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Practice and exam technique

Practice questions: federal law

Compiled by the Sitonce editorial team from the NMLS Resource Center and the federal regulations named belowUpdated 3 min readFacts verified 4 September 2026
The short answer

Federal law is 24 percent of the paper, roughly 29 questions. These four cover the areas that produce most of the wrong answers: servicing transfers, the Closing Disclosure wait, tolerance buckets and rescission.

Twenty-four percent of the paper, and the questions here are almost always about a deadline or a threshold rather than about the purpose of a statute.

Four to work through. Cover the answer first.

Question 1

A servicer is transferring servicing on a loan with an effective date of 1 June. By when must the borrower be notified?

  1. 15 days before the effective date
  2. 30 days before the effective date
  3. 60 days before the effective date
  4. Within 15 days after the transfer
Answer: A. 15 days before, under 12 CFR 1024.33(b). The 60-day figure in option C is the grace period AFTER transfer during which a payment to the old servicer cannot be treated as late, which is why it is offered here.
Question 2

Three days before consummation the creditor discovers the APR is now inaccurate beyond tolerance. What must happen?

  1. A corrected Closing Disclosure, and closing may proceed as scheduled
  2. A corrected Closing Disclosure and a new three-business-day waiting period
  3. A revised Loan Estimate
  4. Nothing, provided the change benefits the borrower
Answer: B. An APR change beyond tolerance is one of only three events that restart the three-business-day wait, with a product change and an added prepayment penalty. Option A is the answer for every other kind of change, which is what makes it the strongest distractor.
Question 3

A borrower chooses a title company from the creditor's written list of providers. At closing that charge has risen by 15 percent. Which applies?

  1. Zero tolerance, so the excess must be refunded
  2. Ten percent cumulative tolerance, applied across the category
  3. No tolerance applies, because the consumer chose the provider
  4. The charge may not increase at all after the Loan Estimate
Answer: B. A shoppable service from a provider ON the creditor's written list falls in the 10 percent cumulative bucket. Option C would be right if the consumer had gone outside the list - that is the distinction being tested.
Question 4

A borrower refinances their primary residence with a new lender and closes on Monday. When does the rescission period expire?

  1. Immediately, as rescission does not apply to a refinance
  2. Midnight on Thursday
  3. Midnight on Wednesday
  4. Three years from consummation
Answer: B. Three business days after consummation, counting all days except Sundays and specified holidays, so Tuesday, Wednesday and Thursday. Option D is right only where the notice or material disclosures were never delivered.

What these four have in common

Each wrong option is a real rule, correctly stated, applied to the wrong situation.

That is the shape of this area. You are rarely asked whether you have heard of a rule; you are asked whether you know which of two neighboring rules governs the scenario in front of you.

Common questions

How many federal law questions are on the NMLS exam?

Federal law is 24 percent of the paper, which we estimate at 29 of the 120 questions.

What is the most tested federal law topic?

The TRID timeline, particularly which three changes restart the three-business-day waiting period.

How much notice is required for a servicing transfer?

15 days before the effective date, with a 60-day grace period afterwards.

What tolerance applies to a shoppable service?

Ten percent cumulative if the provider is on the creditor's written list, and no tolerance if the consumer chose outside it.

Does rescission apply to a purchase?

No. It applies to a refinance secured by the principal dwelling.

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