AK MLO key terms

The cost of credit expressed as a yearly rate, including the interest rate plus certain finance charges such as origination fees and mortgage insurance premiums. Lenders must disclose it so borrowers can compare loan offers.

The total dollar amount of interest and other costs a borrower pays to obtain credit, such as points, origination fees, and mortgage insurance premiums. It is disclosed alongside the APR on TILA disclosures.

A federal law requiring lenders to disclose credit costs in a standardized way, including the APR and finance charge. It also provides borrowers a right to rescind certain refinance transactions within three business days.

A federal law governing settlement practices for federally related mortgage loans. It requires disclosures such as the Loan Estimate and Closing Disclosure, restricts referral fees, and regulates escrow account practices.

A standardized three-page disclosure a lender must deliver within three business days of receiving a mortgage application. It shows estimated loan terms, projected payments, and closing costs so borrowers can shop.

A standardized five-page form a borrower must receive at least three business days before closing. It itemizes final loan terms, projected payments, and closing costs, and must be compared with the Loan Estimate.

A borrower's right to cancel certain refinance or home equity loans secured by a principal residence within three business days after closing or after receiving required disclosures, whichever is later.

The RESPA rule barring giving or receiving anything of value in exchange for referrals of settlement service business. It also limits unearned fee splits except for services actually performed.

A federal law prohibiting lenders from denying credit based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income. It also requires adverse action notices.

A federal law prohibiting discrimination in the sale, rental, and financing of housing based on protected characteristics including race, color, religion, sex, national origin, familial status, and disability.

A written notice a lender must send when denying a credit application or taking other unfavorable action. It states the reasons for the decision and informs the applicant of rights under ECOA.

A federal law requiring covered lenders to collect and report data on mortgage applications and originations, including applicant demographics, loan purpose, and pricing. The data helps regulators detect discriminatory lending patterns.

A federal law governing how consumer credit information is collected and used. It requires permissible purpose before pulling a credit report and gives consumers rights to dispute inaccurate information.

A federal law requiring flood insurance on properties securing loans in designated special flood hazard areas. Lenders must determine flood zone status and ensure coverage is maintained for the life of the loan.

A geographic zone designated by FEMA as having a one percent or greater chance of flooding in any year. Federally related loans on structures in these zones require flood insurance.

A written legal promise by a borrower to repay a loan under stated terms, including the interest rate, payment schedule, and maturity date. It is separate from the security instrument.

A security instrument used in many states that conveys title to a trustee to secure a loan, naming a lender as beneficiary. It allows nonjudicial foreclosure through the trustee rather than court action.

A security instrument in which a borrower pledges real property as collateral for a loan while retaining title. The lender may foreclose on the property if the borrower defaults.

A clause in a deed of trust or mortgage authorizing the trustee or lender to sell the property without court supervision if the borrower defaults. It enables nonjudicial foreclosure.

The legal process by which a lender takes and sells collateral property after a borrower defaults, to satisfy the debt. It may be judicial, through the courts, or nonjudicial under a power of sale.

The loan amount divided by the property's appraised value or sale price, expressed as a percentage. Higher LTVs generally require mortgage insurance and signal greater lender risk.

The total of all loans secured by a property divided by its value, expressed as a percentage. It is used when a borrower has a second lien such as a home equity loan or piggyback loan.

Insurance protecting a lender against loss when a borrower defaults with a high loan-to-value ratio. It is usually required above 80 percent LTV and must be canceled under federal rules at a set threshold.

A charge paid by the borrower for mortgage insurance on government-backed loans, such as FHA loans. It may be collected upfront and monthly, and it protects the lender against borrower default.

A mortgage insured by the Federal Housing Administration, allowing lower down payments and more flexible credit standards. Lenders originate the loan, but the FHA reimburses them for covered losses.

A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, active-duty members, and certain surviving spouses. It often requires no down payment and limits lender loss.

An account a lender uses to hold borrower funds collected monthly for property taxes and insurance, then pays those bills when due. Federal rules limit the cushion the lender may require.

The gradual repayment of a loan through scheduled payments. In early years, more of each payment goes to interest; over time, more goes to principal until the balance reaches zero at maturity.

A loan whose interest rate changes periodically based on an index plus a margin. It features an initial fixed period, adjustment caps, and a fully indexed rate disclosed to the borrower.

The process of taking a borrower's application through processing, underwriting, and closing to fund a mortgage. It includes gathering documentation, verifying information, and issuing required disclosures.

The lender's evaluation of a borrower's creditworthiness and the property's value to decide whether to approve a loan. It weighs income, assets, debts, credit history, and appraisal results.

A borrower's total monthly debt payments divided by gross monthly income, expressed as a percentage. Lenders use it to judge the borrower's capacity to repay a new mortgage.

An itemized estimate of settlement charges a borrower is likely to pay at closing. Modern rules replaced it with the Loan Estimate, but the concept of good faith disclosure remains central.

A federal rule limiting how mortgage loan originators may be paid, including bans on compensation based on loan terms and on dual compensation from borrower and lender for the same transaction.

An individual who takes a residential mortgage application and offers or negotiates loan terms for compensation. MLOs must be licensed or registered and meet education and testing requirements.

The Nationwide Multistate Licensing System, a database used to license and track mortgage loan originators and companies. It stores applications, testing results, and public consumer complaint records.

A federal law setting minimum national standards for licensing mortgage loan originators, including pre-licensing education, testing, background checks, and annual continuing education. States implement it through their licensing systems.

A legal obligation to act in the client's best interest, placing the client's interests ahead of the originator's own. It includes duties of loyalty, disclosure, and confidentiality in the lending relationship.

The ethical and legal duty to protect a borrower's nonpublic personal information, sharing it only as authorized or required. It supports trust and complies with privacy laws governing financial institutions.

Situations where an originator's personal or financial interests could improperly influence decisions affecting a borrower. Ethical practice requires disclosure and avoidance of arrangements that compromise objectivity.

A federal law requiring financial institutions to safeguard consumer nonpublic personal information and provide privacy notices explaining how that information is shared and protected.

Directing a borrower toward or away from certain loan products or neighborhoods based on protected characteristics or on the originator's compensation rather than the borrower's interest. It may violate fair lending laws.

Abusive lending practices that impose unfair or deceptive terms on borrowers, such as excessive fees, hidden costs, or loans the borrower cannot reasonably repay. Federal and state laws restrict such practices.

The state agency that licenses and supervises mortgage loan originators and mortgage companies doing business in Alaska. It enforces state licensing, examination, and consumer protection requirements.

The Alaska statute governing licensing and conduct of residential mortgage lenders and originators in the state. It sets standards for licensure, records, disclosures, and prohibited practices.

A license issued by the state allowing a person or company to conduct business in Alaska. Mortgage licensees must maintain required state registrations as a condition of continued licensure.

A bond purchased by a licensee to protect consumers and the state against losses caused by the licensee's violations of law. Alaska may require a bond as a condition of mortgage licensure.

The annual education hours a licensed mortgage loan originator must complete to renew a license, covering federal law, ethics, and state-specific topics. Alaska sets its own hour and content requirements.

A foreclosure conducted without court involvement, typically under a power of sale in a deed of trust. Alaska law sets notice and timing requirements for this process.

The security instrument commonly used for Alaska mortgages, naming a trustee who may conduct a nonjudicial foreclosure on default. It differs from a mortgage, which relies on judicial foreclosure.