MD MLO cheat sheet

RESPA Section 8 prohibits giving or receiving anything of value for the referral of settlement service business; routine, unearned referral fees are illegal even if disclosed.

RESPA requires a Loan Estimate within 3 business days of application and a Closing Disclosure at least 3 business days before consummation; the consumer must receive the CD before closing.

TILA disclosure tolerances: the APR is accurate if within 1/8 of 1% for regular transactions and 1/4 of 1% for irregular transactions; the finance charge tolerance is $100.

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

HMDA (Regulation C) requires covered institutions to collect and report data on applications, originations, denials, and pricing; the loan-volume threshold is adjusted periodically by the CFPB.

The SAFE Act requires mortgage loan originators to be registered or licensed, pass a written test, complete pre-licensure education, and renew annually with continuing education.

HOEPA (Section 32) covers high-cost mortgages using points-and-fees and APR triggers; covered loans face restrictions on prepayment penalties, balloon payments, and late fees.

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

Flood insurance: the Flood Disaster Protection Act requires flood insurance for loans secured by improved real property in a Special Flood Hazard Area, and mandates escrow in many cases.

Qualifying ratio guidelines: conventional often uses 28% front-end and 36% back-end; FHA commonly allows 31% front-end and 43% back-end, with compensating factors permitting higher back-end ratios.

Maximum conventional conforming loan limits are set annually by FHFA; loans above the limit are non-conforming (jumbo) and generally carry stricter underwriting.

LTV = loan amount / lesser of appraised value or purchase price; CLTV includes all liens secured by the property. PMI is generally required above 80% LTV on conventional loans.

Amortization: a fully amortizing loan retires principal and interest over the term; an interest-only or balloon loan leaves a balance due at a specified date.

Escrow/impound accounts collect 1/12 of annual taxes and insurance monthly; RESPA limits reserves to no more than 1/6 of the annual disbursements for taxes and insurance.

Fixed-rate loans lock the rate for the full term; ARMs adjust per an index plus margin, subject to initial, periodic, and lifetime caps.

FHA loans require mortgage insurance: an upfront premium plus an annual premium; MIP generally lasts the life of the loan when the LTV at origination exceeds 90%.

VA loans typically require no down payment and no monthly PMI, but charge a one-time funding fee that varies by down payment and prior use.

Application intake: collect the six pieces of information (borrower name, income, SSN, property address, estimated value, loan amount) that trigger RESPA/TILA disclosure obligations.

The Loan Estimate must be delivered or placed in the mail within 3 business days of receiving an application; a revised LE requires a valid changed circumstance.

Ability-to-Repay/Qualified Mortgage: verify income, assets, employment, credit, and debts; the general QM uses a 43% DTI benchmark (or price-based thresholds under the revised rule).

Complete a good-faith evaluation of the borrower's repayment ability and document the basis for approval or denial; provide adverse action notice within 30 days of a completed application.

Order the appraisal and title work after disclosures; the borrower must receive a copy of the appraisal no later than 3 business days before closing.

Verify self-employment income with tax returns, profit-and-loss statements, and business licenses; use a written verification of employment for salaried borrowers.

Closing: the Closing Disclosure must be received by the borrower at least 3 business days before consummation; a changed CD may require a new 3-day waiting period.

Rate lock: confirm the lock date, expiration, and any extension fees; a lock that expires before closing may change the disclosed APR and require a revised LE.

Fiduciary duty to the borrower includes loyalty, disclosure of conflicts, confidentiality, and acting in the borrower's best interest rather than maximizing commission.

Fraud indicators: altered documents, inflated appraisals, undisclosed debts, straw buyers, and occupancy misrepresentation must be escalated, not ignored.

Kickbacks and unearned fees violate RESPA and state law; referral arrangements must be disclosed and must reflect bona fide services actually performed.

Fair lending: steering borrowers to higher-cost products based on protected characteristics is prohibited; pricing exceptions must be documented and consistently applied.

Confidentiality: nonpublic personal information is protected under GLBA; sharing borrower data requires notice, consent, and a permissible purpose.

Conflicts of interest: disclose any ownership interest in a title company, appraisal firm, or real estate brokerage; recusal may be required.

Advertising: license numbers and required disclosures must appear on solicitations; avoid misleading claims about rates, approvals, or government affiliation.

Recordkeeping: retain loan files and disclosure evidence for the required period; accurate, contemporaneous documentation supports both compliance and ethics.

Fiduciary duty to the borrower includes loyalty, disclosure of conflicts, confidentiality, and acting in the borrower's best interest rather than maximizing commission.

Fraud indicators: altered documents, inflated appraisals, undisclosed debts, straw buyers, and occupancy misrepresentation must be escalated, not ignored.

Kickbacks and unearned fees violate RESPA and state law; referral arrangements must be disclosed and must reflect bona fide services actually performed.

Fair lending: steering borrowers to higher-cost products based on protected characteristics is prohibited; pricing exceptions must be documented and consistently applied.

Confidentiality: nonpublic personal information is protected under GLBA; sharing borrower data requires notice, consent, and a permissible purpose.

Conflicts of interest: disclose any ownership interest in a title company, appraisal firm, or real estate brokerage; recusal may be required.

Advertising: license numbers and required disclosures must appear on solicitations; avoid misleading claims about rates, approvals, or government affiliation.

Recordkeeping: retain loan files and disclosure evidence for the required period; accurate, contemporaneous documentation supports both compliance and ethics.