Free Mortgage Loan Originator Practice Test

Question 1

Which description best captures what it means to discriminate against an applicant under Regulation B?

Accepted Answer

To treat an applicant less favorably than other applicants

Answer

To treat applicants differently, whether or not the treatment is less favorable

Answer

To deny credit to any applicant who belongs to a protected group

Answer

To issue a denial after receiving a completed application

Question 2

A lender's salaried employee takes mortgage applications and communicates loan terms to applicants on the lender's behalf. Why is that employee not a mortgage broker under Regulation X's definition?

Accepted Answer

The definition excludes an employee of a lender.

Answer

Taking an application is not an origination service.

Answer

A broker must personally underwrite each loan.

Answer

A broker must close each loan in the broker's own name.

Question 3

A consumer loan secured by a qualifying home is intended by its originating lender for sale to Fannie Mae. No exemption applies. Which coverage conclusion is supported?

Accepted Answer

The intended sale supplies a qualifying connection under the definition.

Answer

The intended sale removes the origination from RESPA.

Answer

The loan must first be purchased before a qualifying connection exists.

Answer

The intended sale matters only if the mortgage also has federal insurance.

Question 4

A lender's advertisement uses a video to communicate that applicants of a particular religion will receive worse terms. The lender argues that no printed sentence says this. Which response is correct?

Accepted Answer

Visual images, including videos, can be statements under the discouragement rule

Answer

The rule requires an express printed statement of the discriminatory policy

Answer

The rule applies to videos after a viewer submits an application

Answer

Advertising is outside the rule if the lender uses nondiscriminatory application forms

Question 5

A loan assumption requires lender permission, and the lender grants it without charging an assumption fee. How does Regulation X treat the assumption?

Accepted Answer

It is covered because permission is required and obtained.

Answer

It is exempt because the lender charges no assumption fee.

Answer

It is exempt because the buyer assumes rather than refinances the debt.

Answer

It is covered only if the lender increases the interest rate.

Question 6

A training guide says RESPA ensures that each borrower receives the lowest available mortgage interest rate. Which revision best states RESPA's purpose?

Accepted Answer

RESPA promotes timely settlement-cost information and protects against abusive practices that unnecessarily increase settlement charges.

Answer

RESPA standardizes interest rates for borrowers with similar credit scores.

Answer

RESPA substitutes federal underwriting decisions for lender credit review.

Answer

RESPA requires the same settlement price from competing service providers.

Question 7

A mortgage is assumed under an instrument giving the lender no express right to approve the new borrower. What is the applicable RESPA treatment of the assumption?

Accepted Answer

The assumption is exempt under the assumption-without-approval provision.

Answer

The assumption is covered because the original loan was covered.

Answer

The assumption is covered because the property remains residential.

Answer

The assumption is exempt only if the original borrower remains in possession.

Question 8

A consumer obtains a fixed-rate second mortgage from a federally insured bank for personal home improvements. It is secured by a one-family home, and no exemption applies. A reviewer excludes it because another lender holds the first lien. Which conclusion is correct?

Accepted Answer

The subordinate lien can qualify regardless of who holds the first lien.

Answer

The exclusion is correct because the first lien belongs to another lender.

Answer

The loan qualifies only if it pays off the first mortgage.

Answer

The loan qualifies only if the borrower purchases a different property.

Question 9

A lender increases the price of an existing credit arrangement solely because the borrower changes religion. Which statement is correct?

Accepted Answer

Existing credit is covered, so religion cannot justify less favorable terms

Answer

ECOA protects applicants seeking new credit rather than existing borrowers

Answer

Existing credit is covered only when the borrower has applied to modify the credit terms

Answer

Existing credit is covered for collection practices, but later price changes are contract matters

Question 10

A lender proposes replacing early settlement-cost information with an explanation delivered after closing. Which RESPA purpose is most directly undermined?

Accepted Answer

Effective advance disclosure of settlement costs

Answer

Modernization of land-title records

Answer

Reduction in required tax and insurance escrow deposits

Answer

Elimination of referral kickbacks that increase settlement costs

Question 11

Regulation B defines an elderly applicant as a person of what age?

