The content outline, area by area

All five areas, and the federal regulations each of them turns on.

The NMLS exam content outlineFive content areas: Federal Mortgage Related Laws at 24%, Uniform State Content at 11%, General Mortgage Knowledge at 20%, Mortgage Loan Origination A…
Federal Mortgage Related LawsThe second largest area at 24%, covering RESPA, TILA and TRID, ECOA, loan originator compensation, HMDA, FCRA, privacy and anti-money laundering. Almo…
Mortgage Loan Origination ActivitiesThe largest content area at 27%, covering the loan from inquiry to post-closing: application, disclosures, income and asset analysis, appraisal and ti…
General Mortgage KnowledgeTwenty percent of the exam, covering loan programs and products: conventional and conforming, government programs, fixed and adjustable rates, reverse…
EthicsEighteen percent of the exam, covering prohibited acts, fair lending, mortgage fraud, advertising compliance and consumer confidentiality. It is a rul…
Uniform State ContentEleven percent of the exam, covering the SAFE Act framework adopted across participating states: purpose and definitions, licensing and qualification,…
The TRID timelineLoan Estimate within 3 business days of application and at least 7 business days before consummation. Closing Disclosure at least 3 business days befo…
The three-day rules, told apartThree separate rules run on three business days: the Loan Estimate after application, the Closing Disclosure before consummation, and the right of res…
The six items that make an applicationName, income, social security number, property address, an estimate of value and the loan amount sought. Under 12 CFR 1026.2(a)(3) those six items con…
Tolerance levels and curesZero tolerance for the creditor's own charges, services the consumer cannot shop for and transfer taxes. Ten percent cumulative tolerance for recordin…
RESPA, for the NMLS examRESPA is Regulation X, at 12 CFR 1024. The exam tests Section 8 kickbacks, the 15-day servicing transfer notice, the 2-month escrow cushion, and the 1…
Regulation Z, for the NMLS examRegulation Z implements the Truth in Lending Act at 12 CFR 1026. It carries TRID, the right of rescission, ability to repay and qualified mortgages, H…
The right of rescissionThree business days after consummation on a refinance secured by the borrower's principal dwelling. It extends to three years if the notice or materia…
Ability to repay and qualified mortgagesA creditor must make a reasonable, good-faith determination of ability to repay using eight factors. A qualified mortgage gets a presumption of compli…
ECOA and the prohibited basesThe Equal Credit Opportunity Act prohibits discrimination on nine bases: race, color, religion, national origin, sex, marital status, age, receipt of …
The mortgage calculations you needHousing ratio, total debt ratio, loan-to-value, combined loan-to-value, discount points and per-diem interest. Six formulas, each of which should take…
The SAFE Act explainedThe Secure and Fair Enforcement for Mortgage Licensing Act of 2008 requires state-licensed originators to complete 20 hours of approved education, pas…
Licensed against registered originatorsState-licensed originators work for brokers and non-bank lenders and must pass the SAFE MLO test. Federally registered originators work for depository…
Continuing education requirementsEight hours a year for a state-licensed originator: 3 hours federal law, 2 hours ethics, 2 hours non-traditional mortgage lending and 1 hour of electi…
Loan originator compensation rulesCompensation may not vary with a term of the transaction, under 12 CFR 1026.36(d)(1). An originator paid by the consumer may not also be paid by anyon…
FHA loans explainedFHA loans require 3.5 percent down at a credit score of 580 or above, and 10 percent between 500 and 579. They carry an upfront mortgage insurance pre…
VA loans explainedVA loans require no down payment within the borrower's entitlement and carry no monthly mortgage insurance. A funding fee applies unless the borrower …
USDA loans explainedUSDA loans require the property to be in an eligible rural area and the household income to fall under a limit. They allow no down payment, which make…
Conventional against government loansConventional means not government-insured or guaranteed. Conforming means it meets the standards for purchase by the government-sponsored enterprises,…
ARM caps and indexesThe rate on an adjustable-rate mortgage is the index plus the margin, limited by an initial cap, a periodic cap and a lifetime cap. A 2/2/5 structure …
Debt-to-income ratios explainedThe housing ratio is the proposed housing payment over gross monthly income. The total debt ratio adds every other monthly obligation. Conventional be…
Loan-to-value and combined LTVLoan-to-value is the loan amount divided by the lesser of the purchase price and the appraised value. Combined loan-to-value uses every lien on the pr…
Private mortgage insurance rulesBorrower-paid private mortgage insurance may be canceled on request at 80 percent loan-to-value and terminates automatically at 78 percent, under the …
Escrow accounts and analysisRESPA caps the escrow cushion at two months of escrow payments and requires an annual escrow statement within 45 days of the end of the computation ye…
Underwriting decisions explainedAn underwriter approves, approves with conditions, suspends pending information, or denies. Most approvals carry conditions, and clearing them is a la…
HOEPA high-cost thresholdsA mortgage is high-cost under HOEPA if the APR exceeds the average prime offer rate by 6.5 points on a first lien of 50,000 dollars or more, or 8.5 po…
