Indiana MLO cheat sheet

RESPA Section 8 bans giving or accepting anything of value for the referral of settlement service business and bans splitting fees when no service is performed; penalties include treble damages and criminal fines.

TRID timing: Loan Estimate delivered or mailed within 3 business days of application; Closing Disclosure received at least 3 business days before consummation; a revised Loan Estimate must be received no later than 4 business days before consummation.

Fee tolerance tiers: zero tolerance (creditor/affiliate fees, transfer taxes), 10 percent cumulative tolerance (recording fees, lender-selected third-party services), unlimited tolerance (prepaid interest, escrow deposits, borrower-shopped services).

TILA right of rescission runs 3 business days after consummation for refinances and closed-end home equity loans secured by a primary residence; it does not apply to purchases, investment property, or second homes.

ECOA/Regulation B protected factors: race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, and good-faith exercise of rights under the Consumer Credit Protection Act; adverse action notice generally within 30 days.

Flood Disaster Protection Act: improved property in a Special Flood Hazard Area requires flood insurance before closing, an escrow account for residential loans, and written notice to the borrower.

HOEPA high-cost triggers include points and fees above 5 percent of the total loan amount for larger loans, APR exceeding the average prime offer rate by more than 6.5 points on a first lien, and prepayment penalties beyond the statutory window.

SAFE Act baseline: 20 hours of approved pre-licensure education, 8 hours of annual continuing education, NMLS registration, criminal background check, and credit report review.

Ability-to-Repay requires verification of eight underwriting factors (income, employment, assets, debts, credit history, simultaneous loans, mortgage-related obligations, monthly payment); General QM uses a price-based threshold rather than the former 43 percent DTI cap.

LTV equals the loan amount divided by the lesser of the sales price or the appraised value; CLTV adds all liens secured by the property to the numerator.

Conforming loan limits are set annually by the FHFA; loans above the applicable baseline or high-cost ceiling are non-conforming and generally held in portfolio or sold through private channels.

Housing expense ratio (front-end) compares PITI plus HOA dues to gross monthly income; total debt ratio (back-end) adds all recurring obligations including installment, revolving, and child support.

FHA purchase loans require 3.5 percent down at a 580 credit score or higher and 10 percent down for scores of 500 to 579; upfront MIP is typically financed into the loan balance.

VA loans allow 0 percent down for eligible veterans; the funding fee varies by down payment, first versus subsequent use, and is waived for certain service-connected disability exemptions.

Homeowners Protection Act: borrower may request PMI cancellation at 80 percent of original value, automatic termination occurs at 78 percent, and final termination at the end of the amortization schedule.

ARM structure: the fully indexed rate equals the index plus margin, and initial, periodic, and lifetime caps limit how much the rate may rise at each adjustment and over the loan term.

The promissory note evidences the debt and repayment terms; the mortgage or deed of trust is the security instrument granting the lender a lien and, in a deed-of-trust state, a trustee power of sale.

Lender's title insurance protects the lender's lien up to the loan amount; owner's title insurance is optional for the buyer and is typically issued in the purchase price amount.

No fee may be collected before the Loan Estimate is delivered except a reasonable credit report fee; the borrower must indicate intent to proceed before other fees are charged.

The Loan Estimate remains available for comparison for 10 business days from issuance; a revised estimate is required upon a valid changed circumstance within 3 business days of learning of it.

Standard documentation set: 30 days of pay stubs, two years of W-2s, two months of asset statements, two years of tax returns for self-employed borrowers, and a complete credit report.

Appraisal Independence Rules prohibit influencing or pressuring an appraiser; for higher-priced first-lien loans the borrower must receive a free copy of the appraisal at least 3 business days before closing.

Rate locks must be confirmed in writing with the rate, points, expiration date, and extension cost; expired locks require a re-lock at current market pricing or a documented extension fee.

Cure payments for tolerance violations must be made and documented within 60 days of consummation; refunds are issued to the borrower and reflected in the file.

AUS findings from DU or LP dictate documentation and eligibility; a refer or manual underwrite requires compensating factors such as reserves, low DTI, or residual income.

Simultaneous second liens, subordinate financing, and gift funds each carry specific sourcing, documentation, and disclosure requirements that must be resolved before submission to underwriting.

Fair lending prohibits both disparate treatment (intentional differential treatment) and disparate impact (neutral policies with unjustified disproportionate effect) based on protected class characteristics.

Steering is directing a borrower to a loan product for the originator's compensation rather than the borrower's stated needs; steering a borrower by protected class status also violates fair lending law.

Affiliated business arrangements require a written disclosure of the relationship and estimated charges; the arrangement may not require the borrower to use the affiliate as a condition of the loan.

Advertising rules: rate claims must be accurate and include required APR and terms disclosures, and all solicitation materials must display the originator's unique NMLS identifier.

Fraud red flags include altered or inconsistent documents, undocumented income that does not match deposits, undisclosed debts, straw buyers, and applications showing occupancy the borrower does not intend.

GLBA and state privacy rules require safeguarding nonpublic personal information, limiting disclosure to third parties, and providing privacy notices at established intervals.

Unfair, deceptive, or abusive practices include quoting a rate or fee the lender cannot honor, misleading marketing of government programs, and exploiting gaps in borrower understanding.

The Indiana Department of Financial Institutions is the state regulator for mortgage lending and originator licensing; applications, renewals, and filings are processed through NMLS.

Indiana MLO licenses expire December 31 annually; the renewal window opens November 1 and runs through December 31, and renewal requires completion of continuing education and updated background authorization.

Indiana pre-licensure requires 20 hours of NMLS-approved education covering federal law, ethics, non-traditional lending, and state-specific content before the license is issued.

Annual continuing education totals 8 hours: 3 hours federal law and regulation, 2 hours ethics including fraud, consumer protection, and fair lending, 2 hours non-traditional mortgage lending, and 1 additional hour.

The Indiana Home Loan Practices Act restricts high-cost home loans by prohibiting prepayment penalties, balloon payments, and negative amortization, and requires lenders to evaluate the borrower's ability to repay.

Licensed originators must report changes to name, address, employer, or criminal history through NMLS within 30 days; failure to report can trigger fines or license suspension.

Indiana licensees must maintain a surety bond as required by the licensing statute, and unlicensed origination activity is subject to enforcement action by the Department of Financial Institutions.

Exemptions from Indiana MLO licensing include employees of federally insured banks, savings banks, and credit unions, and certain attorneys acting within the practice of law.