DC MLO cheat sheet

RESPA Section 8 prohibits giving or receiving anything of value for the referral of settlement service business; bona fide compensation for services actually performed and disclosed is permitted.

RESPA permits affiliated business arrangements only if the affiliate is disclosed in writing at or before referral, the consumer is not required to use it, and the only thing of value received is a return on ownership interest.

TILA disclosure timing: the Loan Estimate must be delivered or placed in the mail no later than three business days after the application is received; the Closing Disclosure at least three business days before consummation.

A changed circumstance permits a revised Loan Estimate within three business days of when the lender learns of it; the revised estimate must be delivered or mailed no later than four business days before consummation.

Tolerance categories: 0% tolerance for lender-charged fees, transfer taxes, and fees paid to affiliates; 10% cumulative tolerance for recording fees and third-party services where the consumer may shop and the provider is on the written list.

ECOA/Regulation B prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, or good-faith exercise of rights under the Consumer Credit Protection Act.

HMDA (Regulation C) requires collection and reporting of data on covered closed-end mortgage loans and open-end lines of credit meeting applicable loan-volume thresholds, including applicant demographics and pricing.

GFE-era rules are superseded; current TRID applies to most closed-end consumer-purpose mortgage loans secured by real property, while HELOCs and reverse mortgages are generally exempt from the TRID integrated disclosures.

SAFE Act requires mortgage loan originators to be registered in NMLS, pass a qualified written test, complete pre-licensure education, and meet annual continuing education requirements.

Loan-to-value (LTV) equals loan amount divided by the lesser of the property's appraised value or purchase price; combined LTV (CLTV) adds any subordinate lien balance to the first lien.

Conventional conforming loan limits are set annually by FHFA; loans above the limit are non-conforming (jumbo) unless eligible under high-cost area exceptions.

FHA loans require mortgage insurance: an upfront premium (typically 1.75% of the base loan amount) plus an annual premium paid monthly; MIP duration depends on LTV and down payment.

VA loans generally require no down payment and no monthly mortgage insurance, but carry a one-time funding fee that varies with down payment and prior use, with certain exemptions.

Fixed-rate mortgages have constant principal and interest payments; adjustable-rate mortgages have an initial fixed period, then adjust per an index plus margin, subject to periodic and lifetime caps.

Amortization: on a fully amortizing loan, the monthly payment is calculated so the balance reaches zero at maturity; the interest portion is largest early and declines over time.

An escrow (impound) account collects 1/12 of annual property taxes and hazard insurance each month; RESPA limits the cushion to no more than one-sixth of the annual escrow disbursements.

Debt-to-income ratio equals total monthly debt obligations divided by gross monthly income; Fannie Mae and Freddie Mac generally cap DTI at 50% for manually underwritten loans, with automated underwriting allowances.

Title insurance protects the lender (loan policy) against defects in title; an owner's policy separately protects the borrower's equity and is typically issued at a simultaneous-issue discount.

The six pieces of information that constitute an application under Regulation Z are: consumer name, income, Social Security number, property address, estimated value, and loan amount.

A prequalification is an estimate based on unverified information; a preapproval requires a completed application and underwriting review, and neither is a commitment to lend.

The Loan Estimate must show projected payments, closing cost details, cash to close, and the total interest percentage (TIP); it is not a binding offer.

The Closing Disclosure must be received at least three business days before consummation; if the APR increases by more than 1/8 of 1% (1/4 for irregular loans), a revised CD and new three-day waiting period are required.

Verification documents commonly collected include pay stubs, W-2s, tax returns, bank statements, and a credit report; self-employed borrowers typically provide two years of returns and a profit-and-loss statement.

The credit report contains scores, tradelines, inquiries, and public records; undisclosed debt discovered before closing must be evaluated for DTI impact and possible re-underwriting.

Appraisal independence rules (Regulation Z/HPML requirements and state law) prohibit loan originators from selecting or influencing the appraiser on higher-priced mortgage loans.

Rate lock agreements state the locked rate, the lock period, and the cost or credit; extension fees apply if closing occurs after expiration unless the lender grants a float-down.

A Notice of Incomplete Application must be sent within 30 days of receiving an application that lacks the six required pieces of information, stating what is needed and a reasonable deadline.

Fiduciary-type duties owed to borrowers include good faith, fair dealing, honesty, and disclosure of material facts affecting the transaction.

Steering a borrower to a higher-cost product to increase compensation, absent a legitimate benefit to the borrower, is a breach of the duty of good faith and fair dealing.

