Mortgage Broker flashcards
Mortgage Broker · 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.
- Loan Estimate
- A three-page Reg Z disclosure that must be delivered or placed in the mail within three business days after a mortgage application and before consummation.
- Closing Disclosure
- A Reg Z form showing final loan terms and costs; it must be received by the borrower at least three business days before consummation.
- Right of rescission
- A three-business-day right to cancel certain refinance and home equity loans secured by a principal dwelling; purchase-money mortgages and second homes are generally exempt.
- RESPA Section 8
- Prohibits giving or receiving anything of value for referrals of settlement services and prohibits splitting charges for services not actually performed.
- Adverse action notice
- An ECOA/Reg B notice that a creditor must provide within 30 days after receiving a completed application when credit is denied or terms are unfavorable.
- Ability-to-Repay rule
- Requires creditors to make a reasonable, good-faith determination that a consumer can repay a mortgage based on verified income, assets, debts, and eight underwriting factors.
- HMDA
- The Home Mortgage Disclosure Act requires covered lenders to collect and report loan-level data on applications, originations, denials, borrower demographics, and pricing.
- PITI
- Principal, interest, property taxes, and homeowners insurance; the four components used to estimate a borrower's monthly housing payment.
- Loan-to-value ratio
- The loan amount divided by the lesser of the property's purchase price or appraised value, expressed as a percentage.
- Debt-to-income ratio
- Total monthly debt obligations divided by gross monthly income; lenders use it to assess capacity to repay.
- Conforming loan
- A mortgage that meets Fannie Mae and Freddie Mac eligibility rules, including loan limits set annually by the FHFA.
- Adjustable-rate mortgage
- A loan with an initial fixed-rate period, then periodic rate adjustments based on an index plus margin, subject to initial, periodic, and lifetime caps.
- Discount point
- A fee paid at closing to reduce the interest rate; one point equals one percent of the loan amount.
- Mortgage insurance
- Coverage that protects the lender against borrower default, often required when the loan-to-value ratio exceeds 80 percent.
- TRID application
- A request for credit containing six pieces of information: borrower name, income, Social Security number, property address, estimated value, and loan amount.
- Pre-approval
- A conditional underwriting decision that states a lender's willingness to lend up to a specified amount, subject to property and final verification.
- Rate lock
- A lender commitment to hold a specified interest rate for a set period, often with extension fees if closing is delayed.
- Automated underwriting system
- Software such as Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor that evaluates credit, capacity, and collateral to issue findings.
- Title commitment
- A title insurer's offer to issue a policy after showing ownership, liens, and exceptions; it must be cleared before closing.
- Escrow account
- An impound account that holds borrower funds for property taxes and insurance and pays those bills when due.
- Occupancy fraud
- Misrepresenting a property as a primary residence to obtain better pricing or terms when the borrower intends to rent it out.
- Redlining
- Denying or discouraging mortgage services in specific neighborhoods based on race, ethnicity, or other prohibited characteristics rather than credit risk.
- Kickback
- An undisclosed payment or thing of value given for a referral of settlement business, prohibited by RESPA Section 8.
- Protected class
- A group shielded from credit discrimination by ECOA or fair housing law, such as race, sex, marital status, age, disability, or familial status.
- Suspicious activity report
- A confidential filing that financial institutions submit to FinCEN when they detect suspected money laundering or fraud involving the institution.
- Steering
- Directing a borrower toward a loan product or terms based on a prohibited characteristic rather than the borrower's qualifications and stated needs.
- NMLS
- The Nationwide Multistate Licensing System, the online registry used for mortgage licensing, renewals, and regulatory filings.
- SAFE Act
- Federal law requiring mortgage loan originators to meet education, testing, and licensing standards, administered through state regulators and NMLS.
- Continuing education
- Annual required training for licensed MLOs; SAFE standards call for eight hours, including federal law, ethics, nontraditional lending, and general topics.
- Surety bond
- A bond required by many states that provides funds to consumers harmed by a licensee's violations and helps ensure regulatory compliance.
- Branch license
- A separate authorization many states require for each mortgage business location; the main license does not automatically cover branch operations.
- Record retention
- Regulatory requirement to keep mortgage transaction and licensing records for a set period, commonly three years, available for examination.