Accepted Answer

62 or older

Answer

55 or older

Answer

60 or older

Answer

65 or older

Question 12

Under Regulation X, which description best defines a mortgage broker?

Accepted Answer

A person other than a lender's employee who provides origination services as an intermediary between borrower and lender

Answer

A lender employee who takes applications for that lender

Answer

A purchaser of existing loans who provides no origination services

Answer

A settlement agent who records closing documents without arranging financing

Question 13

A compliance reviewer calls a broker's table-funded closing an exempt secondary-market sale because the broker assigns the loan immediately. What is the best correction?

Accepted Answer

The initial assignment does not turn a table-funded broker transaction into a secondary-market transaction.

Answer

The exemption applies once the broker charges an origination fee.

Answer

The exemption applies if the broker signs the note as the named lender.

Answer

The exemption applies if the assignment is delayed until the day after closing.

Question 14

A broker closes a federally related mortgage in its own name in a table-funded transaction. The obligation is initially assigned to the funding company at settlement. Who is the lender for Regulation X purposes?

Accepted Answer

The funding company receiving the initial assignment

Answer

The broker because its name appears on the closing documents

Answer

The settlement agent disbursing the proceeds

Answer

The investor that might buy the loan in a later resale

Question 15

A trainee screens out a consumer mortgage solely because its qualifying residential collateral is an individual cooperative unit rather than a detached house. What is the correct response?

Accepted Answer

Individual cooperative units are included in the residential collateral definition.

Answer

Cooperative units qualify only when the mortgage has a subordinate lien.

Answer

The exclusion is correct because RESPA requires detached housing.

Answer

The exclusion is correct unless the borrower purchases the entire cooperative building.

Question 16

A proposal would reduce the amount home buyers must place in accounts used to pay property taxes and insurance. Which RESPA purpose does that most closely match?

Accepted Answer

Reducing required escrow deposits

Answer

Improving advance disclosure of settlement costs

Answer

Eliminating kickbacks that increase settlement costs

Answer

Modernizing the recording of land titles

Question 17

Which statement about ECOA's protection based on age is accurate?

Accepted Answer

It includes the condition that the applicant has capacity to contract

Answer

It begins when an applicant reaches age 62

Answer

It requires lenders to disregard whether an applicant can enter a binding contract

Answer

It applies when retirement income exceeds employment income

Question 18

Two assumptions involve otherwise covered loans. For the first, lender approval is required and granted without a fee. For the second, the lender has no express approval right. Which distinction controls their RESPA treatment?

Accepted Answer

The first is covered and the second is exempt because the approval conditions differ.

Answer

Both are exempt because neither creates a new purchase-money loan.

Answer

Both are covered because their original loans were covered.

Answer

The first is exempt because there is no fee, and the second is covered because approval is unnecessary.

Question 19

Two independent firms provide origination services between borrowers and lenders. One closes in the funding lender's name; the other closes in its own name through table funding. Which assessment of mortgage-broker status is correct?

Accepted Answer

Both can be brokers because own-name table funding is included, not required, in the definition.

Answer

The first is a broker; the second cannot be a broker because it uses its own name.

Answer

The second is a broker; the first cannot be a broker because it does not use its own name.

Answer

Neither is a broker unless it retains the loans after settlement.

Question 20

Which goal is expressly part of RESPA's purpose?

Accepted Answer

Improving advance disclosure of settlement costs

Answer

Standardizing mortgage interest rates among lenders

Answer

Setting a uniform minimum down payment for home purchases

Answer

Establishing a single underwriting score for mortgage applicants

Question 21

An applicant honestly exercises a Consumer Credit Protection Act right but does not obtain the requested relief. A lender penalizes the applicant because of that exercise of rights. Which analysis is best?

Accepted Answer

Good faith concerns honesty in fact, so an unsuccessful outcome does not itself remove the protection

Answer

The protection depends on obtaining the requested relief

Answer

The penalty is permissible if the earlier matter is closed

Answer

The protection depends on the lender having approved the exercise of rights

Question 22

For purposes of Regulation B, what does good faith mean?

