Syllabus
NMLS SAFE Mortgage Loan Originator Test (National Test with Uniform State Content)
Prep for the SAFE Mortgage Loan Originator Test (National Test with Uniform State Test content). NMLS develops it for the CSBS state regulators and Prometric delivers it. It is the single national test that meets the MLO licensing test requirement in every US state and territory. The syllabus follows the official five-area outline: Federal Law 24%, Uniform State Content 11%, General Mortgage Knowledge 20%, Origination Activities 27% and Ethics 18%.
Preview Module 1, Federal Mortgage Related Laws here, lesson by lesson with its clips. Study all 5 modules in the app.
Module 1 · 41 lessonsPreview here
Federal Mortgage Related Laws
RESPA / Regulation X
Lesson 1
RESPA purpose, coverage and exemptions
- State the purposes of RESPA (advance disclosure of settlement costs and elimination of kickbacks and unearned fees)
- Identify a federally related mortgage loan on 1–4 family residential property as the loan type RESPA covers
- Identify RESPA-exempt transactions (business/agricultural purpose, temporary financing, vacant land, 25+ acres, assumptions without lender approval, secondary-market sales)
- Recall the Regulation X definition of 'mortgage broker' as a non-employee of the lender who brings borrower and lender together
- Recall that RESPA is implemented by Regulation X (12 CFR 1024) and enforced by the CFPB
Lesson 2
RESPA Section 8: kickbacks, unearned fees and fee splitting
- Define a 'thing of value' and a 'referral' as used in Section 8
- Identify fee splitting or unearned fees for services not actually performed as Section 8 violations
- Distinguish permitted payments (bona fide pay for goods, services or facilities actually provided; payments to employees; cooperative brokerage) from prohibited kickbacks
- Recall the criminal penalty for Section 8 violations (fine up to $10,000 and/or up to 1 year in prison)
- Recall that private plaintiffs may recover three times the settlement-service charge involved
Lesson 3
Affiliated business arrangements (AfBA)
- Define an affiliated business arrangement as a referral to a provider in which the referrer has more than a 1% ownership interest
- State that the AfBA disclosure must be given at or before the time of referral
- State that the borrower generally cannot be required to use the affiliated provider
- Identify that the only permitted payment to the referring party is a return on its ownership interest
Lesson 4
RESPA Sections 9 & 10: title insurance choice and escrow limits
- State Section 9's rule that a seller may not require the buyer to buy title insurance from a particular company, and recall that damages are three times the title insurance charge
- Apply the Section 10 limit on the escrow cushion (no more than 1/6, or two months, of annual disbursements)
- Recall the initial escrow account statement timing (at closing or within 45 days of settlement)
- Recall the annual escrow statement timing (within 30 days of the end of the computation year)
- Apply the rule that an escrow surplus of $50 or more is refunded within 30 days of the analysis
Lesson 5
Servicing transfers and error resolution
- Recall servicing transfer notice timing (transferor at least 15 days before, transferee within 15 days after the effective date)
- Identify the required contents of a transfer notice (effective date, new servicer contact, date the old servicer stops accepting payments)
- Apply the 60-day grace period during which a payment sent to the old servicer cannot be treated as late
- Recall qualified written request and error-notice timelines (acknowledge within 5 business days, respond within 30 business days)
Lesson 6
Early intervention, loss mitigation and foreclosure limits
- Recall the early-intervention deadlines (live contact by the 36th day and written notice by the 45th day of delinquency)
- State the continuity-of-contact requirement (personnel assigned to a delinquent borrower by the 45th day)
- State that the first foreclosure notice or filing may not be made until the borrower is more than 120 days delinquent
- Apply the dual-tracking prohibition when a complete loss-mitigation application is pending
- Recall loss-mitigation application timelines (acknowledge within 5 business days; evaluate a complete application within 30 days when received more than 37 days before a sale)
Lesson 7
Regulation X application-stage disclosures
- Identify examples of settlement services (origination, appraisal, title, credit reports, surveys, closing)
- State that the special information booklet (Your Home Loan Toolkit) is due within 3 business days of application for purchase transactions
- Identify transactions that do not require the Toolkit (refinances, subordinate liens, reverse mortgages)
