AL MLO flashcards
AL MLO · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- RESPA Section 8
- Prohibits giving or receiving fees, kickbacks, or things of value for referrals of settlement service business in federally related mortgage loans.
- Regulation Z
- Implements the Truth in Lending Act, requiring disclosure of APR, finance charge, and other credit terms to consumers.
- ECOA
- Equal Credit Opportunity Act prohibits lenders from discriminating based on protected characteristics and requires notice of adverse action.
- HMDA
- Home Mortgage Disclosure Act requires covered lenders to collect and report data about mortgage applications and originations to regulators and the public.
- SAFE Act
- Requires mortgage loan originators to be licensed or registered and to include their unique identifier on loan documents.
- Flood insurance requirement
- Lenders must require flood insurance for improved property in a Special Flood Hazard Area when the loan is federally related.
- HOEPA
- High-cost mortgage rules under Regulation Z trigger additional disclosures and restrictions when points and fees or rates exceed statutory thresholds.
- Fair Housing Act
- Prohibits discrimination in the sale, rental, and financing of dwellings based on protected classes including race, religion, sex, and disability.
- PITI
- The four components of a monthly mortgage payment: principal, interest, property taxes, and hazard insurance.
- Front-end ratio
- A borrower's monthly housing expense divided by gross monthly income, used to assess affordability.
- Back-end ratio
- Total monthly debt obligations divided by gross monthly income, used to evaluate overall debt burden.
- Loan-to-value (LTV)
- The loan amount divided by the property value or purchase price, whichever is less, expressed as a percentage.
- Amortization
- The scheduled repayment of a loan through periodic payments that include both principal and interest over the loan term.
- Adjustable-rate mortgage
- A loan whose interest rate resets periodically based on an index plus a margin, changing the monthly payment.
- Escrow account
- An account that collects monthly portions of property taxes and insurance and disburses them when due.
- Promissory note
- The legal document containing the borrower's promise to repay the loan, including rate, term, and payment terms.
- Pre-qualification
- An informal estimate of how much a borrower may qualify to borrow, typically not involving full underwriting.
- Pre-approval
- A conditional commitment based on documented income, assets, and credit review indicating likely loan approval.
- Loan Estimate timing
- The Loan Estimate must be delivered or mailed within three business days after the lender receives a complete application.
- Closing Disclosure timing
- The Closing Disclosure must be received by the borrower at least three business days before loan consummation.
- Complete application
- Includes borrower name, income, Social Security number, property address, and estimated value, per Regulation X.
- Ability-to-Repay
- Rule requiring lenders to verify income, assets, employment, credit history, and debts before originating a mortgage.
- Rate lock
- An agreement fixing the interest rate for a specified period, often with a fee or cost.
- Documentation of income
- Evidence such as pay stubs, W-2s, and tax returns used to verify a borrower's earnings and stability.
- Fiduciary duty
- An ethical obligation to act in the client's best interest, including loyalty, confidentiality, and disclosure of material facts.
- Confidentiality
- The duty to protect non-public personal information and share it only with consent or under a legal exception.
- Mortgage fraud
- Intentional misrepresentation of income, assets, occupancy, or property value to obtain a loan.
- Steering
- Directing borrowers to loan products based on compensation rather than suitability, violating ethical and fair lending standards.
- Conflict of interest
- A situation where personal or financial interests could compromise objectivity and must be disclosed to the client.
- Fair dealing
- The ethical standard requiring accurate advertising, honest communication, and clear disclosure of loan terms and costs.
- Anti-money laundering
- Obligations requiring suspicious activity reporting and a customer identification program to prevent illicit funds in mortgage transactions.
- Correcting errors
- An ethical duty to promptly and accurately correct known errors in loan documents or disclosures.