NMLS Quiz: Apply Origination Compliance Rules

What this quiz covers

This quiz focuses on Apply Origination Compliance Rules, giving you a quick way to practice the rules, question types, and explanations that matter most for NMLS.

How to use this quiz

Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

Question 1

1. File a Suspicious Activity Report (SAR) with FinCEN within 30 days of identifying the suspicious activity
2. Immediately contact local law enforcement and refuse to process the loan application until investigation concludes
3. Notify the borrower of the suspicion and request additional documentation to verify fund sources
4. Report the activity to their company's compliance officer and continue normal processing unless instructed otherwise (correct answer)

Question 2

1. The loan amount exceeds the conforming loan limit for the area where the property is located
2. The APR exceeds the average prime offer rate by more than the specified percentage thresholds (correct answer)
3. The borrower's debt-to-income ratio exceeds 43% of their verified monthly gross income
4. The loan-to-value ratio exceeds 80% requiring private mortgage insurance coverage for the lender

Question 3

1. Wait until post-closing to correct disclosures if the loan funds as scheduled
2. Document root cause, remediate affected files, issue corrected disclosures when required, and enhance controls (correct answer)
3. Treat the issue as a RESPA Section 8 matter and refund all lender fees immediately
4. Transfer responsibility to the loan servicer because origination disclosures are a servicing function

Question 4

1. Centralize intake, classify issues, set response timelines, perform root-cause analysis, and track corrective actions (correct answer)
2. Respond only to complaints received by mail to ensure authenticity
3. Close complaints after 1 call attempt to reduce operational burden
4. Route all complaints to the settlement agent because they control closing documents

Question 5

1. TILA/Regulation Z appraisal independence requirements (correct answer)
2. RESPA Section 8 marketing services only
3. HMDA/Regulation C rate-spread reporting
4. FDCPA debt collection standards

Question 6

1. Obtain consumer consent consistent with E-SIGN and retain evidence of consent and delivery (correct answer)
2. Email disclosures without consent if the borrower provided an email address on the application
3. Use electronic delivery only for denied applications to reduce printing costs
4. Rely on the settlement agent's portal consent for all lender disclosures automatically

Question 7

1. Limit access by role, secure transmission/storage, and provide required privacy notices consistent with policy (correct answer)
2. Share full loan files with lead generators to improve conversion rates
3. Store unencrypted applicant documents in shared email folders for speed
4. Avoid documenting privacy controls to reduce audit exposure

Question 8

1. Adopt controls for fee mapping, monitor tolerances, and retrain staff on Loan Estimate/Closing Disclosure timing (correct answer)
2. Disclose all fees only on the promissory note because it is the controlling document
3. Eliminate written fee estimates to avoid tolerance violations
4. Rely on the settlement agent's discretion for all disclosure timing decisions

Question 9

1. Provide the appraisal promptly, document the lapse, and update procedures and tracking to ensure timely delivery (correct answer)
2. Provide the appraisal only if the borrower requests it in writing after closing
3. Substitute a verbal summary of value to satisfy the requirement
4. Treat the issue as a HMDA reporting error and resubmit the LAR

Question 10

1. Accepting a referral fee from a real estate agent in exchange for recommending clients to that agent (correct answer)
2. Providing educational materials about the mortgage process to potential borrowers at no charge to them
3. Charging borrowers standard origination fees that are disclosed on the Loan Estimate and Closing Disclosure
4. Receiving normal compensation from their employing lender based on completed loan transactions and performance metrics

Question 11

1. Obtain and document a flood hazard determination and ensure required flood insurance for covered properties (correct answer)
2. Disclose flood zone status only on the Closing Disclosure if the borrower asks
3. Treat flood determinations as optional for first-lien residential mortgages
4. Shift flood compliance to the appraiser because valuations include hazard data

Question 12

1. Perform due diligence, contract controls, ongoing monitoring, and complaint trend reviews for third parties (correct answer)
2. Allow vendors to set their own disclosure timing because they are independent contractors
3. Remove all written scripts to reduce UDAAP risk
4. Limit oversight to annual financial statements only

Question 13

1. Within 15 calendar days of receiving the complete application, regardless of the lender's final credit decision
2. Within 30 calendar days of receiving the complete application, allowing adequate time for full underwriting review (correct answer)
3. Within 45 business days of the initial application submission, providing sufficient processing time for complex loans
4. Within 60 calendar days of application receipt, ensuring thorough evaluation of all borrower qualifications and documentation

Question 14

1. At the time of loan application or within a reasonable time thereafter, before loan closing occurs (correct answer)
2. Only after loan approval has been granted and all other underwriting conditions have been satisfied
3. Within 10 business days of closing, allowing time for the borrower to secure appropriate coverage
4. No later than 30 days after loan funding, ensuring adequate time for policy procurement and activation

Question 15

1. An MLO receiving a salary plus performance bonus based on the total number of loans originated per quarter
2. An MLO receiving compensation based on the interest rate or other loan terms negotiated with the borrower (correct answer)
3. An MLO receiving a flat fee per loan originated, regardless of loan amount or borrower characteristics
4. An MLO receiving commission based on loan volume, with higher rates for loans above certain dollar thresholds

Question 16

1. A 30-year fixed interest rate with monthly principal and interest payments throughout the loan term
2. An interest-only payment period during the first five years of the loan term (correct answer)
3. A loan amount that exceeds the conforming loan limit for the property's geographic area
4. A borrower debt-to-income ratio of 41% based on verified income and recurring monthly obligations

Question 17

1. Their individual NMLS unique identifier number (correct answer)
2. Their company's federal tax identification number and business address
3. Their personal state mortgage license number if different from NMLS
4. Their supervising manager's NMLS number and contact information

Question 18

1. When there is any change in loan terms, regardless of the amount or timing of the change
2. When a changed circumstance occurs that affects settlement charges or other loan terms beyond applicable tolerances (correct answer)
3. Only when the borrower specifically requests updated loan information in writing from the lender
4. When the initial Loan Estimate expires after 10 business days and the loan has not yet closed

Question 19

1. Requesting that an appraiser provide additional comparable sales data to support their valuation conclusion
2. Asking an appraiser to correct a factual error in the property description section of their report
3. Telling an appraiser that the loan approval depends on achieving a specific minimum property value (correct answer)
4. Providing an appraiser with relevant property information that was not available during their initial inspection

Question 20

1. Three business days before the loan consummation date, ensuring adequate review time for the borrower (correct answer)
2. Seven calendar days before the scheduled closing date, allowing sufficient time for any necessary corrections
3. The same day as loan approval, provided all required loan terms have been finalized by underwriting
4. Five business days after the Loan Estimate has been provided, ensuring proper disclosure sequencing requirements