- Identify the mortgage servicing disclosure requirement for first-lien applications
ECOA / Regulation B
Lesson 1
ECOA prohibited bases and permissible acts
- List the ECOA prohibited bases (race, color, religion, national origin, sex, marital status, age, public assistance income, good-faith exercise of CCPA rights)
- Apply the age rule (age may be considered only for capacity to contract or used favorably for applicants 62 or older)
- Identify permissible inquiries such as immigration/permanent residency status and the applicant's own reliance on alimony
- Recall that Regulation B (12 CFR 1002) implements ECOA and covers every aspect of a credit transaction
- Recall that Regulation B defines 'elderly' as age 62 or older
Lesson 2
Reg B application inquiries and government monitoring information
- Apply the rule that marital status may be asked only as married, unmarried or separated
- Identify prohibited questions such as birth control, childbearing plans or a spouse's information when the spouse is not involved
- State that applicants must be told they need not disclose alimony or child support unless they want it considered
- Apply the procedure when a borrower declines to give race, ethnicity or sex in a face-to-face application (the MLO notes it from visual observation or surname)
- Recall that demographic collection by visual observation is not required for mail, telephone or internet applications
Lesson 3
ECOA notification of action taken and adverse action
- Define adverse action and identify examples (denial, counteroffer not accepted, unfavorable change to an existing account)
- Recall the 30-day notice deadline after a complete application
- Recall the 90-day deadline when a counteroffer is not accepted
- Identify the required contents of an adverse action notice (specific reasons or right to request them, ECOA notice, regulator contact)
- Apply the incomplete-application notice rule
- Recall that Reg B records are kept for 25 months
Lesson 4
ECOA income, co-signer and appraisal-copy rules
- Identify income that may not be discounted because of its source (part-time, public assistance, alimony/child support if reliable, retirement)
- Apply the rule that a spouse's signature cannot be required when the applicant qualifies individually
- Identify when additional parties or co-signers may be required and the limits on requiring a spouse to be that party
- Recall that notice of the right to an appraisal copy is due within 3 business days of application, and copies are due promptly or at least 3 business days before consummation
- Identify the standard creditworthiness factors (credit history, capacity/income, capital/assets, collateral)
TILA / Regulation Z
Lesson 1
TILA purpose and covered transactions
- State TILA's purpose of uniform disclosure of credit costs so consumers can compare credit
- Identify covered credit (consumer purpose, offered regularly, payable in more than four installments or subject to a finance charge)
- Identify exempt credit such as business, commercial or agricultural purpose loans
- Define 'dwelling' and 'residential mortgage transaction' under Regulation Z
- Recall that Regulation Z (12 CFR 1026) implements TILA under CFPB authority
- Recall that Regulation Z records are generally kept for 2 years
Lesson 2
Finance charge, APR and amount financed
- Define the finance charge as the cost of consumer credit expressed as a dollar amount
- Classify fees as included in the finance charge (interest, points, origination, mortgage insurance) or excluded in real estate transactions (title, appraisal, credit report, document preparation, notary)
- Define APR as the cost of credit expressed as a yearly rate and distinguish it from the note rate
- Recall the APR tolerances (1/8 of 1% regular, 1/4 of 1% irregular transactions)
- Compute the amount financed as the loan amount minus prepaid finance charges
- Define seller contributions (interested-party contributions) and recall that seller-paid points are excluded from the borrower's finance charge
Lesson 3
Right of rescission
- Identify transactions carrying rescission rights (refinances and home equity loans on the principal dwelling) and those without (purchase-money loans, same-lender refinance without new money)
- Count the rescission period (midnight of the 3rd business day, counting Saturdays but excluding Sundays and federal holidays, after the last of consummation, notice or material disclosures)
- Recall that the right extends up to 3 years if notice or material disclosures were not provided
- State that every owner whose ownership interest is subject to the security interest may rescind and must receive notice
- Recall that the creditor must return money within 20 calendar days of a rescission
- Identify the bona fide personal financial emergency waiver
Lesson 4