Dual compensation or undisclosed fees from third parties (title, appraisal, or real estate agents) are prohibited and may violate RESPA Section 8 and state licensing law.

Confidentiality: nonpublic personal information may be shared only as permitted by the Gramm-Leach-Bliley Act privacy rules or with the consumer's authorization.

Fair lending requires consistent treatment of similarly situated applicants; disparate treatment (intentional) and disparate impact (neutral policy with disproportionate effect) are both prohibited.

Mortgage fraud includes occupancy fraud (claiming a primary residence for an investment property), income falsification, appraisal inflation, and straw-buyer schemes.

Loan originators must not sign or alter documents on a borrower's behalf, must not encourage a borrower to leave signature lines blank, and must document borrower-provided information accurately.

Advertising must be accurate and not misleading; trigger terms such as a specific rate or payment require additional disclosures under Regulation Z and, where applicable, state law.

The District of Columbia licenses mortgage loan originators and mortgage lenders/brokers through the Department of Insurance, Securities and Banking (DISB), with licensing administered via NMLS.

DC requires pre-licensure education of at least 20 hours, including 3 hours of federal law, 3 hours of ethics, 2 hours of nontraditional mortgage lending, and 2 hours of DC law, plus a passing test.

Annual continuing education in DC is 8 hours, including at least 3 hours of federal law and regulation, 2 hours of ethics, 2 hours of nontraditional mortgage lending, and 1 hour of DC law.

DC's Mortgage Lender and Broker Act and its implementing regulations govern licensing, recordkeeping, and prohibited practices, and DISB may examine licensees and impose penalties.

DC law restricts prepayment penalties and imposes disclosure obligations consistent with federal law; licensees must retain transaction records for the period required by DISB regulation.

DC Home Purchase Assistance Program (HPAP) provides deferred and amortizing loans to eligible first-time homebuyers meeting income and homebuyer-education requirements.

DC's Mortgage Disclosure Form/borrower disclosures must be provided at defined stages of the transaction; failure to provide required disclosures is a violation subject to DISB enforcement.

DC prohibits unfair or deceptive trade practices under its consumer protection law, and licensees are subject to discipline for fraud, misrepresentation, or dishonest dealing in mortgage transactions.

RESPA Section 8 prohibits giving or receiving anything of value for the referral of settlement service business; bona fide compensation for services actually performed and disclosed is permitted.

RESPA permits affiliated business arrangements only if the affiliate is disclosed in writing at or before referral, the consumer is not required to use it, and the only thing of value received is a return on ownership interest.

TILA disclosure timing: the Loan Estimate must be delivered or placed in the mail no later than three business days after the application is received; the Closing Disclosure at least three business days before consummation.

A changed circumstance permits a revised Loan Estimate within three business days of when the lender learns of it; the revised estimate must be delivered or mailed no later than four business days before consummation.

Tolerance categories: 0% tolerance for lender-charged fees, transfer taxes, and fees paid to affiliates; 10% cumulative tolerance for recording fees and third-party services where the consumer may shop and the provider is on the written list.

ECOA/Regulation B prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, or good-faith exercise of rights under the Consumer Credit Protection Act.

HMDA (Regulation C) requires collection and reporting of data on covered closed-end mortgage loans and open-end lines of credit meeting applicable loan-volume thresholds, including applicant demographics and pricing.

GFE-era rules are superseded; current TRID applies to most closed-end consumer-purpose mortgage loans secured by real property, while HELOCs and reverse mortgages are generally exempt from the TRID integrated disclosures.

SAFE Act requires mortgage loan originators to be registered in NMLS, pass a qualified written test, complete pre-licensure education, and meet annual continuing education requirements.

Loan-to-value (LTV) equals loan amount divided by the lesser of the property's appraised value or purchase price; combined LTV (CLTV) adds any subordinate lien balance to the first lien.

Conventional conforming loan limits are set annually by FHFA; loans above the limit are non-conforming (jumbo) unless eligible under high-cost area exceptions.

FHA loans require mortgage insurance: an upfront premium (typically 1.75% of the base loan amount) plus an annual premium paid monthly; MIP duration depends on LTV and down payment.

VA loans generally require no down payment and no monthly mortgage insurance, but carry a one-time funding fee that varies with down payment and prior use, with certain exemptions.

Fixed-rate mortgages have constant principal and interest payments; adjustable-rate mortgages have an initial fixed period, then adjust per an index plus margin, subject to periodic and lifetime caps.

