Free MLO Practice Test Questions 2026

If a mortgage loan includes a prepayment penalty, it must be included on which of the following disclosures?

A. Loan Estimate only

B. Closing Disclosure only

C. Uniform Residential Loan Application

D. Both the Loan Estimate and Closing Disclosure

When a mortgage loan originator (MLO) receives information from a borrower that indicates potential employment fraud, the MLO should:

A. Take no additional action because it is not confirmed.

B. Take no additional action unless the borrower admits that they submitted false employment information.

C. Report the information to another MLO for their opinion.

D. Report the information to the company's compliance officer.

Which of the following conditions must be met when presenting loan product options to a consumer?

A. The presentation of loan products with prepayment penalties

B. The presentation of loan products with the highest interest rates

C. The presentation of loan products for which the consumer likely qualifies

D. The presentation of loan products from creditors with which the mortgage loan originator does not regularly do business

Which of the following entities has the primary enforcement authority under the Red Flags Rule?

A. IRS

B. Federal Trade Commission

C. HUD

D. Conference of State Bank Supervisors

A charge payable by the consumer and imposed by the creditor as an incident to or a condition of the extension of credit is the:

A. Title fee

B. Attorney fee

C. Escrow charge

D. Finance charge

The purpose of a Suspicious Activity Report (SAR) is to report known or suspected violations or suspicious activity observed by financial institutions subject to the:

A. Bank Secrecy Act (BSA).

B. Truth in Lending Act (TILA).

C. Gramm-Leach-Bliley Act(GLBA).

D. Real Estate Settlement Procedures Act(RESPA).

Which of the following facets of a loan could be considered predatory lending or steering?

A. Cash-out

B. Fixed interest rate

C. Prepayment penalty

D. Lowered interest rate

Which of the following actions do mortgage companies take to prevent falsified information by a borrower or mortgage loan originator (MLO)?

A. Accept the documentation supplied by the borrower

B. Accept the documentation supplied by both the borrower and the MLO

C. Verify the income information by a settlement service provider

D. Verify information by third parties not involved in the transaction

How many days before consummation must a borrower receive a revised Loan Estimate?

A. 4 business days

B. 5 business days

C. 7 business days

D. 10 business days

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

A woman and her son meet with a mortgage loan originator (MLO) about refinancing the mother's home. During the meeting, the MLO senses that the mother is against the transaction and may be being unfairly coerced into the procedure. In which of the following ways should the MLO proceed?

A. Ask to speak to the mother privately to inquire whether she Is a willing participant in the transaction

B. [Consider the issue to be a private family matter and proceed with the next steps in the application process

C. Suggest that the son be listed as a co-borrower on the mortgage to ensure he assumes part of the risk of the loan

D. Tell the mother that she needs to sign a power of attorney so that her son may complete the transaction on her behalf

When there is no tax return history for a rental property, the Federal Housing Administration (FHA) requires gross rental income to be documented and reduced by what percentage?

A. 10%

B. 15%

C. 20%

D. 25%