AK MLO flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Annual Percentage Rate
- The cost of credit expressed as a yearly rate that includes the interest rate plus certain finance charges, disclosed under TILA/Regulation Z before consummation.
- RESPA Section 8
- Prohibits giving or receiving anything of value for referrals of settlement service business and prohibits fee splitting not for services actually performed.
- Ability-to-Repay Rule
- Regulation Z requirement that lenders make a reasonable, good-faith determination the borrower can repay based on income, assets, debts, and DTI.
- ECOA Protected Classes
- Race, color, religion, national origin, sex, marital status, age, public assistance income, and good-faith exercise of consumer credit rights.
- HMDA Reporting
- Regulation C obligation for covered lenders to collect and report application, origination, denial, and borrower demographic data on covered loans.
- Flood Insurance Requirement
- Federally related loans secured by improved structures in Special Flood Hazard Areas require flood insurance and borrower notice of flood zone status.
- SAFE Act MLO Requirements
- Mortgage loan originators must be NMLS-registered or licensed, pass a written test, complete pre-licensure education, and satisfy annual continuing education.
- Loan-to-Value Ratio
- Loan amount divided by the lesser of the appraised value or purchase price; higher LTV signals greater risk and may require mortgage insurance.
- Debt-to-Income Ratio
- Total monthly debt obligations divided by gross monthly income; front-end DTI uses only housing costs while back-end includes all debts.
- Government-Backed Loan Types
- FHA, VA, and USDA loans carry federal insurance or guarantees; conventional loans are not government-insured and follow agency underwriting guidelines.
- Fixed-Rate Mortgage
- A loan with an interest rate and principal-and-interest payment that remain constant for the entire term, typically 15 or 30 years.
- Adjustable-Rate Mortgage
- A loan with an initial fixed-rate period after which the rate adjusts periodically based on an index plus margin, subject to caps.
- Discount Point
- Prepaid interest equal to one percent of the loan amount; paying points typically reduces the note interest rate.
- Escrow Cushion Limit
- RESPA limits the escrow account cushion to no more than one-sixth of the total annual disbursements for taxes and insurance.
- Mortgage Insurance Purpose
- Protects the lender against loss when the loan-to-value ratio is high; required on many conventional loans above 80% LTV and on FHA loans.
- Pre-Qualification vs Pre-Approval
- Pre-qualification is an informal estimate of borrowing capacity; pre-approval involves verified income, assets, and credit and is more reliable.
- Loan Estimate Timing
- Must be delivered or mailed no later than three business days after application and at least seven business days before consummation.
- Closing Disclosure Timing
- Must be received by the borrower at least three business days before consummation; a changed APR outside tolerance restarts the review period.
- Fee Tolerance Categories
- Zero tolerance for lender-selected fees and transfer taxes, 10% cumulative tolerance for certain third-party fees, and unlimited tolerance for shoppable items.
- Rate Lock Agreement
- Specifies the locked interest rate, the lock period, and any extension costs; an expired lock may result in a higher rate.
- Appraisal Independence
- Rules barring loan originators from selecting, influencing, or coercing appraisers; borrowers generally receive a copy of the appraisal.
- Points and Fees Test
- High-cost mortgage threshold under Regulation Z; for loans of $100,000 or more, total points and fees may not exceed 3% of the loan amount.
- Application Intake Data
- Six key elements collected at application: income, assets, liabilities, employment, residence history, and property or loan purpose.
- Fiduciary Duty
- The originator's obligation of loyalty, confidentiality, disclosure of conflicts, and acting in the borrower's best interest throughout the transaction.
- Steering Conflict
- Directing a borrower to a loan product based on originator compensation rather than borrower qualifications; may violate RESPA and fair lending rules.
- Dual Compensation
- Receiving compensation from both the borrower and the lender on the same transaction; restricted and must be disclosed per lender policy.
- Fair Lending Consistency
- Applying the same standards, pricing, and documentation requirements to all applicants regardless of protected class status.
- Mortgage Fraud Indicators
- Red flags such as altered documents, income inconsistent with deposits, undisclosed debts, straw buyers, and unusual pressure to close quickly.
- GLBA Privacy Rule
- Limits sharing of borrower nonpublic personal information without permissible purpose or consent and requires privacy notices to customers.
- Alaska Licensing Authority
- Mortgage licensing is administered by the Division of Banking and Securities in the Department of Commerce, Community, and Economic Development via NMLS.
- Alaska Mortgage Statutes
- Residential mortgage lending is governed by AS 06.60, the Alaska Secure and Fair Enforcement for Mortgage Licensing Act, with regulations in 3 AAC 14.
- Alaska Recording Practice
- Deeds and mortgages are recorded with the local district recorder; recording provides constructive notice of the lien to third parties.