MI MLO key terms

The Real Estate Settlement Procedures Act, a federal law requiring disclosures of settlement costs, limiting escrow practices, and prohibiting kickbacks or unearned fees for referrals in federally related mortgage loans.

The Truth in Lending Act, a federal law requiring clear disclosure of credit terms such as APR, finance charge, and payment schedule so borrowers can compare loan costs.

The TILA-RESPA Integrated Disclosure rule, which replaced older forms with the Loan Estimate and Closing Disclosure and imposes timing rules for delivering them to consumers.

A three-page TRID form delivered within three business days of application that summarizes the loan terms, projected payments, and estimated closing costs.

A five-page TRID form the borrower must receive at least three business days before consummation, showing the final loan terms and actual closing costs.

The annual percentage rate, which expresses the cost of credit as a yearly rate by including the interest rate plus certain finance charges, allowing comparison across loan offers.

A borrower's right under TILA to cancel certain non-purchase, owner-occupied refinances and home equity loans within three business days after consummation or disclosure delivery.

The RESPA rule barring giving or receiving anything of value in exchange for referrals of settlement service business and barring splitting fees when no service was performed.

A relationship in which a settlement service provider refers business to an affiliated company; RESPA requires a written AfBA disclosure of the ownership and estimated charges.

A contract in which a settlement service provider pays a referral source for advertising or lead generation; payments must reflect fair market value for actual services to avoid RESPA violations.

The Equal Credit Opportunity Act, which prohibits creditors from discriminating in credit decisions based on prohibited bases such as race, color, religion, national origin, sex, marital status, age, or public assistance income.

The Federal Reserve regulation implementing ECOA, setting rules for application processing, adverse action notices, record retention, and collection of government monitoring information.

The Home Mortgage Disclosure Act, which requires covered lenders to collect and report data about mortgage applications, originations, denials, and borrower characteristics to regulators and the public.

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

The Secure and Fair Enforcement for Mortgage Licensing Act, which requires mortgage loan originators to be licensed or registered through the Nationwide Multistate Licensing System and meet education and testing standards.

The Nationwide Multistate Licensing System, a centralized database used by state regulators to process license applications, track continuing education, and maintain public records for mortgage loan originators.

The NMLS-assigned number that a mortgage loan originator must include on applications, solicitations, and business cards so consumers can look up the originator's licensing record.

A federal law requiring flood insurance for properties in special flood hazard areas securing federally related loans and mandating borrower notice before closing.

A written notice a creditor must send within 30 days of a completed application when credit is denied or terms are unfavorable, stating the reasons or how to request them.

Principal, interest, taxes, and insurance, the four components of a typical monthly mortgage payment used to calculate housing expense and qualify borrowers.

The process of paying off a loan through scheduled principal and interest payments, with early payments mostly interest and later payments increasingly principal.

A table showing each scheduled payment's allocation between principal and interest and the remaining balance after each payment over the loan term.

An account a servicer uses to hold borrower funds collected monthly for property taxes and insurance and to pay those bills when due.

The loan amount divided by the property's appraised value or purchase price, whichever is lower, expressed as a percentage and used to assess risk and PMI requirements.

The total of all mortgage liens on a property divided by its value, used to evaluate risk on subordinate financing and home equity lending.

The borrower's proposed monthly housing payment divided by gross monthly income, one of the debt ratios underwriters use to evaluate repayment ability.

The borrower's total monthly obligations, including housing payment and all other debts, divided by gross monthly income; also called the back-end ratio.

Insurance protecting the lender against loss when a borrower defaults with a down payment below twenty percent; it is typically required above eighty percent LTV.

A mortgage with an interest rate that stays the same for the entire loan term, producing predictable principal and interest payments.

A mortgage whose interest rate changes periodically based on an index plus margin, usually starting with a fixed introductory period and subject to caps.

A limit on how much an adjustable-rate mortgage's interest rate or payment may increase at each adjustment and over the life of the loan.

The fixed percentage added to an index to determine the fully indexed rate on an adjustable-rate mortgage; it does not change over the loan term.

A large lump-sum payment due at the end of a loan whose regular payments do not fully amortize the principal.

A mortgage not insured or guaranteed by a government agency such as FHA, VA, or USDA, often subject to Fannie Mae or Freddie Mac guidelines.

A mortgage insured by the Federal Housing Administration that allows lower down payments and more flexible credit standards in exchange for mortgage insurance premiums.

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

A mortgage guaranteed or made by the U.S. Department of Agriculture for eligible rural properties and income-limited borrowers, often with no down payment.

The insurance charge on FHA loans, collected upfront and annually, that protects the lender in case the borrower defaults.

A document issued by the Department of Veterans Affairs confirming a borrower's entitlement to a VA-guaranteed home loan.

The maximum amount of VA guaranty available to an eligible borrower, which determines how much can be borrowed without a down payment.

An independent, licensed opinion of a property's market value based on recent comparable sales, property condition, and location, used to support the loan decision.

Software that evaluates a loan application against investor guidelines and credit data to produce an approval, referral, or denial recommendation.

The submission of a borrower's financial information for a loan; under TRID, receipt triggers the three-business-day deadline for the Loan Estimate.

An event affecting the loan terms or costs that permits a lender to issue a revised Loan Estimate, such as a new appraisal requirement or a borrower-requested change.

The point at which the borrower becomes contractually obligated on the loan, typically at closing; it starts the three-day rescission and disclosure periods.

A document given to borrowers on rescindable transactions explaining their three-business-day right to cancel and how to exercise it.

A disclosure of estimated settlement charges under RESPA for transactions not covered by TRID, such as certain reverse mortgages or business-purpose loans.

The dollar cost of credit, including interest and certain fees, used in calculating the annual percentage rate under TILA.

The illegal practice of denying or limiting credit in certain neighborhoods based on the racial or ethnic composition of the area rather than borrower qualifications.

Directing borrowers toward or away from certain loan products or neighborhoods based on protected characteristics rather than their actual needs or qualifications.

Abusive lending practices that impose unfair or deceptive terms, excessive fees, or unsuitable products on borrowers, often targeting vulnerable populations.

A legal obligation to act in the borrower's best interest with loyalty, honesty, and full disclosure, placing the client's interests above the originator's own.

The ethical duty to protect a borrower's nonpublic personal information and disclose it only as authorized or required by law.

The Gramm-Leach-Bliley Act, which requires financial institutions to protect consumer nonpublic personal information and provide privacy notices explaining information-sharing practices.

A credential issued by the Michigan Department of Insurance and Financial Services under the SAFE Act allowing a person to originate mortgage loans secured by Michigan residential property.

The Michigan Department of Insurance and Financial Services, the state agency that licenses and supervises mortgage loan originators, brokers, and lenders operating in Michigan.

Michigan law requiring entities that broker, lend, or service mortgage loans in the state to be licensed and to comply with state records, disclosure, and conduct requirements.

State law limiting the interest rate a lender may charge on mortgage loans, with certain exceptions and preemption rules for federally related loans.

Michigan law regulating high-cost home loans and imposing restrictions on fees, prepayment penalties, and lending practices for covered mortgages.

Ongoing coursework required to renew a mortgage loan originator license, typically including federal law, ethics, and state-specific instruction hours annually.