IL MLO key terms

The cost of credit expressed as a yearly rate, combining interest, points, and certain finance charges. Federal disclosure rules require it on the Loan Estimate and Closing Disclosure so borrowers can compare offers.

The total dollar cost of credit a borrower pays, including interest, discount points, and specified fees. It is the dollar counterpart to the APR and must be disclosed under federal lending rules.

Federal law requiring lenders to disclose credit costs clearly and consistently. It governs APR and finance charge disclosure, rescission rights on certain refinances, and advertising rules for consumer credit.

The implementing regulation for TILA. It spells out disclosure timing and content, loan originator compensation limits, high-cost mortgage rules, and ability-to-repay requirements that lenders must follow.

Federal law governing settlement practices on federally related mortgage loans. It requires disclosures at application and closing, restricts escrow practices, and prohibits unearned fees and referral kickbacks.

The regulation implementing RESPA. It sets rules for Loan Estimates, Closing Disclosures, escrow account administration, servicing transfers, and loss mitigation procedures for delinquent borrowers.

A standardized three-page disclosure delivered within three business days after a mortgage application. It shows projected loan terms, closing costs, cash to close, and APR so borrowers can shop.

A standardized five-page form the borrower must receive at least three business days before consummation. It states final loan terms, closing costs, and cash to close, replacing the estimate.

The RESPA rule barring giving or accepting anything of value for referrals of settlement service business and barring splitting charges except for services actually performed. Violations carry civil and criminal penalties.

A Regulation Z requirement that lenders make a reasonable, good-faith determination the borrower can repay before extending a mortgage. It sets underwriting factors and defines qualified mortgages.

A loan meeting Regulation Z standards that give lenders protection from ATR liability. General QM limits points and fees and caps the debt-to-income ratio; other QM categories follow agency or statutory criteria.

A borrower's right to cancel certain refinances and home equity loans secured by a principal residence within three business days after consummation or disclosure delivery, whichever is later.

Federal law prohibiting discrimination in credit decisions based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. It also requires adverse action notices.

The regulation implementing ECOA. It governs application collection, monitoring data, notice of adverse action, appraisal copy delivery, and rules on discouraging or discriminating against applicants.

Federal law prohibiting discrimination in the sale, rental, and financing of housing based on protected characteristics. It covers mortgage lending, advertising, and practices such as steering or redlining.

Federal law requiring covered lenders to collect and report loan application data, including applicant demographics, loan purpose, and pricing. Reported data is used to detect discriminatory lending patterns.

The regulation implementing HMDA. It defines covered institutions and loans, specifies data points to collect, and sets reporting, recordkeeping, and public disclosure requirements.

Federal law requiring flood insurance on loans secured by property in a special flood hazard area and mandating borrower notice. It also restricts lending on uninsured property in those zones.

A Regulation Z rule limiting how loan originators are paid. Compensation cannot vary with loan terms other than amount, and dual compensation from borrower and lender is generally barred.

The borrower's written promise to repay a specified sum under stated terms, including interest rate, payment schedule, and maturity. It is the legal evidence of the debt obligation.

The security instrument that pledges real property as collateral for a loan. A mortgage involves two parties; a deed of trust adds a trustee who can foreclose if the borrower defaults.

The gradual repayment of principal and interest over scheduled payments. Early payments are mostly interest; later payments reduce principal faster until the balance reaches zero at maturity.

An account the servicer maintains to collect portions of property taxes and insurance with each payment and pay those bills when due. Rules limit cushions and require annual statements.

The four components of a typical monthly housing payment: principal, interest, property taxes, and homeowners insurance. Lenders use it to measure affordability and qualify borrowers.

The loan amount divided by the property's appraised value or purchase price, whichever is lower. Higher LTV means less equity and usually requires mortgage insurance.

The total of all mortgage liens on a property divided by its value. It matters for subordinate financing, home equity lending, and mortgage insurance decisions.

Insurance protecting the lender against loss when a borrower defaults with a high LTV loan. Federal rules govern borrower notice and automatic termination as the balance declines.

Total monthly debt payments divided by gross monthly income. Lenders use it to judge repayment capacity, and qualified mortgage standards may cap it.

An independent, licensed opinion of a property's market value based on inspection and comparable sales. Lenders rely on it to support the loan amount and LTV.

Coverage protecting against losses from defects in title, such as undisclosed liens or ownership claims. A lender's policy protects the lender; an owner's policy protects the buyer.

The order in which liens are paid from sale proceeds. Recording order generally sets priority, so a first mortgage is paid before later liens such as judgments or second mortgages.

A written notice telling an applicant that credit was denied or changed unfavorably. It must state the reasons or how to obtain them and cite ECOA rights within required timelines.

Demographic data on ethnicity, race, and sex that lenders must request on most mortgage applications. Collection is required by Regulation B and reported under HMDA.

The submission of a borrower's financial information for credit evaluation. Under Regulation X, receipt of six specified pieces of information triggers Loan Estimate delivery.

An individual who takes a residential mortgage application or offers or negotiates loan terms for compensation. Federal rules require licensing, registration, and unique identifier use.

A permanent number assigned to a licensed or registered loan originator through the Nationwide Multistate Licensing System. It must appear on loan documents and advertising.

An unearned payment or thing of value given to reward a referral of settlement service business. RESPA prohibits it, and violations can lead to penalties and license discipline.

A relationship in which a person referring settlement business has an ownership interest in the provider. RESPA permits it only with written disclosure of the arrangement and no required use.

Directing a borrower toward or away from a loan product or neighborhood based on a protected characteristic or to benefit the originator. It can violate fair lending and fair housing law.

Refusing or limiting credit in specific geographic areas, often minority neighborhoods, regardless of individual borrower qualifications. It is prohibited discrimination under federal fair lending laws.

Federal law setting minimum standards for licensing and registering mortgage loan originators. It requires pre-licensure education, testing, background checks, and annual continuing education.

The Illinois statute governing licensing and conduct of residential mortgage lenders, brokers, and originators. It authorizes IDFPR supervision and sets examination, disclosure, and enforcement requirements.

The Illinois Department of Financial and Professional Regulation, which licenses and examines mortgage businesses and originators. It enforces state mortgage law and can suspend or revoke licenses.

Illinois requires licensed mortgage loan originators to complete annual continuing education, including state-specific law hours, in addition to the federal SAFE minimum. Records must be retained and reported.