MN MLO cheat sheet

RESPA Section 8 prohibits fees, kickbacks, or things of value for referral of settlement service business; Section 9 bars sellers from requiring title insurance from a particular company; Section 10 limits escrow deposits to 1/6 of annual charges.

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

Regulation Z tolerance buckets: 0% for lender-chosen fees and transfer taxes, 10% aggregate for lender-required services where the borrower may shop, unlimited for borrower-chosen providers not on the written list.

ECOA/Regulation B prohibits discrimination in credit on prohibited bases and requires adverse action notice within 30 days of a completed application; HMDA data collection comes from Regulation C.

The SAFE Act requires MLO licensing and registration through NMLS, annual continuing education, and a criminal background check; independent contract processors and underwriters are generally excluded.

Fair Housing Act prohibits discrimination in sale, rental, and financing of dwellings on race, color, religion, sex, national origin, familial status, or disability; disparate impact claims remain available.

HOEPA/Regulation Z high-cost mortgage triggers include points and fees exceeding 5% of the loan amount for loans of $20,000 or more, prepayment penalties, or an APR exceeding the average prime offer rate by more than 6.5 percentage points for first liens.

Flood Disaster Protection Act requires flood zone determination, notice, and flood insurance for federally related loans on property in a Special Flood Hazard Area; mandatory purchase is required at origination and on renewal.

TRID requires the Loan Estimate and Closing Disclosure to be in writing and delivered or placed in the mail; a revised Loan Estimate must be delivered within 3 business days of the changed circumstance.

Loan-to-value (LTV) = loan amount / appraised value or purchase price, whichever is lower; combined LTV (CLTV) = (first lien + all subordinate liens) / value.

Front-end ratio = housing expense (PITI + HOA) / gross monthly income; back-end ratio = total monthly debt obligations / gross monthly income.

Conventional conforming loan limits are set annually by FHFA; loans above the limit are non-conforming jumbo loans.

FHA loans require mortgage insurance premium (MIP) and have lower credit score and down payment thresholds; VA loans require no down payment and a funding fee; USDA loans are for rural eligible areas.

Fixed-rate mortgages have constant principal and interest payments; adjustable-rate mortgages have an initial fixed period followed by periodic adjustments tied to an index plus margin.

An amortization schedule shows how much of each payment goes to principal versus interest; early payments are interest-heavy because interest is computed on the outstanding balance.

Discount points are prepaid interest that lower the note rate; origination fees compensate the lender for processing the loan.

Escrow/impound accounts collect monthly portions of property taxes and hazard insurance so the servicer can pay them when due.

A deed of trust uses a trustee to hold title as security, while a mortgage uses a mortgagee; both secure the note and can be foreclosed.

The loan application is the trigger for disclosures; the Loan Estimate must be delivered within 3 business days and the borrower must receive it before closing.

A complete application includes the borrower's name, income, Social Security number, property address, estimated value, and loan amount.

Adverse action notice is required when an application is denied, counteroffered, or not funded; the notice must state the action, the specific reasons, and ECOA rights.

Verification documents typically include pay stubs, W-2s, tax returns, bank statements, and a credit report; self-employed borrowers generally need 2 years of returns.

A rate lock agreement states the locked rate, lock period, and any float-down or extension terms; a lock expiring before closing may cause a new rate or fee.

The Closing Disclosure lists the loan terms, projected payments, closing costs, and cash to close; the borrower must receive it 3 business days before consummation.

The appraisal supports the value used for LTV; a low appraisal may require a revised loan amount, additional down payment, or a new loan.

The MLO must provide the borrower with the NMLS Unique Identifier on written solicitation and business cards, and must keep records of the loan file.

Pre-approval is a conditional commitment based on verified income and credit; pre-qualification is an unverified estimate of borrowing capacity.

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

Steering a borrower to a higher-cost loan or a lender that pays a higher yield spread premium without disclosure violates RESPA and TILA.

Dual compensation (receiving fees from both borrower and lender) must be disclosed and may be restricted; undisclosed compensation is a violation.

Fair lending requires consistent treatment of similarly situated applicants; disparate treatment can be shown by comparing files with similar credit profiles.

Redlining is denying or discouraging applications based on the racial or ethnic composition of a neighborhood; it violates the Fair Housing Act and ECOA.

Predatory lending indicators include equity stripping, excessive fees, prepayment penalties, balloon payments, and loan flipping without a net tangible benefit.

Confidential borrower information must be protected under the Gramm-Leach-Bliley Act; sharing nonpublic personal information requires privacy notices and opt-out rights.

An MLO must not falsify income, asset, or occupancy information; occupancy fraud (claiming a primary residence for an investment property) is a federal offense.

Conflicts of interest must be disclosed in writing; referral relationships with real estate agents or builders cannot involve undisclosed payments.