TILA advertising and triggering terms
- Identify triggering terms (down payment amount or percentage, number of payments or repayment period, payment amount, finance charge amount)
- List the disclosures a triggering term requires (down payment, repayment terms, APR and whether it may increase)
- Apply the rule that a rate in an ad must be accompanied by an equally prominent APR
- Identify prohibited misleading terms such as 'fixed' without its time period or comparisons to hypothetical payments
Lesson 5
HOEPA high-cost mortgages (§1026.32)
- Apply the APR trigger (more than 6.5 points over APOR for most first liens, 8.5 points for subordinate liens)
- Apply the points-and-fees trigger (more than 5% of the total loan amount for loans at or above the annually adjusted threshold)
- Apply the prepayment penalty trigger (charged more than 36 months after consummation or more than 2% of the amount prepaid)
- Identify HOEPA restrictions (no balloon payments generally, no negative amortization, no financing points and fees, late fee cap of 4%)
- State that pre-loan homeownership counseling is required before a high-cost mortgage
- Identify loans excluded from HOEPA (reverse mortgages, construction-only loans, HFA and USDA direct loans)
Lesson 6
Higher-priced mortgage loans (§1026.35)
- Apply the HPML APR thresholds over APOR (1.5 points first-lien conforming, 2.5 points first-lien jumbo, 3.5 points subordinate)
- State the HPML escrow requirement for first liens (escrow for at least 5 years)
- State the HPML appraisal requirement (written appraisal with interior inspection by a certified or licensed appraiser)
- Apply the property-flip second-appraisal rule (resale within 180 days at a price more than 10% higher within 90 days or 20% higher within 91–180 days), with no charge to the consumer
- Distinguish an HPML from a HOEPA high-cost mortgage
Lesson 7
Loan originator compensation rule (§1026.36(d)–(e))
- Apply the ban on compensation based on a loan's terms or a proxy for its terms
- Apply the ban on dual compensation (an LO paid by the consumer may not also be paid by the creditor or another party)
- Identify permissible compensation bases (fixed percentage of loan amount, loan volume, hourly or salary)
- List the three loan options in the anti-steering safe harbor (lowest rate, lowest rate without risky features, lowest total origination points/fees and discount points)
- Recall the 3-year retention requirement for compensation records
Lesson 8
LO qualification and other Reg Z loan-term restrictions
- State the employer's duty to screen unlicensed loan originator employees (criminal background, credit report, periodic training) under §1026.36(f)
- Identify the credit documents that must show the LO's name and NMLS ID under §1026.36(g) (application, note, security instrument)
- Apply the ban on mandatory arbitration clauses and on waivers of federal claims in dwelling-secured loans
- Apply the ban on financing single-premium credit insurance in a dwelling-secured loan
- Apply the §1026.43(g) prepayment-penalty limits (only on fixed or step-rate QMs that are not HPMLs; no more than 2% in the first two years, 1% in the third year, none after 3 years; an alternative without a penalty must be offered)
Lesson 9
HELOC open-end disclosures and protections (§1026.40)
- State that the HELOC program disclosures and the HELOC brochure must be given with the application (within 3 business days if the application is taken by phone or through an intermediary)
- Apply the consumer's right to a refund of all fees if HELOC terms change before the plan is opened
- Apply the rule that no nonrefundable fee may be collected until 3 business days after the consumer receives the disclosures
- Identify the only grounds for terminating and accelerating a HELOC (fraud or material misrepresentation, failure to meet repayment terms, action that adversely affects the security)
- Identify when a creditor may freeze or reduce a line (significant decline in property value, material change in the borrower's finances)
TRID (Know Before You Owe)
Lesson 1
TRID purpose, coverage and the six-item application
- State that TRID combined the GFE/TIL into the Loan Estimate and the HUD-1/final TIL into the Closing Disclosure
- Identify loans covered by TRID (most closed-end consumer loans secured by real property)
- Identify loans excluded from TRID (HELOCs, reverse mortgages, dwellings not attached to land)
- List the six items that make up an application (name, income, SSN, property address, estimated property value, loan amount)
- Recall that TRID is known as the 'Know Before You Owe' rule
Lesson 2
Loan Estimate contents and fee restrictions
- Identify page 1 content (loan terms, projected payments, costs at closing)
