MD MLO flashcards
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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 anything of value for referral of settlement service business. Routine, unearned referral fees are illegal even when disclosed to the borrower.
- Loan Estimate timing
- Lender must deliver or mail the Loan Estimate within 3 business days of receiving an application. A revised estimate requires a valid changed circumstance.
- Closing Disclosure timing
- Borrower must receive the Closing Disclosure at least 3 business days before consummation. A changed CD may restart the 3-day waiting period.
- APR accuracy tolerance
- 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 protected classes
- Race, color, religion, national origin, sex, marital status, age, public assistance income, and good-faith exercise of consumer protection rights are protected under Regulation B.
- SAFE Act requirements
- Mortgage loan originators must be licensed or registered, pass a written test, complete pre-licensure education, and renew annually with continuing education.
- HOEPA high-cost triggers
- Section 32 covers loans exceeding points-and-fees or APR triggers. Covered loans face restrictions on prepayment penalties, balloon payments, and late fees.
- Flood insurance mandate
- Loans secured by improved real property in a Special Flood Hazard Area require flood insurance. Escrow is often mandatory for the life of the loan.
- 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.
- Conforming loan limit
- FHFA sets the maximum conforming loan limit annually. Loans above the limit are non-conforming jumbo loans and generally receive stricter underwriting.
- LTV and CLTV
- LTV equals loan amount divided by the lesser of appraised value or purchase price. CLTV includes all liens. PMI is generally required above 80% LTV on conventional loans.
- Fully amortizing loan
- A loan that retires principal and interest over its term. Interest-only and balloon loans leave a balance due at a specified date.
- Escrow reserve limit
- Monthly escrow collects 1/12 of annual taxes and insurance. RESPA limits reserves to no more than 1/6 of annual disbursements for taxes and insurance.
- ARM caps
- Adjustable-rate mortgages adjust by an index plus margin, subject to initial, periodic, and lifetime caps that limit payment increases.
- FHA mortgage insurance
- FHA requires an upfront premium plus annual premium. MIP generally lasts the life of the loan when the LTV at origination exceeds 90%.
- VA funding fee
- VA loans typically require no down payment and no monthly PMI, but charge a one-time funding fee varying by down payment and prior use.
- Six pieces of information
- Borrower name, income, Social Security number, property address, estimated value, and loan amount trigger RESPA and TILA disclosure obligations.
- Changed circumstance
- A valid changed circumstance permits a revised Loan Estimate. Examples include new information about the borrower, property, or a changed loan product.
- Ability-to-Repay
- Lenders must verify income, assets, employment, credit, and debts. The general QM uses a 43% DTI benchmark or price-based thresholds under the revised rule.
- Adverse action notice
- Must be provided within 30 days of a completed application when the borrower is denied. It states the reasons for the denial.
- Appraisal delivery
- Borrower must receive a copy of the appraisal no later than 3 business days before closing, regardless of whether the loan is approved.
- Self-employment income verification
- Verify with tax returns, profit-and-loss statements, and business licenses. Salaried borrowers generally require a written verification of employment.
- Rate lock
- Confirm the lock date, expiration, and extension fees. A lock that expires before closing may change the disclosed APR and require a revised Loan Estimate.
- Application intake
- Collect the six pieces of information and supporting documents. Disclosures must be delivered within 3 business days of application receipt.
- Fiduciary duty
- 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.
- Kickback prohibition
- Kickbacks and unearned fees violate RESPA and state law. Referral arrangements must be disclosed and reflect bona fide services actually performed.
- Fair lending steering
- Steering borrowers to higher-cost products based on protected characteristics is prohibited. Pricing exceptions must be documented and consistently applied.
- GLBA confidentiality
- Nonpublic personal information is protected. Sharing borrower data requires notice, consent, and a permissible purpose.
- Conflict of interest disclosure
- Disclose any ownership interest in a title company, appraisal firm, or real estate brokerage. Recusal may be required in some transactions.
- Advertising compliance
- 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.