MN MLO flashcards
MN MLO · Build recall with a focused review session.
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 fees, kickbacks, or things of value in exchange for referrals of settlement service business on federally related mortgage loans.
- RESPA Section 9
- Bars a seller from requiring the buyer to purchase title insurance from a particular company as a condition of the sale.
- RESPA Section 10
- Limits escrow deposits to no more than one-sixth of the total annual charges and requires interest on escrow balances where required by law.
- Loan Estimate
- A three-page TILA/RESPA disclosure delivered within three business days of application, showing loan terms, projected payments, and closing costs.
- Closing Disclosure
- A five-page form given to the borrower at least three business days before consummation, itemizing final loan terms and closing costs.
- Regulation B adverse action
- Requires a creditor to notify the applicant of a denial, counteroffer, or other adverse action within thirty days of a completed application.
- SAFE Act
- Federal law requiring mortgage loan originators to be licensed or registered through NMLS, pass a background check, and complete annual continuing education.
- HOEPA high-cost trigger
- A loan is high-cost if points and fees exceed five percent of the loan amount for loans of twenty thousand dollars or more, or the APR exceeds the average prime offer rate by more than six and a half percentage points.
- Flood insurance requirement
- Federally related loans secured by property in a Special Flood Hazard Area must have flood insurance; the lender must give notice and verify coverage.
- Loan-to-value ratio
- The loan amount divided by the lesser of the appraised value or purchase price, used to measure borrower equity and lending risk.
- Combined LTV
- The sum of the first lien and all subordinate liens divided by the property value, used when a second mortgage or HELOC exists.
- Front-end ratio
- The borrower's monthly housing expense, including principal, interest, taxes, insurance, and HOA dues, divided by gross monthly income.
- Back-end ratio
- Total monthly debt obligations, including housing expense and all consumer debt, divided by gross monthly income.
- Conforming loan limit
- The maximum loan amount eligible for purchase by Fannie Mae or Freddie Mac, set annually by FHFA and higher in high-cost areas.
- FHA mortgage insurance premium
- A required insurance premium on FHA loans, paid upfront and monthly, protecting the lender against borrower default.
- VA funding fee
- A fee charged on VA loans, typically a percentage of the loan amount, which funds the program and may be financed into the loan.
- Adjustable-rate mortgage
- A loan with an initial fixed-rate period, after which the rate adjusts periodically based on an index plus a margin.
- Discount points
- Prepaid interest paid at closing to lower the note rate; one point equals one percent of the loan amount.
- Escrow account
- An impound account that collects monthly portions of property taxes and hazard insurance so the servicer can pay them when due.
- Deed of trust
- A security instrument in which a trustee holds title to the property until the loan is repaid, used instead of a mortgage in some states.
- Complete application
- An application containing the borrower's name, income, Social Security number, property address, estimated value, and loan amount.
- Adverse action notice
- A written notice stating the action taken, the specific reasons for denial, and the applicant's rights under ECOA.
- Rate lock
- An agreement fixing the interest rate for a specified period, with terms for extension or float-down if closing is delayed.
- Pre-approval
- A lender's conditional commitment based on verified income, assets, and credit, indicating the borrower likely qualifies for a set loan amount.
- Pre-qualification
- An unverified estimate of borrowing capacity based on stated income and credit information, not a commitment to lend.
- Appraisal
- An independent opinion of value by a licensed appraiser that supports the loan-to-value calculation and loan amount.
- NMLS Unique Identifier
- A number assigned to each licensed mortgage loan originator, required on business cards, written solicitations, and loan documents.
- Fiduciary duty
- The obligation to act in the borrower's best interest, including loyalty, disclosure of conflicts, confidentiality, and full disclosure of compensation.
- Steering
- Directing a borrower to a loan product or lender that pays the originator more compensation without disclosing the conflict or benefit.
- Redlining
- Denying or discouraging loan applications based on the racial or ethnic composition of a neighborhood rather than borrower creditworthiness.
- Predatory lending
- Lending practices such as equity stripping, excessive fees, prepayment penalties, and loan flipping that harm borrowers without a net tangible benefit.
- Gramm-Leach-Bliley Act
- A federal law requiring financial institutions to protect nonpublic personal information and provide privacy notices with opt-out rights.