- Classify Loan Estimate closing costs into sections A (origination), B (services the borrower cannot shop for), C (services the borrower can shop for), E (taxes/government fees), F (prepaids), G (initial escrow) and H (other)
- Identify page 3 comparison measures (In 5 Years, APR, Total Interest Percentage)
- Apply the rule that only a bona fide credit report fee may be charged before the LE is received and intent to proceed is given
- Apply the requirement that a written pre-LE estimate carry the required disclaimer
- State that the LE must reflect the best information reasonably available (good faith), with no blanks left for known items
Lesson 3
Loan Estimate timing, revisions and expiration
- State that the initial LE must be delivered or mailed within 3 general business days of application
- State that the LE must be delivered at least 7 specific business days before consummation
- Apply the mailbox rule (a mailed LE is deemed received 3 specific business days after mailing)
- State that a revised LE must be received no later than 4 specific business days before consummation and never on or after the CD
- Apply the rule that estimated charges expire if intent to proceed is not given within 10 business days
Lesson 4
Changed circumstances and revised disclosures
- Identify valid changed circumstances (extraordinary events, inaccurate information that was relied on, new information)
- Identify other valid triggers for revision (borrower-requested changes, rate lock, LE expiration)
- Apply the rule that the revised LE is due within 3 business days of receiving information about the change
- Apply the construction-loan exception when settlement is expected more than 60 days after the initial LE
- Distinguish an allowed reset of fees from a tolerance violation
Lesson 5
TRID tolerance categories
- Classify zero-tolerance charges (fees paid to the creditor, broker or affiliate; services the borrower cannot shop for; transfer taxes)
- Classify 10%-cumulative-tolerance charges (recording fees; third-party services chosen from the creditor's written list)
- Classify unlimited-tolerance charges (prepaid interest, insurance premiums, escrow deposits, borrower-chosen providers not on the list)
- State that the written list of settlement service providers must accompany the LE when the consumer is permitted to shop
- Recall that excess charges must be refunded within 60 calendar days after consummation
Lesson 6
Closing Disclosure contents, timing and consummation
- Define consummation as the moment the consumer becomes contractually obligated on the loan
- State that the CD must be received at least 3 specific business days before consummation
- Identify CD content that differs from the LE (the actual closing cost details, cash to close, the Loan Calculations page)
- Identify who may deliver the CD (creditor or settlement agent) and that the creditor remains responsible
- Apply the rule that each consumer with a right to rescind must receive the CD
- Recall that the creditor keeps the CD for 5 years after consummation
Lesson 7
Corrected Closing Disclosures and new waiting periods
- Identify the three changes that require a new 3-business-day waiting period (APR becomes inaccurate, loan product changes, prepayment penalty added)
- Apply the rule that other changes need only a corrected CD at or before consummation
- Recall the post-consummation corrected CD deadlines (30 days after learning of an event, 60 days for clerical errors)
- Apply the bona fide personal financial emergency waiver of the waiting period
Lesson 8
Information available to consumers on request
- State the payoff statement deadline (within 7 business days of a written request)
- Recall that a servicer must answer a request for the identity of the loan's owner or assignee within 10 business days
- State that a new owner or assignee must notify the borrower within 30 days of acquiring the loan
- Distinguish information given only on request from disclosures that must be delivered automatically
Other Federal Laws
Lesson 1
HMDA / Regulation C
- State HMDA's purposes (whether lenders serve community housing needs, public investment decisions, identifying discriminatory lending)
- Identify the Loan/Application Register (LAR) and the kinds of data reported
- Recall the annual LAR submission deadline (March 1 for the prior calendar year)
- Recall that HMDA data is made public and the LAR is kept for at least 3 years
Lesson 2
Fair Credit Reporting Act fundamentals
- State the permissible-purpose requirement for obtaining a consumer report
- Recall reporting time limits (most negative information 7 years, bankruptcies 10 years)
- Identify the adverse-action disclosure based on a credit report (CRA name and contact, free report within 60 days, right to dispute)
- Describe the consumer's right to dispute inaccurate information with a CRA
Lesson 3