Amortization: on a fully amortizing loan, the monthly payment is calculated so the balance reaches zero at maturity; the interest portion is largest early and declines over time.

An escrow (impound) account collects 1/12 of annual property taxes and hazard insurance each month; RESPA limits the cushion to no more than one-sixth of the annual escrow disbursements.

Debt-to-income ratio equals total monthly debt obligations divided by gross monthly income; Fannie Mae and Freddie Mac generally cap DTI at 50% for manually underwritten loans, with automated underwriting allowances.

Title insurance protects the lender (loan policy) against defects in title; an owner's policy separately protects the borrower's equity and is typically issued at a simultaneous-issue discount.

The six pieces of information that constitute an application under Regulation Z are: consumer name, income, Social Security number, property address, estimated value, and loan amount.

A prequalification is an estimate based on unverified information; a preapproval requires a completed application and underwriting review, and neither is a commitment to lend.

The Loan Estimate must show projected payments, closing cost details, cash to close, and the total interest percentage (TIP); it is not a binding offer.

The Closing Disclosure must be received at least three business days before consummation; if the APR increases by more than 1/8 of 1% (1/4 for irregular loans), a revised CD and new three-day waiting period are required.

Verification documents commonly collected include pay stubs, W-2s, tax returns, bank statements, and a credit report; self-employed borrowers typically provide two years of returns and a profit-and-loss statement.

The credit report contains scores, tradelines, inquiries, and public records; undisclosed debt discovered before closing must be evaluated for DTI impact and possible re-underwriting.

Appraisal independence rules (Regulation Z/HPML requirements and state law) prohibit loan originators from selecting or influencing the appraiser on higher-priced mortgage loans.

Rate lock agreements state the locked rate, the lock period, and the cost or credit; extension fees apply if closing occurs after expiration unless the lender grants a float-down.

A Notice of Incomplete Application must be sent within 30 days of receiving an application that lacks the six required pieces of information, stating what is needed and a reasonable deadline.

Fiduciary-type duties owed to borrowers include good faith, fair dealing, honesty, and disclosure of material facts affecting the transaction.

Steering a borrower to a higher-cost product to increase compensation, absent a legitimate benefit to the borrower, is a breach of the duty of good faith and fair dealing.

Dual compensation or undisclosed fees from third parties (title, appraisal, or real estate agents) are prohibited and may violate RESPA Section 8 and state licensing law.

Confidentiality: nonpublic personal information may be shared only as permitted by the Gramm-Leach-Bliley Act privacy rules or with the consumer's authorization.

Fair lending requires consistent treatment of similarly situated applicants; disparate treatment (intentional) and disparate impact (neutral policy with disproportionate effect) are both prohibited.

Mortgage fraud includes occupancy fraud (claiming a primary residence for an investment property), income falsification, appraisal inflation, and straw-buyer schemes.

Loan originators must not sign or alter documents on a borrower's behalf, must not encourage a borrower to leave signature lines blank, and must document borrower-provided information accurately.

Advertising must be accurate and not misleading; trigger terms such as a specific rate or payment require additional disclosures under Regulation Z and, where applicable, state law.

The District of Columbia licenses mortgage loan originators and mortgage lenders/brokers through the Department of Insurance, Securities and Banking (DISB), with licensing administered via NMLS.

DC requires pre-licensure education of at least 20 hours, including 3 hours of federal law, 3 hours of ethics, 2 hours of nontraditional mortgage lending, and 2 hours of DC law, plus a passing test.

Annual continuing education in DC is 8 hours, including at least 3 hours of federal law and regulation, 2 hours of ethics, 2 hours of nontraditional mortgage lending, and 1 hour of DC law.

DC's Mortgage Lender and Broker Act and its implementing regulations govern licensing, recordkeeping, and prohibited practices, and DISB may examine licensees and impose penalties.

DC law restricts prepayment penalties and imposes disclosure obligations consistent with federal law; licensees must retain transaction records for the period required by DISB regulation.

DC Home Purchase Assistance Program (HPAP) provides deferred and amortizing loans to eligible first-time homebuyers meeting income and homebuyer-education requirements.

DC's Mortgage Disclosure Form/borrower disclosures must be provided at defined stages of the transaction; failure to provide required disclosures is a violation subject to DISB enforcement.

DC prohibits unfair or deceptive trade practices under its consumer protection law, and licensees are subject to discipline for fraud, misrepresentation, or dishonest dealing in mortgage transactions.