Indiana 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 accepting anything of value in exchange for the referral of settlement service business, and prohibits splitting fees when no work is performed; penalties include treble damages and imprisonment.

Loan Estimate delivery

Under TILA-RESPA integrated disclosures, a lender must deliver or place in the mail the Loan Estimate no later than three business days after receiving the mortgage application.

Right of rescission

For refinances and home equity loans secured by a primary residence, TILA gives the borrower three business days after consummation to cancel the transaction and recover fees paid.

ECOA adverse action notice

When an application is denied or a borrower receives less favorable terms, ECOA and Regulation B require written notice within thirty days of a completed application.

Flood insurance mandate

Federally regulated lenders must require flood insurance on improved property located in a Special Flood Hazard Area before closing, and must escrow premiums on residential loans.

HOEPA high-cost trigger

A loan is high-cost under HOEPA when points and fees exceed five percent of the total loan amount for larger loans or the adjusted dollar threshold for smaller loans.

SAFE Act annual CE

Licensed mortgage loan originators complete eight hours of approved continuing education yearly: three hours federal law, two hours ethics, two hours non-traditional lending, and one additional hour.

Fair Housing Act classes

The federal Fair Housing Act prohibits discrimination in the sale, rental, or financing of housing based on race, color, religion, sex, national origin, familial status, or disability.

Loan-to-value ratio

The loan amount divided by the lesser of the purchase price or appraised value, expressed as a percentage; LTV drives pricing, mortgage insurance, and eligibility.

PMI cancellation thresholds

Borrowers may request cancellation of private mortgage insurance at eighty percent of original value, and servicers must automatically terminate coverage at seventy-eight percent under the Homeowners Protection Act.

FHA minimum down payment

FHA purchase loans require a three and one-half percent down payment for borrowers with credit scores of 580 or higher; scores between 500 and 579 require ten percent down.

VA funding fee

A one-time fee charged on VA loans that varies by down payment amount and first versus subsequent use, and is waived for veterans with certain service-connected disability ratings.

ARM rate caps

Adjustable-rate mortgages limit rate movement through initial, periodic, and lifetime caps, while the fully indexed rate equals the index value plus the lender's margin.

PITI payment

Principal, interest, taxes, and insurance combined form the full monthly housing payment used for debt-to-income qualification and for escrow account analysis.

Note versus security instrument

The promissory note contains repayment terms and creates personal liability; the mortgage or deed of trust pledges the property as collateral and allows foreclosure on default.

Form 1003

The Uniform Residential Loan Application collects borrower identity, employment, income, assets, liabilities, and property information, and is signed to certify the accuracy of the data.

Prequalification versus preapproval

A prequalification estimates borrowing capacity from stated information; a preapproval verifies documentation and credit and usually produces a conditional commitment subject to property approval.

Zero tolerance fees

Fees paid to the creditor, an affiliate, or a provider the creditor selected cannot increase at closing absent a valid changed circumstance, and any overage must be cured.

Closing Disclosure timing

The consumer must receive the Closing Disclosure at least three business days before consummation, allowing time to compare final fees and terms against the Loan Estimate.

Rate lock agreement

A written confirmation of the interest rate and discount points for a stated period; an expired lock typically requires an extension fee or re-pricing at current market.

Appraisal copy timing

For first-lien higher-priced mortgage loans, the lender must provide the borrower a free copy of the appraisal at least three business days before closing.

Verification of employment

A verbal or written confirmation of the borrower's job status and income; a ten-day pre-closing re-verification is standard when the closing date exceeds the original verification date.

Undue influence

Using position, authority, or pressure to alter a borrower's choices so that the originator or an affiliate benefits, even when the resulting loan terms are lawful.

Occupancy fraud

Misrepresenting a property as a primary residence to obtain a lower rate or reduced down payment; intent to occupy is a material representation on the loan application.

UDAAP

The Consumer Financial Protection Bureau prohibits unfair, deceptive, or abusive acts and practices, including misleading fee quotes and exploiting gaps in borrower understanding of loan terms.

Steering

Directing a borrower to a loan product based on the originator's compensation rather than the borrower's needs; guiding borrowers by protected class characteristics also violates fair lending law.

NMLS ID in advertising

Solicitation materials must display the originator's unique NMLS identifier, and state-licensed originators must include the licensing state and regulator contact information.

Indiana DFI

The Indiana Department of Financial Institutions licenses mortgage loan originators and lenders in the state and coordinates applications, renewals, and complaints through the NMLS.

Indiana license renewal

Indiana mortgage loan originator licenses renew annually between November 1 and December 31; incomplete continuing education, unpaid fees, or unresolved background issues block renewal.

Indiana Home Loan Practices Act

Indiana law bars prepayment penalties, balloon payments, and negative amortization in high-cost home loans and requires lenders to assess the borrower's ability to repay.

Indiana pre-licensure hours

New Indiana originators complete twenty hours of approved pre-licensure education covering federal law, ethics, non-traditional lending, and state-specific content before the license is issued.

Change reporting timeline

Licensed originators must report changes to name, address, employer, or criminal history through NMLS within thirty days; failure to report may result in fines or suspension.