United States
Hong KongThe hardest topics on the NMLS exam
TRID timing and tolerance cures, the right of rescission, ability-to-repay and qualified mortgage rules, loan originator compensation, and the ratio calculations. All are precision problems rather than comprehension problems.
The exam is not evenly difficult. A handful of areas produce most of the wrong answers, and they have something in common: each has several rules that are almost the same.
TRID timing
The Loan Estimate is due within 3 business days of a complete application and at least 7 business days before consummation. The Closing Disclosure is due 3 business days before consummation.
Then the redisclosure triggers: an APR change beyond tolerance, a change of loan product, or the addition of a prepayment penalty all restart a 3 business day wait. Nothing else does. That last part is where questions are set.
Tolerance and cures
Zero tolerance for the creditor's own charges, for services the consumer cannot shop for, and for transfer taxes. Ten percent cumulative tolerance for recording fees and for third-party services the consumer may shop for.
The trap is the middle case: a service the consumer could shop for, from a provider on the creditor's written list. Know which bucket that falls into.
The right of rescission
Three business days, on a refinance secured by a principal dwelling. Not on a purchase.
The extension to three years when the notice or material disclosures were never delivered is asked constantly, and so is the creditor's 20 calendar days to return money and release the security interest.
Ability to repay and QM
Eight underwriting factors, a 3% points and fees cap on loans of 100,000 dollars or more, and a General QM definition that changed in 2021 from a 43% debt-to-income limit to a price-based standard.
Older prep material quotes it as the current rule. It was the General QM standard before the price-based test replaced it. Know what it was and know it moved.
The ratio calculations
Housing ratio, total debt ratio, loan-to-value, combined loan-to-value, points, per-diem interest. Individually trivial. Collectively they are where the clock goes.
The fix is mechanical: drill them until each takes under a minute without a second look at the stem.
Common questions
What is the hardest part of the NMLS exam?
TRID timing and tolerance rules, because several requirements are nearly identical and the exam tests the differences.
Are there calculations on the NMLS exam?
Yes, throughout. Debt ratios, loan-to-value, discount points and per-diem interest are the common ones.
What triggers a new three-day wait before closing?
An APR change beyond tolerance, a change of loan product, or the addition of a prepayment penalty. Nothing else restarts it.
Is the 43% DTI rule still current?
Not as the General QM standard. A price-based test replaced it in 2021, though the figure still appears in older material.
When does the right of rescission apply?
On a refinance secured by the borrower's principal dwelling, for three business days. It does not apply to a purchase.