Adverse action noticesA creditor must notify an applicant of action taken within 30 days of a completed application, stating the specific reasons for a denial or how to obt…
Appraisal rules you must knowCoercing an appraiser is prohibited under 12 CFR 1026.42. An applicant must be told within 3 business days of application that they may receive a copy…
FCRA and credit reportsThe Fair Credit Reporting Act governs how consumer reports are obtained and used. A permissible purpose is required to pull one, agencies have 30 days…
BSA, AML and suspicious activity reportsA suspicious activity report must be filed within 30 calendar days of initial detection. A currency transaction report is required for cash over 10,00…
Gramm-Leach-Bliley privacy rulesThe Gramm-Leach-Bliley Act requires a privacy notice at the start of a customer relationship and annually afterwards, an opt-out from sharing with non…
The Do Not Call rulesA number on the National Do Not Call Registry may be called for three months after an inquiry and eighteen months after a transaction. A consumer aski…
Advertising rules and trigger termsStating a rate, a payment amount, a down payment or a term in an advertisement triggers additional required disclosures under 12 CFR 1026.24(d). The A…
Prohibited acts and practicesSteering, fee splitting for referrals, falsifying documents, failing to disburse funds as agreed, misrepresenting terms and unlicensed activity are th…
Steering explainedSteering means directing a consumer to a transaction the originator will be paid more on, and which is not in the consumer's interest. It is prohibite…
The loan inquiry and application processAn enquiry becomes an application when six specific items are received. That moment starts the TRID clock and creates disclosure obligations, regardle…
Required disclosures and the origination timelineThe Loan Estimate within three business days of application, the appraisal notice within three, the Closing Disclosure three days before consummation,…
Income and employment analysisLenders generally want two years of employment history and two years of tax returns for a self-employed borrower. Income must be stable, likely to con…
Assets, liabilities and credit analysisAssets must be sourced and seasoned, large deposits explained, and reserves expressed in months of PITI. Credit analysis looks at payment history and …
Property valuation, appraisal and titleAppraisers use the sales comparison, cost and income approaches, with sales comparison usual for residential property. Title work establishes ownershi…
Closing, funding and post-closingAt closing the borrower signs and the Closing Disclosure is reconciled. Funding follows, delayed on a rescindable refinance until the three-day window…
Reverse mortgages explainedA Home Equity Conversion Mortgage requires the youngest borrower to be at least 62, mandatory counseling, and continued payment of taxes and insurance…
HELOCs and second liensA HELOC is open-end revolving credit secured by the home, with a draw period followed by repayment. A home equity loan is closed-end with a lump sum. …
Discount points and buydownsOne discount point is one percent of the loan amount and reduces the interest rate. Break-even is the point cost divided by the monthly saving. Origin…
Amortization and how to read a scheduleAn amortizing loan pays interest and principal, with interest dominating early payments. Negative amortization occurs when the payment does not cover …
Mortgage fraud: for housing or for profitFraud for housing is committed to obtain a home to live in, usually by overstating income or assets. Fraud for profit is committed to extract money fr…
Predatory lending red flagsThe four named patterns are equity stripping, loan flipping, packing and lending without regard to ability to repay. Questions typically describe one …
UDAAP explainedUnfair means causing substantial injury the consumer cannot avoid and that is not outweighed by benefits. Deceptive means likely to mislead a reasonab…
Consumer relationships and confidentialityAn originator owes honesty, accurate disclosure and compliance with the anti-steering and compensation rules. Borrower information is protected under …
HMDA and what gets reportedThe Home Mortgage Disclosure Act requires covered institutions to collect and report data on mortgage applications and originations, on a Loan Applica…
Qualified and non-qualified mortgagesA qualified mortgage meets defined product and underwriting limits and gives the creditor a presumption of compliance with the ability-to-repay rule. …
Title, liens and priorityLien priority generally runs by recording order, but property tax liens usually take priority regardless. A subordination agreement lets a lienholder …
Appraisal against home inspectionAn appraisal estimates market value for the lender and is required. A home inspection assesses condition for the buyer and is optional. Both are usual…
State licensing: qualification and applicationThe SAFE Act sets a national floor: 20 hours of education, a 75 percent test score, a background check, a credit report and financial responsibility. …
State regulatory authority and disciplineState regulators may examine licensees, investigate complaints, issue cease and desist orders, impose fines, and suspend or revoke a license. Records …
Mortgage terminology you needThe exam assumes fluency in terms like note, security instrument, escrow, PITI, lien and consummation. Several pairs are routinely confused, and quest…