations
* 2 hours of ethics (covering fraud, consumer protection, etc.)
* 2 hours of non-traditional mortgage lending
* 1 hour of elective content that may vary depending on state requirements.
Failure to meet these CE requirements can result in license suspension or revocation.
References:
* National Mortgage Licensing System (NMLS) Continuing Education Guidelines
* SAFE Act requirements for MLOs

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Question 25

Under the SAFE Act, which of the following individuals is not a "mortgage loan originator"?

A.An individual who takes a loan application for compensation
B.An individual who quotes interest rates to a consumer for compensation
C.An individual who negotiates credit terms on behalf of a consumer for compensation
D.An individual who handles the collection of a mortgage payment from a consumer for compensation

Correct Answer: D

The SAFE Act defines a mortgage loan originator (MLO) as someone who takes a residential mortgage loan application and offers or negotiates terms for compensation or gain. An individual who only handles the collection of mortgage payments is not acting as an MLO under the Act.
"Mortgage loan originator means an individual who (i) takes a residential mortgage loan application; and (ii) offers or negotiates terms of a residential mortgage loan for compensation or gain. The term does not include an individual who only performs administrative or clerical tasks or who only collects mortgage payments."
- SAFE Act, 12 U.S.C. § 5102(4); NMLS Uniform State Content Outline
References:
SAFE Act, 12 U.S.C. § 5102(4)

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