Accepted Answer

Honesty in fact in the conduct or transaction

Answer

Observance of reasonable commercial standards of fair dealing

Answer

A reasonable belief that the asserted claim will succeed

Answer

An absence of any intent to delay or avoid repayment

Question 23

A creditor has none of the other qualifying federal connections. Under the annual-volume route in the federally related mortgage definition, what residential real estate loan activity must that qualifying creditor have?

Accepted Answer

Making or investing more than $1,000,000 per year

Answer

Making or investing at least $100,000 per year

Answer

Making or investing exactly $1,000,000 per year

Answer

Making or investing more than $1,000,000 over its entire history

Question 24

Which change to a lender's policy best addresses an ECOA problem?

Accepted Answer

Replace a public-assistance exclusion with lawful evaluation of income amount and probable continuance

Answer

Move national-origin pricing into a disclosed adjustment every borrower can read before applying

Answer

Replace the written religious eligibility rule with loan officer discretion exercised orally on each file

Answer

Apply the marital-status score adjustment uniformly so that no loan officer can make exceptions

Question 25

An independent firm takes applications, processes files, and connects borrowers with lenders in federally related mortgage transactions. It closes loans in the lenders' names. Which fact supports classifying it as a mortgage broker?

Accepted Answer

It provides origination services as an intermediary without being the lender's employee.

Answer

It must first purchase the loans before arranging them.

Answer

It can qualify only after it begins closing loans in its own name.

Answer

It is a mortgage broker because any processor is a mortgage broker regardless of role.

Question 26

A lender denies a request because documented repayment capacity fails a legitimate standard applied without prohibited discrimination. The applicant argues that ECOA requires approval. Which response is best?

Accepted Answer

ECOA prohibits discriminatory treatment but allows legitimate creditworthiness evaluation

Answer

ECOA requires approval if the applicant belongs to a protected group

Answer

ECOA allows the denial only when no collateral is offered

Answer

ECOA requires a written explanation of the denial but does not address how applicants are evaluated

Question 27

An MLO tells unmarried callers they should apply elsewhere because this lender favors married borrowers. The lender says it never receives applications from those callers. What is the best assessment?

Accepted Answer

The message can violate the discouragement rule before an application is submitted

Answer

The absence of applications establishes that ECOA does not apply

Answer

Referring callers elsewhere makes a marital-status preference permissible

Answer

The statement is permitted because it concerns preference rather than a guaranteed denial

Question 28

An applicant meets the same credit criteria as comparable applicants but is offered a smaller loan solely because of sex. Which analysis is correct?

Accepted Answer

The reduced amount is less favorable credit treatment on a prohibited basis

Answer

A smaller offer avoids ECOA because some credit remains available

Answer

The offer is permitted if the interest rate is unchanged

Answer

The offer is permitted if the lender states the reason accurately

Question 29

An MLO tells a coworker, 'We approve applicants of every race, so ECOA allows us to charge one race a higher rate.' What is the best correction?

Accepted Answer

ECOA also prohibits discrimination in credit terms, including pricing

Answer

The pricing difference is acceptable if no applicant is denied

Answer

The pricing difference is acceptable when described in the disclosures

Answer

ECOA concerns collection practices rather than origination pricing

Question 30

A borrower converts a mortgage under its existing permitted terms without a new note. Another borrower signs a new note to replace an existing mortgage. Why should a reviewer avoid applying the loan-conversion exemption to both based on these facts?

Accepted Answer

The second transaction lacks the no-new-note condition required for that exemption.

Answer

Any change in terms disqualifies the first transaction from the exemption.

Answer

The first transaction qualifies only if the lender also changes.

Answer

Replacement of existing debt is itself a conversion exemption.

Question 31

Which pair correctly identifies two of Congress's RESPA goals?

Accepted Answer

Reducing required escrow deposits and modernizing land-title recordkeeping

Answer

Reducing required escrow deposits and capping lender origination fees

Answer

Modernizing land-title recordkeeping and requiring title insurance on every covered loan

Answer

Eliminating settlement kickbacks and guaranteeing borrowers the lowest available settlement costs

Question 32

A lender wants to ask about an applicant's age to evaluate a pertinent element of creditworthiness under applicable regulations. Which statement is accurate?

