MD MLO key terms

The yearly cost of credit expressed as a percentage, combining the interest rate with certain finance charges such as origination fees and mortgage insurance, so borrowers can compare loan offers on a like-for-like basis.

The total dollar cost of consumer credit, including interest, origination points, and specified fees, disclosed under federal lending rules so borrowers see the full price of borrowing.

A federal law requiring lenders to disclose credit costs clearly and consistently, giving borrowers standardized APR and finance charge figures before they commit to a loan.

The implementing rule for the Truth in Lending Act that spells out disclosure timing, content, and advertising standards for consumer mortgage credit transactions.

A federal statute governing settlement practices, requiring disclosures of closing costs and loan servicing, and prohibiting unearned fees and certain referral payments in residential mortgage transactions.

The rule that implements RESPA, covering settlement cost disclosures, escrow account limits, servicing transfer notices, and anti-kickback requirements for federally related mortgage loans.

A standardized three-page disclosure given to a mortgage applicant shortly after application, showing projected interest rate, monthly payment, closing costs, and cash needed to close.

A standardized form delivered to the borrower at least three business days before consummation, itemizing final loan terms, closing costs, and the cash required to close.

A borrower's limited right to cancel certain refinance or home equity loans secured by a principal residence within three business days after closing, without penalty.

The RESPA rule barring giving or accepting fees, kickbacks, or things of value for referrals of settlement service business, except for services actually performed.

A federal law prohibiting creditors from denying credit or setting terms based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income.

The rule implementing ECOA, setting standards for collecting applicant information, notifying applicants of credit decisions, and preserving records of credit transactions.

A written notice sent to an applicant when credit is denied or terms are changed unfavorably, stating the reasons or how reasons may be obtained.

A federal law prohibiting discrimination in the sale, rental, and financing of housing based on protected characteristics, including race, color, religion, sex, disability, and familial status.

The illegal practice of refusing or limiting mortgage or housing services in specific neighborhoods, often identified by demographic makeup, rather than evaluating individual borrower qualifications.

A federal law requiring mortgage lenders to collect and report loan application, origination, and denial data so regulators and the public can detect discriminatory or underserved lending patterns.

The rule implementing HMDA, defining which institutions and transactions are covered and specifying the loan-level data lenders must record and report annually.

A federal law requiring flood insurance for federally related loans on improved property located in a Special Flood Hazard Area, and mandating borrower notice of flood status.

A zone mapped by FEMA as having a one percent or greater annual chance of flooding, which triggers mandatory flood insurance for federally related mortgage loans.

The obligation to obtain and maintain coverage at least equal to the lesser of the outstanding loan balance or the maximum coverage available under the federal flood program.

A lender-held account funded through monthly borrower payments to collect and pay property taxes, hazard insurance, and other recurring charges when due.

A federal law requiring mortgage loan originators to be registered or licensed through the Nationwide Multistate Licensing System, meet education and testing standards, and provide unique identifiers.

A permanent number assigned to a registered or licensed mortgage loan originator, which must appear on loan documents and business communications so consumers can verify status.

An individual who takes a residential mortgage application or offers or negotiates loan terms for compensation, subject to federal registration and state licensing requirements.

A written promise by the borrower to repay a specified sum with interest according to a stated schedule, establishing the personal repayment obligation.

A security instrument that pledges real property as collateral for a loan, giving the lender the right to foreclose if the borrower defaults.

The gradual repayment of a loan through scheduled payments that apply part to interest and part to principal, reducing the balance over the loan term.

The two core components of a monthly mortgage payment: principal reduces the outstanding balance, while interest compensates the lender for the use of funds.

The full monthly housing payment combining principal, interest, property taxes, and homeowners insurance, used by underwriters to measure affordability.

The loan amount divided by the property's appraised value or purchase price, expressed as a percentage, indicating how much of the property is financed.

The total of all mortgage liens on a property divided by its value, used to assess risk when a borrower has a second mortgage or home equity line.

Insurance protecting the lender against loss when a borrower's down payment is small, typically required when the loan-to-value ratio exceeds eighty percent.

A fee charged on government-backed loans, such as FHA loans, to protect the lender, often paid upfront and monthly as part of the housing payment.

A borrower's total monthly debt obligations divided by gross monthly income, used by underwriters to judge capacity to repay a new mortgage.

The lender's process of evaluating a borrower's credit, income, assets, and collateral to decide whether to approve a loan and on what terms.

Software that analyzes application data against investor guidelines to produce an eligibility recommendation, such as an approve or refer decision, before human review.

A mortgage not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac when it meets conforming loan limits and credit standards.

A mortgage that meets the loan limits and underwriting guidelines set by Fannie Mae and Freddie Mac, allowing it to be sold on the secondary market.

A government-insured mortgage that allows lower down payments and more flexible credit standards, requiring mortgage insurance premiums for the life of many loans.

A mortgage guaranteed by the Department of Veterans Affairs and available to eligible service members and veterans, often requiring no down payment.

The marketplace where existing mortgages are bought and sold by investors, supplying lenders with capital to make new loans.

The process of pooling many mortgage loans into securities sold to investors, spreading risk and funding further lending in the housing market.

A revolving credit line secured by a home, allowing the borrower to draw funds up to a limit during a draw period and repay over time.

The legal process by which a lender takes ownership of a property, or forces its sale, after the borrower fails to meet repayment obligations.

A sale of a home for less than the amount owed on the mortgage, completed with the lender's agreement to release the lien for less than full repayment.

A historical settlement cost disclosure that was replaced by the Loan Estimate; candidates should recognize it as a superseded form not used for current transactions.

The submission of a borrower's financial information sufficient for a credit decision, which starts disclosure timing requirements under federal mortgage rules.

The ethical obligation to act with the skill, knowledge, and diligence a competent mortgage professional would use, including verifying borrower information.

The ethical obligation to put the borrower's legitimate interests ahead of the originator's compensation or convenience, avoiding conflicts of interest.

A relationship of trust in which the originator must act in the borrower's best interest, disclosing material facts and avoiding self-serving conduct.

Abusive lending practices such as steering borrowers into unaffordable or high-cost loans through deception, pressure, or equity stripping.

Directing a borrower toward a particular loan product for the originator's financial gain rather than the borrower's qualifications or stated needs.

A lender's required set of policies, procedures, and controls to detect and report suspicious activity and prevent the financing of illegal proceeds.

A confidential filing made to federal authorities when a financial institution detects transactions that may involve illegal activity or evasive structuring.

A required process to verify the identity of loan applicants using name, address, date of birth, and identification documents before account opening.