Kentucky 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 receiving any fee, kickback, or thing of value for referrals of settlement service business. Payments must be for services actually performed at reasonable value.

TRID 3-day rule

The initial Loan Estimate must be delivered or mailed within three business days after the consumer submits a mortgage application.

Right of rescission

Three-business-day cancellation right for refinances and home equity loans secured by a principal dwelling. Not available for purchases, business loans, or second homes.

Adverse action notice

Written notice required within 30 days of a completed application when credit is denied or terms are less favorable, stating reasons and ECOA rights.

SAFE Act CE hours

Licensed MLOs complete 8 hours of annual continuing education, including 3 hours federal law, 2 hours ethics, 2 hours nontraditional lending, and 1 hour elective.

ATR points and fees

Qualified mortgage points-and-fees cap is 3% under $100,000, 2.25% for $100,000-$249,999, 2% for $250,000-$499,999, and 1% at $500,000 and above.

HPML escrow requirement

Higher-priced mortgage loans generally require an escrow account for taxes and insurance unless an exemption applies, such as certain rural or small-creditor loans.

Conforming loan limit

Maximum loan amount eligible for Fannie Mae or Freddie Mac purchase, updated annually by FHFA. Loans above the limit are non-conforming jumbo loans.

FHA minimum down payment

Borrowers with a 580 or higher FICO may put down 3.5%. Borrowers with scores from 500 to 579 must put down 10%.

VA funding fee

Upfront fee paid by the veteran, varying by down payment and first or subsequent use. It may be financed. No monthly mortgage insurance premium applies.

USDA guarantee fee

USDA rural loans charge an upfront guarantee fee plus an annual fee. Eligible properties must be in designated rural areas and borrower income must be within limits.

Back-end DTI

Total monthly debt obligations, including housing payment, divided by gross monthly income. It is the ratio most commonly used in underwriting decisions.

CLTV

Combined loan-to-value equals the sum of all mortgage liens divided by the lesser of the purchase price or appraised value.

PMI automatic termination

Private mortgage insurance terminates automatically when the loan balance reaches 78% of original value based on the amortization schedule, with good payment history.

Escrow cushion

RESPA permits a cushion of no more than two months of escrow payments in the account after the annual escrow analysis.

Loan Estimate timing

Initial LE within three business days of application. A revised LE must be delivered at least four business days before consummation.

Rate lock

Agreement fixing the interest rate for a set period. The lock period and expiration must be disclosed, and re-locks may carry a fee.

Large deposit sourcing

Deposits beyond normal income must be documented. The underwriter verifies the source to confirm funds are not borrowed or from an undisclosed party.

Reconsideration of Value

Formal process for challenging an appraisal by submitting additional comparable sales or corrections to the lender for review by the appraiser.

Flood zone determination

If the property lies in a Special Flood Hazard Area and the loan is federally related, flood insurance is required and notice must be provided before closing.

Closing Disclosure delivery

The Closing Disclosure must be received by the borrower at least three business days before consummation. Changed terms may restart the waiting period.

Servicing transfer notice

Notice of servicing transfer must be provided at least 15 days before the effective date. Late fees are barred for 60 days after transfer.

ECOA protected classes

Race, color, religion, national origin, sex, marital status, age, receipt of public assistance, and good-faith exercise of rights under consumer protection law.

Fair Housing Act classes

Race, color, religion, sex, disability, familial status, and national origin are protected. State and local laws may add classes.

UDAAP standard

Unfair, deceptive, or abusive acts or practices. Deception requires a material misrepresentation likely to mislead a reasonable consumer.

GLBA privacy notice

Financial institutions must provide privacy notices and safeguard nonpublic personal information. Sharing requires authorization or a legal exception.

NMLS ID in advertising

The unique identifier must appear on all mortgage advertising and loan documents. Advertising must not contain misleading rates or terms.

Kentucky licensing regulator

Mortgage loan originators and companies are licensed by the Kentucky Department of Financial Institutions and managed through the NMLS.

Kentucky pre-licensure education

Applicants complete 20 hours of pre-licensure education, including Kentucky-specific law content, before taking the licensing exam.

Kentucky continuing education

Licensed originators complete 8 hours of annual CE through NMLS, including a Kentucky law component, before the renewal deadline.

Kentucky surety bond

Mortgage loan companies must maintain a surety bond set by DFI, scaled to loan volume, to protect consumers against violations.

Kentucky sponsorship change

An originator's license is tied to a sponsoring mortgage company. A change in sponsorship must be reported through NMLS, often with a fee.