DC MLO flashcards
DC 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 accepting anything of value in exchange for referrals of settlement service business. Bona fide compensation for services actually rendered is permitted if disclosed and not a referral fee.
- Loan Estimate delivery deadline
- Lender must deliver or mail the Loan Estimate no later than three business days after receiving the application, and no later than seven business days before consummation.
- Closing Disclosure waiting period
- Borrower must receive the Closing Disclosure at least three business days before consummation. Receipt is presumed three business days after mailing or electronic delivery.
- Zero tolerance fees
- Fees that cannot increase from the Loan Estimate, including lender-charged fees, fees paid to affiliates, and transfer taxes. Increases require a valid changed circumstance.
- ECOA prohibited basis
- Regulation B bars discrimination based on race, color, religion, national origin, sex, marital status, age, public assistance income, or good-faith exercise of consumer protection rights.
- SAFE Act requirement
- Mortgage loan originators must be registered in NMLS, complete pre-licensure education, pass a written test, and satisfy annual continuing education and background checks.
- HMDA Regulation C
- Requires covered lenders to collect and report data on mortgage applications and originations, including applicant demographics, loan pricing, and property information.
- Adverse action notice
- Written notice required within 30 days of a completed application when credit is denied or terms are unfavorable, stating reasons and ECOA rights.
- Loan-to-value formula
- LTV equals the loan amount divided by the lesser of the appraised value or purchase price, expressed as a percentage.
- Combined LTV
- CLTV equals the sum of all lien balances divided by the property value. Used to evaluate risk when a subordinate lien exists.
- FHA upfront MIP
- A one-time mortgage insurance premium typically equal to 1.75 percent of the base loan amount, financed into the loan or paid at closing.
- VA funding fee
- One-time fee paid by the veteran, varying by down payment and prior use, generally financed. Certain disabled veterans are exempt.
- Adjustable-rate mortgage caps
- Limits on rate changes: initial adjustment cap, periodic cap, and lifetime cap. The fully indexed rate equals the index value plus the margin.
- Debt-to-income ratio
- Total monthly debt obligations divided by gross monthly income. Includes housing payment, installment debt, and required minimum credit card payments.
- Escrow cushion limit
- RESPA limits the escrow account cushion to no more than one-sixth of the total annual disbursements for taxes and insurance.
- Loan policy of title insurance
- Protects the lender's interest in the property against covered title defects up to the loan balance. An owner's policy separately protects the borrower.
- Conforming loan limit
- Annual maximum loan amount eligible for Fannie Mae and Freddie Mac purchase, set by FHFA, with higher limits in designated high-cost areas.
- Six pieces of application
- Name, income, Social Security number, property address, estimated value, and loan amount. Receipt triggers Loan Estimate and disclosure timing requirements.
- Notice of incomplete application
- Sent within 30 days when an application lacks required information, stating what is missing and a reasonable deadline for the borrower to respond.
- Prequalification versus preapproval
- Prequalification is an unverified estimate. Preapproval follows a completed application and underwriting review. Neither is a commitment to lend.
- Rate lock agreement
- States the locked interest rate, lock period, and any cost or credit. Extension fees may apply if closing occurs after the lock expires.
- Appraisal independence
- Loan originators may not select or influence appraisers on higher-priced mortgage loans. The borrower generally receives a copy of the appraisal promptly.
- Self-employed income documentation
- Typically two years of personal and business tax returns plus a year-to-date profit-and-loss statement, with verification of business existence.
- Revised Closing Disclosure trigger
- If the APR increases by more than one-eighth of one percent (one-quarter for irregular transactions), a revised disclosure and new three-day waiting period are required.
- Duty of good faith
- Loan originators must deal honestly and fairly, disclose material facts, and avoid steering borrowers to costlier products for compensation.
- Occupancy fraud
- Falsely representing an investment property as a primary residence to obtain better pricing or terms. A form of mortgage fraud subject to criminal and civil penalties.
- GLBA privacy rule
- Restricts sharing of nonpublic personal information with nonaffiliated third parties unless permitted or the consumer receives notice and opt-out opportunity.
- Disparate impact
- A neutral policy or practice that has a disproportionately adverse effect on a protected class, even without discriminatory intent, may violate fair lending law.
- Undisclosed third-party compensation
- Fees from title, appraisal, or real estate professionals not disclosed to the borrower violate RESPA Section 8 and state licensing rules.
- DC licensing authority
- The Department of Insurance, Securities and Banking licenses mortgage loan originators and lenders in the District, with applications processed through NMLS.
- DC pre-licensure education hours
- At least 20 hours including federal law, ethics, nontraditional mortgage lending, and District of Columbia law, plus a passing licensing test.
- DC continuing education
- Eight hours annually, covering federal law and regulation, ethics, nontraditional mortgage lending, and at least one hour of DC law.