Kentucky MLO key terms

A three-page disclosure a lender must deliver within three business days of receiving a mortgage application, showing estimated closing costs, loan terms, and projected payments in a standardized format.

A five-page form the borrower must receive at least three business days before consummation, itemizing final loan terms and actual closing costs so they can be compared with the earlier Loan Estimate.

The integrated disclosure rule under Regulation Z and Regulation X that combines Truth in Lending and RESPA disclosures into the Loan Estimate and Closing Disclosure, with strict timing and tolerance requirements.

A permitted variance between estimated and actual closing costs. Zero-tolerance items cannot increase, ten-percent categories are capped in aggregate, and unlimited-tolerance items may change if disclosed in good faith.

An event such as new information about the borrower or property, or an unforeseen change in requirements, that permits a lender to revise a Loan Estimate and reset cost tolerances.

A reissued Loan Estimate permitted only when a valid changed circumstance or other allowed trigger occurs, and generally delivered within three business days of learning of the event.

The moment a borrower becomes contractually obligated on the credit transaction, typically at signing of the promissory note; it starts the three-business-day Closing Disclosure review period.

A three-business-day right for borrowers to cancel certain refinances and home equity loans secured by their principal dwelling, which cannot be waived and requires specific disclosures.

The Federal Reserve rule implementing the Truth in Lending Act, governing disclosures, ability-to-repay standards, loan originator compensation, advertising, and high-cost mortgage protections.

The rule implementing RESPA, covering servicing disclosures, escrow account limits, settlement statement requirements, and prohibitions on kickbacks and unearned referral fees.

A federal statute requiring clear disclosure of credit costs, including the annual percentage rate and finance charge, and giving borrowers cancellation rights on certain dwelling-secured loans.

The Real Estate Settlement Procedures Act, which requires disclosure of settlement costs, limits escrow cushions, regulates servicing transfers, and bans kickbacks for referral of settlement business.

The RESPA provision making it illegal to give or accept anything of value in exchange for referring settlement service business or for splitting charges not actually performed.

A relationship in which a settlement service provider refers business to an affiliated company; it requires a written disclosure of the affiliation and estimated charges, and the referral must not be required.

A Regulation Z requirement that creditors make a reasonable, good-faith determination the consumer can repay the loan based on verified income, assets, debts, and employment, using prescribed underwriting factors.

A loan that meets Regulation Z's repayment protections, such as product-feature limits and points-and-fees caps, giving the creditor a legal safe harbor or rebuttable presumption of ATR compliance.

A QM category based on the price-based threshold, typically measured by the loan's annual percentage rate relative to the average prime offer rate, plus product-feature and points-and-fees limits.

Costs counted against QM and high-cost mortgage thresholds, including origination charges, discount points, certain closing costs, and insurance premiums, computed under Regulation Z rules.

A loan triggering Home Ownership and Equity Protection Act thresholds based on points and fees, APR, or prepayment penalties, which imposes extra disclosures, escrow rules, and consumer protections.

The cost of credit expressed as a yearly rate, incorporating the interest rate plus certain finance charges, used to compare loan offers on a consistent basis.

The total dollar cost of credit, including interest and certain other charges imposed as a condition of the loan, disclosed under Truth in Lending rules.

A borrower's total monthly debt payments divided by gross monthly income; it is a key underwriting measure of repayment capacity and a factor in ATR and QM standards.

The loan amount divided by the property's appraised value or purchase price, whichever is lower, used to judge risk and determine mortgage insurance and pricing requirements.

The total of all liens secured by a property divided by its value, used to evaluate risk when a borrower has a second mortgage or home equity line alongside the first loan.

Insurance protecting the lender against loss when a borrower defaults with a high-LTV loan; it carries cancellation and termination rights under the Homeowners Protection Act.

A federal law requiring automatic termination of private mortgage insurance at a specified LTV and giving borrowers the right to request cancellation earlier with good payment history.

An account a servicer uses to hold borrower funds for property taxes and insurance and pay those bills when due, subject to RESPA limits on required cushions and annual analysis.

The administrative handling of a loan after closing, including collecting payments, managing escrow, and handling defaults; transfers must be disclosed to the borrower under RESPA.

A required disclosure telling the borrower that loan servicing is being transferred, including the effective date and where to send payments, generally at least fifteen days before the change.

The submission of a borrower's financial information in anticipation of a credit decision; for disclosure timing purposes, receipt of six specified pieces of information triggers Loan Estimate delivery.

The process of taking a borrower's application, gathering and verifying documentation, ordering disclosures, and shepherding the file to underwriting and closing.

The lender's evaluation of credit, capacity, and collateral to decide whether to approve a loan and on what terms, including verification of income, assets, and property value.

An independent opinion of a property's market value prepared by a licensed or certified appraiser, used to support the loan amount and subject to appraisal independence rules.

Rules prohibiting loan originators and other interested parties from influencing or attempting to influence an appraiser's value conclusion, with prohibited conduct and reporting obligations.

An individual who takes a residential mortgage application or offers or negotiates loan terms for compensation; federal rules require licensing, registration, and conduct standards.

The Secure and Fair Enforcement for Mortgage Licensing Act, which requires states to license mortgage loan originators and sets minimum standards for testing, education, and background checks.

The Nationwide Multistate Licensing System, the online registry used to apply for, maintain, and track mortgage loan originator and company licenses across participating states.

The permanent NMLS-issued number assigned to a mortgage loan originator, which must appear on loan documents and advertising as required by the SAFE Act.

The state system administered by the Kentucky Department of Financial Institutions under which mortgage loan companies and loan originators must be licensed through NMLS before conducting business with Kentucky consumers.

The state agency that regulates mortgage loan companies and originators in Kentucky, examines licensees, investigates complaints, and may impose fines, suspensions, or license revocations.

A formal enforcement step by a state regulator, such as a cease-and-desist order, fine, probation, suspension, or license revocation, which must be reported on NMLS filings.

The annual process of maintaining a mortgage license through NMLS, typically requiring continuing education, fees, and updated disclosures by a state-set deadline to avoid late fees or expiration.

Annual post-licensing coursework required by the SAFE Act and state rules, including federal law, ethics, and state-specific hours, completed through approved providers and reported to NMLS.

Anything of value given or received in exchange for referring settlement service business, which is prohibited under RESPA and can lead to penalties for both the payer and recipient.

Improper pressure on a consumer or appraiser that compromises independent judgment, such as steering a borrower to a particular provider or pressing for a target value.

The standards of honest and fair dealing required of licensees, including truthfulness in advertising, no misleading statements about loan terms, and protection of borrower nonpublic information.

A federal law requiring financial institutions to safeguard customer nonpublic personal information and to give privacy notices explaining how that information is shared.

A revolving credit line secured by a dwelling, allowing draws during a set period with variable rates, and subject to Truth in Lending disclosure and rescission requirements.