Accepted Answer

ECOA permits limited age inquiries for authorized creditworthiness purposes

Answer

ECOA permits age inquiries only when the age is used in an elderly applicant's favor

Answer

ECOA permits age inquiries only inside a demonstrably and statistically sound scoring system

Answer

ECOA permits age inquiries only to confirm the applicant can enter a binding contract

Question 33

Which reasoning correctly explains why federal mortgage insurance is not required for every RESPA-covered loan?

Accepted Answer

The definition supplies alternative connections, including federal regulation of the lender.

Answer

A residential address by itself establishes the entire federal connection.

Answer

A mortgage broker can waive the need for a qualifying lender connection.

Answer

A consumer's promise to occupy the home substitutes for the lender connection.

Question 34

Which activity is included in Regulation X's definition of an origination service?

Accepted Answer

Processing a mortgage loan application

Answer

Buying a seasoned mortgage solely as an investment

Answer

Collecting scheduled payments on an already originated loan

Answer

Marketing an existing loan portfolio to secondary-market investors

Question 35

A scoring system is otherwise qualifying and statistically sound. It assigns an elderly applicant a negative age factor. The lender cites the system's statistical soundness as its defense. What is the best response?

Accepted Answer

Statistical soundness does not remove the express restriction on negative age factors for elderly applicants

Answer

Statistical soundness permits any age factor the model produces

Answer

The factor is permissible if applied to applicants beginning at age 65

Answer

The factor is permissible if the applicant receives the score before closing

Question 36

An audit finds two practices: an income review conducted for authorized creditworthiness purposes, and a policy charging unmarried applicants more because they are unmarried. Which conclusion is most accurate?

Accepted Answer

The income review can be permitted, but the marital-status pricing policy uses a prohibited basis

Answer

Both are prohibited, because an income review can also reveal a person's marital status

Answer

Both are permitted if accurately described in loan disclosures

Answer

The pricing policy is permitted if the surcharge reflects the creditor's rights and remedies on that loan

Question 37

Which sequence best represents the reach of ECOA and Regulation B's discrimination and discouragement protections?

Accepted Answer

Advertising to prospective applicants, application review, terms, and dealings with existing credit

Answer

Completed application review through the approval or denial decision

Answer

Loan pricing through funding, excluding collection procedures

Answer

Written application intake through delivery of the closing documents

Question 38

A consumer loan finances a manufactured home located on residential real property securing the loan. The lender has federally insured deposits, and no exemption applies. Which statement is correct?

Accepted Answer

The manufactured-home transaction can be covered on these facts.

Answer

Manufactured housing is excluded from the federally related mortgage definition.

Answer

Coverage requires a site-built structure rather than a manufactured home.

Answer

Federal mortgage insurance is necessary because the home is manufactured.

Question 39

Which pair of loans is exempt under the coverage rules stated in Regulation X?

Accepted Answer

A genuine bridge loan and a loan primarily for business purposes

Answer

A same-lender construction-to-permanent loan and a consumer home-purchase mortgage

Answer

An approved assumption requiring lender consent and a genuine bridge loan

Answer

A personal-purpose home refinance and a loan primarily for agricultural purposes

Question 40

A lender lawfully asks about income continuance. Its file shows the decision was actually based on a policy against lending to people of a particular national origin. What matters most?

Accepted Answer

The actual national-origin basis remains prohibited despite the lawful inquiry

Answer

The lawful income question makes the resulting decision permissible

Answer

The decision is permissible if the income analysis alone would have supported the same denial

Answer

The lawful inquiry controls unless the applicant can show the income question itself was a pretext

Question 41

A residential mortgage converts to different terms permitted by the original instrument. No new note is required, but the lender charges a conversion fee. Which result follows under Regulation X?

Accepted Answer

The conversion is exempt despite the fee.

Answer

The fee makes the conversion a covered refinance.

Answer

The conversion is exempt only if the loan's terms remain unchanged.

Answer

A new note must be issued whenever a conversion fee is charged.

