MN MLO key terms

A federal requirement that a lender make a reasonable, good-faith determination that a borrower can repay a mortgage before originating it, based on verified income, assets, debts, and employment.

A loan meeting federal standards that give lenders a legal safe harbor or rebuttable presumption of compliance with the Ability-to-Repay Rule, generally including limits on points, fees, and risky features.

A federal law governing disclosure of settlement costs, escrow account practices, and prohibitions on paying or receiving fees for referrals of settlement service business.

A federal consumer protection law requiring lenders to disclose the true cost of credit, including the annual percentage rate and finance charge, in a consistent format before consummation.

The cost of credit expressed as a yearly rate, incorporating the interest rate plus certain finance charges, used to compare loan offers on a common basis.

The total dollar amount of interest and other costs a borrower pays to obtain credit, disclosed under Truth in Lending rules and used in calculating the annual percentage rate.

A standardized three-page disclosure a lender must deliver within three business days of a mortgage application, showing estimated loan terms, projected payments, and closing costs.

A standardized final disclosure the borrower must receive at least three business days before consummation, detailing actual loan terms, projected payments, and final closing costs.

An unearned fee or thing of value given to a person for referring settlement service business, which is prohibited under federal anti-inducement rules.

The RESPA provision making it illegal to give or accept any fee, kickback, or thing of value in exchange for referrals of business involving a federally related mortgage loan.

A relationship in which a person referring settlement service business has an ownership interest in the provider, requiring a written disclosure of the relationship and an estimate of the charge.

A federal law prohibiting creditors from discriminating against applicants on protected bases such as race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income.

A written notice a creditor must provide when denying credit, offering less favorable terms, or failing to act on an application, stating the reasons or how to request them.

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 illegal practice of denying or limiting credit and services to residents of certain neighborhoods based on the area's racial or ethnic composition rather than individual creditworthiness.

A discrimination theory holding that a neutral policy or practice is unlawful when it disproportionately harms members of a protected class and is not justified by business necessity.

Intentional discrimination in which an applicant is treated differently because of a protected characteristic, as opposed to a neutral practice that produces unequal outcomes.

A borrower's right to cancel certain refinance and home equity loans secured by a principal residence within three business days after consummation or disclosure delivery, whichever is later.

The moment a borrower becomes contractually obligated on the loan, typically at signing of the promissory note, which triggers timing rules for certain disclosures.

A federal law requiring covered lenders to collect and report data about mortgage applications and originations, including applicant demographics, to detect discriminatory lending patterns.

The annual record covered lenders compile under HMDA, listing each application with data fields such as loan purpose, amount, property location, action taken, and applicant characteristics.

A loan whose annual percentage rate exceeds the average prime offer rate by a specified margin, triggering extra protections such as escrow requirements and appraisal rules.

A calculation used to determine whether a loan meets Qualified Mortgage limits, counting specified origination charges, discount points, and certain third-party costs against a threshold.

A federal law requiring states to license and register mortgage loan originators, including national criminal background checks, testing, and pre-licensure education.

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

The centralized online system used by state regulators to manage licensing, registration, and records for mortgage loan originators and companies.

A permanent identification number assigned to each registered mortgage loan originator, which must appear on certain loan documents and advertising.

Receiving compensation from both the borrower and the lender on the same transaction. Federal rules restrict this practice when it creates conflicts with the borrower's interest.

The written contract in which a borrower promises to repay a specified sum with interest according to stated terms, including payment schedule and default provisions.

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

The stated interest rate specified in the promissory note that determines the periodic interest charged on the outstanding principal balance.

The loan amount divided by the property's appraised value or purchase price, expressed as a percentage, used to assess collateral risk and mortgage insurance requirements.

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

The percentage of a borrower's gross monthly income consumed by proposed housing payments plus other recurring debts, used as a key underwriting measure of repayment capacity.

The money left over after subtracting housing costs, debts, and estimated living expenses from net income; used in certain underwriting analyses to judge payment shock tolerance.

A fee paid by the borrower to protect the lender against loss on loans with high loan-to-value ratios, required on many government-backed and low-down-payment conventional loans.

Coverage provided by a private insurer that protects the lender if a borrower defaults on a conventional loan with a down payment below the lender's threshold.

A charge imposed when a borrower pays off all or part of a loan early. Federal rules restrict these penalties on higher-priced and qualified mortgage loans.

A creditor's response to an application offering credit on terms different from those requested, which under fair lending rules must be handled with proper notice if declined.