CT MLO flashcards

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 any fee, kickback, or thing of value for referrals of settlement service business. Bona fide services must be disclosed and reasonably priced.

Loan Estimate timing

Must be delivered or placed in the mail within three business days after receipt of a complete application, and before the borrower pays fees other than a credit report fee.

Closing Disclosure timing

Borrower must receive the Closing Disclosure at least three business days before consummation; receipt can be documented by delivery or mailing rules.

Ability to repay factors

Consider income, assets, employment, credit history, monthly obligations, DTI, loan term, and mortgage-related obligations when underwriting a covered loan.

Qualified mortgage points cap

Points and fees generally limited to 3% of the loan amount for loans of $100,000 or more, with lower percentage caps for smaller loans.

ECOA adverse action

Creditor must notify the applicant of action taken within 30 days of a completed application, stating reasons or the right to request them.

SAFE Act continuing education

Licensed originators complete eight hours annually: three hours federal law, two hours ethics, two hours non-traditional lending, and one hour elective.

HMDA reporting purpose

Collects loan-level data on applications, originations, and pricing to help regulators identify possible discriminatory lending patterns and enforce fair lending laws.

PITI definition

The four components of a housing payment: principal, interest, property taxes, and hazard insurance. Mortgage insurance and HOA dues are added when qualifying.

Debt-to-income ratio

Total monthly obligations divided by gross monthly income. Front-end ratio uses only the housing payment; back-end ratio includes all recurring debts.

Loan-to-value ratio

Loan amount divided by the lesser of the sales price or appraised value, expressed as a percentage. Combined LTV adds subordinate financing to the numerator.

Adjustable-rate mortgage caps

ARMs adjust by an index plus margin, subject to initial, periodic, and lifetime caps that limit how much the rate can change.

Discount point

One percent of the loan amount paid at closing to reduce the interest rate. Discount points are prepaid interest, while origination points are lender fees.

Escrow account cushion

RESPA limits the servicer's escrow cushion to one-sixth of the total annual disbursements, and requires annual escrow statements and surplus refunds.

Appraisal approaches

Sales comparison for residential resale, cost approach for new or unique construction, and income approach for properties valued by rental income.

Mortgage insurance cancellation

Borrower-requested cancellation may occur at 80% LTV with good payment history; automatic termination generally occurs at 78% LTV based on the original schedule.

Six pieces of information

Borrower name, income, Social Security number, property address, estimated value, and loan amount. Receipt starts the disclosure timing requirements.

Rate lock

A lender commitment to a specified rate for a set period. Extensions may carry fees, and floating leaves the rate subject to market movement until locked.

Intent to proceed

Borrower's indication that they wish to continue the application. Fees other than a reasonable credit report fee cannot be collected before it is received.

Self-employed income analysis

Review tax returns, business returns, and profit-and-loss statements; generally require a stable two-year history unless documented exceptions apply.

Sourcing large deposits

Verify and document the source of large or unusual deposits; unexplained funds generally cannot be used for down payment or reserves.

Wire fraud prevention

Verify wire instructions by calling a known number, confirm borrower identity, and never rely solely on email instructions to prevent closing fraud.

Pre-qualification versus pre-approval

Pre-qualification is an unverified estimate of borrowing capacity; pre-approval involves documented income, assets, and credit review and is more reliable.

Changed circumstances

An event such as new information or a changed loan term that permits a revised Loan Estimate, which must be delivered within three business days of learning of it.

Affiliated business arrangement

A relationship in which a provider refers business to an affiliated settlement service company. It requires written disclosure of the affiliation and estimated charges.

Occupancy fraud

Misrepresenting a borrower's intent to occupy a property to obtain better pricing or terms. It is fraud and grounds for license discipline.

Steering prohibition

Originators may not direct borrowers to a loan that is not in their interest because the originator would receive greater compensation from that loan.

GLBA privacy notice

Financial institutions must provide initial and annual privacy notices and allow consumers to opt out of certain sharing with nonaffiliated third parties.

Document falsification

Altering pay stubs, bank statements, or appraisals to qualify a borrower is fraud and can result in license revocation and criminal liability.

Connecticut licensing regulator

The Connecticut Department of Banking, now the Department of Financial Institutions, supervises mortgage lenders, brokers, and originators through NMLS.

Connecticut pre-licensing education

Originator applicants complete 20 hours of NMLS-approved pre-licensing education, pass the SAFE test, and submit fingerprints for a background check.

Connecticut surety bond

Licensees must maintain a surety bond and minimum net worth requirements set by statute and regulation, scaled to business volume, to protect consumers.