Question 42

A lender finances construction of a consumer's home under a loan that may convert to permanent financing with that same lender. The other RESPA coverage elements are met. Which conclusion is correct?

Accepted Answer

The temporary-financing exemption does not apply to this arrangement.

Answer

The loan is exempt because the home is unfinished at closing.

Answer

The loan is exempt until the borrower actually elects conversion.

Answer

The loan is exempt if the construction phase lasts less than two years.

Question 43

A consumer mortgage satisfies the general RESPA coverage definition and is subject to the integrated disclosure requirements. A trainee concludes that it is entirely outside Regulation X. What is the best assessment?

Accepted Answer

Incorrect; the integrated-disclosure category has specified partial exemptions, not blanket exclusion.

Answer

Correct; integrated disclosures eliminate all Regulation X obligations.

Answer

Incorrect; covered loans cannot receive exemptions from individual Regulation X provisions.

Answer

Correct; only loans using older settlement forms are federally related mortgage loans.

Question 44

A qualifying, statistically sound credit scoring system considers age. Which restriction applies to an elderly applicant?

Accepted Answer

The applicant's age may not be assigned a negative factor or value

Answer

The applicant's age must be treated as missing information

Answer

The applicant must receive the same total score as every younger applicant

Answer

The applicant's age may be penalized if the lender discloses the penalty

Question 45

Which standard governs whether a creditor's statement is prohibited discouragement?

Accepted Answer

Whether the creditor knows or should know a reasonable person would understand that a prohibited basis would lead to denial or less favorable terms

Answer

Whether the creditor admits intending to reject the listener

Answer

Whether the listener later receives a formal denial

Answer

Whether a completed application was pending when the statement was made

Question 46

A consumer obtains a genuine bridge loan secured by an otherwise qualifying one-family home. Which RESPA coverage statement applies to that bridge loan?

Accepted Answer

It is exempt under the temporary-financing provision.

Answer

It is covered because a home secures it.

Answer

It is covered if the lender's deposits are federally insured.

Answer

It is exempt only if the borrower pledges vacant land instead.

Question 47

A loan file establishes a first lien on a one-family residence and a federally regulated lender. The reviewer declares RESPA coverage without examining whether the credit is primarily commercial. What analytical step is missing?

Accepted Answer

Checking applicable exemptions after identifying collateral and lender connection

Answer

Determining whether the borrower could have obtained a lower rate

Answer

Determining whether the first lien could instead have been subordinate

Answer

Requiring federal mortgage insurance in addition to lender regulation

Question 48

Which practice most directly illustrates the settlement-cost abuse Congress sought to eliminate through RESPA?

Accepted Answer

Referral kickbacks that unnecessarily increase settlement-service costs

Answer

A lender's disclosed fee for origination services it actually performs

Answer

A disclosed affiliated business arrangement that leaves the borrower free to use another provider

Answer

A payment between real estate brokers under a cooperative brokerage arrangement

Question 49

Two vacant-land loans otherwise meet the coverage conditions. Loan One will use its proceeds to place a manufactured home on the secured property within one year. Loan Two will leave the land unimproved and will fund no structure. Which conclusion follows?

Accepted Answer

Loan One does not receive the vacant-land exemption; Loan Two does.

Answer

Both receive the exemption because the land is vacant at settlement.

Answer

Neither receives the exemption because both are secured by real property.

Answer

Loan One receives the exemption; Loan Two does not.

Question 50

Which statement best describes the scope of the bona fide secondary-market transfer exemption?

Accepted Answer

Such transfers are generally exempt, subject to the specified servicing exception.

Answer

Such transfers are exempt from the servicing provisions as well as settlement provisions.

Answer

Such transfers are treated as new consumer originations requiring the same coverage analysis as a new loan.

Answer

Such transfers are exempt only when the loan is no longer secured by residential property.

Module	Share of exam	Questions here
1. RESPA and Regulation X Free practice: RESPA's purpose, the loans it covers, and the definition of mortgage broker	63%	31
2. Equal Credit Opportunity Act and Regulation B Free practice: ECOA's purpose, the prohibited bases, and what a creditor may do	38%	19