Massachusetts MLO cheat sheet

Massachusetts requires a mortgage loan originator license under M.G.L. c. 255F, administered by the Division of Banks; the license must be obtained before taking a residential mortgage loan application.

NMLS licensing uses the SAFE Act framework: 20 hours of pre-licensure education (3 hours federal law, 3 hours ethics, 2 hours non-traditional lending, 12 hours general), plus a passing SAFE test and a criminal background/FBI fingerprint check.

Annual continuing education is 8 hours: 3 hours federal law and regulation, 2 hours ethics (including fraud and consumer protection), 2 hours non-traditional mortgage lending, and 1 hour Massachusetts-specific law.

Massachusetts license renewal runs on a calendar-year cycle; the NMLS renewal window typically opens November 1 and closes December 31, and late renewal requires a new application rather than a simple fee.

RESPA Section 8 prohibits fees, kickbacks, or things of value for referrals of settlement service business; Section 10 prohibits unearned fees where no service is performed.

TILA/Regulation Z requires disclosure of the APR and finance charge; the Loan Estimate must be delivered within 3 business days of application and the Closing Disclosure at least 3 business days before consummation.

ECOA/Regulation B prohibits discrimination and requires HMDA data collection and reporting; Massachusetts adds its own anti-discrimination statute, M.G.L. c. 151B, covering housing and credit.

Massachusetts law limits prepayment penalties and prohibits certain high-cost loan terms under M.G.L. c. 183 and the Division of Banks' 209 CMR 32/42/53 regulations; state and federal ability-to-repay rules both apply.

The six pieces of the mortgage application are: borrower name, monthly income, Social Security number, property address, estimated property value, and loan amount sought; once all six are received, the 3-business-day Loan Estimate clock starts.

The loan process flow is: pre-qualification, application, processing, underwriting, conditional approval, clear-to-close, closing/disbursement, and post-closing servicing transfer.

The housing expense ratio (front-end) is PITI divided by gross monthly income; the total debt ratio (back-end) is all monthly obligations divided by gross monthly income.

PITI = principal + interest + property taxes + hazard insurance; add HOA dues, mortgage insurance, and flood insurance where applicable to compute the true monthly housing cost.

The Loan Estimate must be delivered or placed in the mail within 3 business days of application; a revised Loan Estimate is permitted only for valid changed circumstances, and it must be delivered within 3 business days of learning of the change.

The Closing Disclosure must be received by the borrower at least 3 business days before consummation; a changed APR beyond 1/8 of a percent (1/4 for irregular transactions) triggers a new 3-business-day waiting period.

The appraisal must be delivered to the borrower promptly and no later than 3 business days before closing; the borrower may waive the timing but not the right to receive it.

A Notice of Incomplete Application must be sent within 30 days if the file is not complete, and an adverse action notice is required within 30 days of a completed application that is denied.

Conventional loans are not government-insured; conforming loans meet Fannie Mae/Freddie Mac limits (the 2024 baseline limit is $766,550 in most areas, with higher limits in high-cost areas such as much of Massachusetts).

FHA loans require mortgage insurance: an upfront MIP (typically 1.75% of the base loan amount) plus annual MIP, and MIP may be life-of-loan depending on LTV and term.

VA loans are guaranteed by the Department of Veterans Affairs, typically require no down payment, and carry a VA funding fee that varies by down payment and first-use status.

USDA loans are for rural areas, allow 100% financing for eligible borrowers, and charge an upfront guarantee fee plus an annual fee.

Adjustable-rate mortgages (ARMs) have an initial fixed period, an adjustment index (often SOFR), a margin, periodic caps, and a lifetime cap; the fully indexed rate equals index plus margin.

Fixed-rate mortgages (30-year and 15-year) offer a constant principal and interest payment; a 15-year amortization pays down principal faster and carries a lower rate but a higher monthly payment.

A reverse mortgage (HECM) is available to borrowers 62 and older; it requires no monthly mortgage payment but requires payment of taxes, insurance, and HOA, and the loan is non-recourse.

Massachusetts-specific programs include MassHousing loans (down payment assistance, first-time buyer programs) and MassHousing's MassDreams and ONE Mortgage products for low- and moderate-income borrowers.

The SAFE Act requires mortgage loan originators to act in the borrower's best interest and to present loan options truthfully; steering a borrower to a higher-cost loan solely for compensation is prohibited.

Massachusetts prohibits unfair or deceptive acts or practices under M.G.L. c. 93A; violations can carry multiple damages and attorney's fees in addition to regulatory penalties.

Predatory lending protections include restrictions on high-cost home loans: no balloon payments, no negative amortization, no prepayment penalties beyond the statutory limit, and no lending without regard to ability to repay.

The Fair Credit Reporting Act (FCRA) requires a permissible purpose to pull a credit report, and adverse action notices must disclose the credit reporting agency used and the borrower's right to a free report.

The Home Mortgage Disclosure Act (HMDA) requires collection and reporting of applicant race, ethnicity, sex, age, and loan pricing data; the data is used to detect discrimination and redlining.

The Gramm-Leach-Bliley Act (GLBA) requires privacy notices and safeguarding of nonpublic personal information; Massachusetts' 201 CMR 17.00 adds a written information security program (WISP) requirement.

Fair lending under ECOA prohibits discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good-faith exercise of rights under the Consumer Credit Protection Act.

The Real Estate Settlement Procedures Act (RESPA) Section 6 requires servicers to respond to qualified written requests within 30 business days (extendable by 15) and to acknowledge them within 5 business days.