SAFE Act, NMLS & Licensing: practice questions

A borrower pays a mortgage broker company's fee directly at closing. The creditor also offers to pay the broker company for the same loan. What does the CFPB's loan originator rule say?

1. The broker may take both payments if both are disclosed
2. The broker may not also be paid by the creditor ✓
3. The creditor's payment is allowed if it is the larger one
4. The broker may take both if the borrower agrees in writing

Why: Regulation Z's dual compensation rule, 12 CFR 1026.36(d)(2)(i)(A), provides that if a loan originator receives compensation directly from the consumer, no loan originator may receive compensation from anyone other than the consumer in connection with the transaction, and no one who knows of the consumer-paid compensation may pay any. Disclosure and consent do not cure it. The company may still pay its own individual originator (1026.36(d)(2)(i)(C)).

Source: 12 CFR 1026.36(d)(2)(i)

Keisha completed an approved 8-hour continuing education course in 2025. In 2026 she wants to take the same course again to meet that year's requirement. Is that permitted?

1. Yes; any approved course counts in whatever year it is taken
2. Yes, provided at least twelve months separate the two
3. No, unless the course content has changed by half
4. No; the same course cannot count in successive years ✓

Why: 12 U.S.C. 5105(b)(3)(B) says a licensed originator may not take the same approved course in the same or successive years to meet the annual requirement, and Regulation H requires states to say the same (12 CFR 1008.107(b)). She could use it again in a non-successive year, such as 2027.

Source: 12 U.S.C. 5105(b)(3)(B); 12 CFR 1008.107(b)

Which of these applicants does NOT qualify for temporary authority to originate under the SAFE Act?

1. One who was registered at a bank for the preceding 11 months
2. One who was licensed in another state until last week
3. One whose license application was denied in another state ✓
4. One whose former employer was a federally chartered bank

Why: Every route to temporary authority in 12 U.S.C. 5117 requires that the individual has not had an application for a loan originator license denied, or a license revoked or suspended, in any governmental jurisdiction (5117(b)(1)(A), applied to interstate moves by 5117(c)(1)(A)). Eleven months at a bank falls within the one-year look-back, and a license held until last week falls within the 30-day window.

Source: 12 U.S.C. 5117(b)(1)(A), (c)(1)(A)

Under the SAFE Act's definition, which combination of activities makes an individual a loan originator?

1. Taking an application, even if no terms are discussed or paid for
2. Funding a loan from personal savings and recording the mortgage
3. Taking an application and offering or negotiating terms for gain ✓
4. Negotiating the price of the home on behalf of the buyer or seller

Why: 12 U.S.C. 5102(4)(A)(i) defines a loan originator as an individual who takes a residential mortgage loan application AND offers or negotiates terms of a residential mortgage loan for compensation or gain. Both limbs are needed under the federal Act. Negotiating the price of the house is real estate brokerage activity, which 5102(4)(D) treats separately.

Source: 12 U.S.C. 5102(4)(A)

Ana failed the SAFE MLO test for the first time on 4 March. What is the earliest she may retake it under federal minimum standards?

1. At least 14 days after 4 March
2. At least 6 months after 4 March
3. At least 90 days after 4 March
4. At least 30 days after 4 March ✓

Why: Under 12 U.S.C. 5104(d)(3)(B) an individual may retake the test 3 consecutive times, with each taking at least 30 days after the preceding one. The 6-month wait in 5104(d)(3)(C) begins only after a third consecutive failure.

Source: 12 U.S.C. 5104(d)(3)(B)

How does the SAFE Act define a "nontraditional mortgage product"?

1. Any mortgage product other than a 30-year fixed-rate loan ✓
2. Any mortgage product with interest-only or negative amortization
3. Any mortgage product sold to a borrower scoring under 620
4. Any loan that is not eligible for purchase by Fannie Mae

Why: 12 U.S.C. 5102(7) is short and broad: a nontraditional mortgage product is any mortgage product other than a 30-year fixed rate mortgage. A 15-year fixed loan is therefore nontraditional for this purpose, which is why the education requirements give the nontraditional marketplace its own required hours.

Source: 12 U.S.C. 5102(7)

What score must a candidate achieve to pass the qualified written test required by the SAFE Act?

1. At least 65 percent
2. At least 70 percent
3. At least 75 percent ✓
4. At least 80 percent

Why: 12 U.S.C. 5104(d)(3)(A): an individual has not passed the qualified written test unless the score is not less than 75 percent correct answers. Regulation H states the same figure at 12 CFR 1008.105(e)(1).

Source: 12 U.S.C. 5104(d)(3)(A); 12 CFR 1008.105(e)(1)

When is the annual renewal period for a registered mortgage loan originator under Regulation G?

1. 1 January through 31 January each year
2. 1 November through 31 December each year ✓
3. The anniversary of the original registration
4. 1 October through 30 November each year

Why: Regulation G defines the annual renewal period as November 1 through December 31 of each year (12 CFR 1007.102), and 1007.103(b)(1)(i) requires the registrant to renew during it. A registration completed less than 6 months before the end of that period need not be renewed that year (1007.103(b)(3)).

Source: 12 CFR 1007.102, 1007.103(b)