FACTA amendments to FCRA
- Recall the fraud alert types and durations (initial 1 year, extended 7 years, active duty 1 year)
- Identify the right to free credit file disclosures from each nationwide CRA
- Identify the credit score disclosure owed to mortgage applicants
- Identify the risk-based pricing notice requirement
- State the disposal rule for consumer report information
Lesson 4
FTC Red Flags Rule (16 CFR 681)
- Define a covered account for Red Flags purposes
- List the four program elements (identify, detect, respond, update)
- Classify red flags into their categories (alerts from CRAs, suspicious documents, suspicious personal information, unusual account activity, notice from others)
- State the requirement for board or senior management approval and oversight
Lesson 5
Bank Secrecy Act / AML and suspicious activity reports
- List the four pillars of an AML program (internal policies, designated compliance officer, training, independent testing)
- Recall the SAR threshold for residential mortgage lenders and originators ($2,000)
- Recall the SAR filing deadline (30 calendar days after initial detection, 60 if no suspect is identified)
- Recall the cash-reporting threshold (more than $10,000)
- Apply the SAR confidentiality rule (never tip off the subject) and the 5-year retention period
Lesson 6
USA PATRIOT Act customer identification
- List the minimum CIP data (name, date of birth, address, identification number)
- Identify the requirement to verify customer identity within a reasonable time
- Identify the check against government lists such as OFAC's
- State the PATRIOT Act's relationship to the BSA (it amended and strengthened it)
Lesson 7
Gramm-Leach-Bliley Act: privacy and safeguards
- Define nonpublic personal information (NPI) and distinguish consumers from customers
- State the initial and annual privacy notice requirements, including the annual-notice exception
- Apply the opt-out right before NPI is shared with nonaffiliated third parties
- Identify the Safeguards Rule requirement for a written information security program
- Identify pretexting as a GLBA violation
Lesson 8
Do-Not-Call and telemarketing rules
- State the permitted calling hours (8 a.m. to 9 p.m. in the recipient's local time)
- Apply the established business relationship exception (18 months after a transaction, 3 months after an inquiry)
- Recall that telemarketers must scrub call lists against the National Registry at least every 31 days
- Apply company-specific do-not-call requests
- Identify caller ID and consent requirements for autodialed or prerecorded calls
Lesson 9
Mortgage Acts and Practices – Advertising (Regulation N)
- Identify prohibited misrepresentations (interest rate, fees, 'fixed' terms, government affiliation, taxes and insurance, counseling services)
- State that Regulation N applies to any commercial communication about mortgage credit
- Recall the 24-month retention requirement for advertisements
- Identify the agencies that enforce Regulation N (CFPB and FTC)
Lesson 10
E-Sign Act
- State that electronic signatures and records have the same legal effect as paper ones
- Identify the affirmative consumer consent required before disclosures are delivered electronically
- List the pre-consent disclosures (right to paper, right to withdraw consent, hardware/software requirements)
- Apply the requirement that the consumer show they can access the electronic format
Lesson 11
Homeowners Protection Act (PMI cancellation)
- Apply borrower-requested cancellation at 80% of original value, with a good payment history
- Apply automatic termination when the loan is scheduled to reach 78% of original value and the borrower is current
- Apply final termination at the midpoint of the amortization period
- State that lender-paid mortgage insurance is not cancellable under HPA
- Recall that HPA applies to residential mortgages closed on or after July 29, 1999, and requires disclosures at consummation and annually
Module 2 · 16 lessonsIn the app
Uniform State Content
SAFE Act, Regulators & NMLS · Licensing Requirements · License Maintenance · Compliance
Study it in the app →Module 3 · 19 lessonsIn the app
General Mortgage Knowledge
Qualified & Non-QM Programs · Conventional Loans · Government Loans · Nonconforming & Nontraditional · Mortgage Loan Products · Mortgage Industry Terms
Study it in the app →Module 4 · 29 lessonsIn the app
Mortgage Loan Origination Activities
Inquiry & Application · Disclosures & Tolerances in Practice · Borrower Qualification · Appraisal & Title · Insurance · Closing · Financial Calculations
Study it in the app →Module 5 · 18 lessonsIn the app
Ethics
Prohibited Acts & Fair Lending · Fraud Detection · Advertising & UDAAP · Predatory Lending · Financial Responsibility & Compliance · Relationships with Consumers
Study it in the app →