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Practice and exam technique

Practice questions: origination activities

Compiled by the Sitonce editorial team from the NMLS Resource Center and the federal regulations named belowUpdated 2 min readFacts verified 4 September 2026
The short answer

Origination activities is 27 percent of the paper and the largest single area. These four cover the application trigger, income analysis, underwriting outcomes and the closing sequence.

Twenty-seven percent of the paper, and the area most study plans under-serve because it feels like practice rather than knowledge.

Question 1

On a phone call an originator collects the borrower's name, income, social security number, the property address, an estimate of value and the loan amount sought. No form is signed. What is the position?

  1. No application exists until a form is signed
  2. An application exists and the Loan Estimate is due within 3 business days
  3. An application exists but no disclosure obligation arises until underwriting
  4. A Loan Estimate is due within 7 business days
Answer: B. Those six items are the definition at 12 CFR 1026.2(a)(3). No signature and no form are required. Option D confuses the 3-business-day delivery deadline with the 7-business-day gap required before consummation.
Question 2

A self-employed borrower shows 180,000 dollars of gross revenue and 72,000 dollars of net income after business expenses on their returns. Which figure is generally used to qualify?

  1. Gross revenue, as it shows earning capacity
  2. Net income after business expenses
  3. An average of the two
  4. Gross revenue less a standard deduction
Answer: B. Self-employed income is generally taken as net income after business expenses. This surprises borrowers who deduct aggressively and then find their qualifying income reduced by the same amount.
Question 3

An underwriter cannot decide because a large deposit is unexplained. What is the correct status?

  1. Denied
  2. Suspended
  3. Approved with conditions
  4. Withdrawn
Answer: B. Suspended means the file is incomplete and the underwriter is asking for something before deciding. It is not a soft denial, which is what option A assumes. Approved with conditions would mean a decision had been made.
Question 4

A borrower refinances their principal residence and signs on Monday. When may the loan fund?

  1. Immediately after signing
  2. After the three-business-day rescission period expires
  3. After the Closing Disclosure waiting period expires
  4. On the first of the following month
Answer: B. On a rescindable refinance no funds are disbursed until the rescission window closes. Option C describes a period that ran before consummation, not after it.

What these test

The sequence, not isolated facts. Each question places you at a point in the loan and asks what happens next.

That is why learning the loan in order beats memorizing requirements individually.

Common questions

How much of the exam is origination activities?

27 percent, the largest single area, which we estimate at 32 questions.

What starts the Loan Estimate clock?

Receipt of the six application items, whether or not a form was signed.

How is self-employed income calculated?

Generally as net income after business expenses, taken from tax returns.

What does a suspended file mean?

The underwriter cannot decide without more information. It is not a denial.

When does a rescindable refinance fund?

After the three-business-day rescission period expires.

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