NAMP CMLP common mistakes
NAMP CMLP · Understand the traps and how to avoid them.
Treats every lender fee as subject to the 10% cumulative tolerance and re-baselines from the most recent revised Loan Estimate instead of the original baseline LE, so a fee that should trigger a cure is recorded as compliant.
Candidates memorize short fee lists but do not internalize that RESPA/TILA tolerance categories are defined by fee type and that a valid changed circumstance resets the baseline only for the affected fees, not the entire disclosure.
What to do instead
Build a one-page grid of zero-tolerance items (lender-originated fees, transfer taxes, fees paid to affiliate of lender/creditor), 10% cumulative categories (recording fees, required services the borrower can shop for), and no-tolerance items. Practice applying it to a revised LE by identifying the triggering event, the 3-business-day delivery deadline, and which fees move to a new baseline.
Uses the general 'business day' definition (a day the institution is open to the public for substantially all business) when counting the three-business-day waiting period after a revised Loan Estimate or Closing Disclosure, and counts the day the disclosure is delivered or mailed as day one.
TRID uses two different business-day definitions, and candidates conflate them; they also forget that the waiting period starts the day after delivery, not on the delivery day.
What to do instead
Memorize the split: the general definition governs delivery of the LE and CD; the 'specific' definition (all calendar days except Sundays and federal legal public holidays) governs the waiting periods after a revised LE and before consummation. Practice counting with a calendar, starting the count the day after delivery, and confirm receipt rules when the CD is mailed or delivered electronically.
Quotes a rate and total closing costs to a borrower, or accepts a fee from a title agent, realtor, or other settlement service provider, without confirming the fee is for a service actually performed and is disclosed on the Loan Estimate and Closing Disclosure.
Candidates treat fee conversations as routine customer service and do not connect them to RESPA Section 8 prohibitions on unearned fees and fee splitting, or to state licensing rules on who may quote terms.
What to do instead
Apply a three-question test before any fee discussion or acceptance: was a real service performed, is the amount reasonable for that service, and is it disclosed? Route all rate and fee quotes through the licensed loan originator, document referral relationships, and escalate any unearned fee or marketing services agreement to compliance.
Continues processing a file where the borrower's stated occupancy, employment, or down payment source does not match the documents (for example, a borrower buying a home near a new job but the file shows a different primary address, or a large deposit described as 'savings' with no paper trail) without asking follow-up questions or escalating.
Processors focus on assembling documents rather than reconciling inconsistencies, and they may fear delaying the loan or upsetting the loan originator or borrower.
What to do instead
Use a documented red-flag checklist at intake and again at underwriting: compare addresses on the application, credit report, and pay stubs; source all large deposits; confirm occupancy intent in writing. When an inconsistency remains unresolved, document the question asked and escalate to the underwriter and compliance rather than proceeding.
Applies conventional reserve and down payment rules to FHA, VA, or USDA loans, such as requiring two months of reserves on an FHA loan or using VA's residual income test on an FHA file, and mixes up which agency's mortgage insurance or guarantee fee applies.
Product guidelines share vocabulary but differ on reserves, mortgage insurance, seller concessions, and underwriting tests, and candidates study one program deeply and then generalize.
What to do instead
Create a comparison matrix with one column per program (Conventional, FHA, VA, USDA) and rows for minimum down payment, reserves, mortgage insurance/guarantee fee, seller concessions, income limits, occupancy, and special underwriting tests. Rebuild it from current agency guides rather than memory, and answer product questions by reading across the row.
Assumes a rate lock automatically extends when the closing date slips, or quotes a note rate to the borrower as the APR without including lender fees, mortgage insurance, or other finance charges.
Candidates confuse the note rate with the annual percentage rate and assume lock terms are administrative rather than contractual and time-sensitive.
What to do instead
Review the lock agreement for expiration date, extension costs, and who pays them, and calendar the expiration at intake. Recalculate the APR whenever fees, mortgage insurance, or the rate change, and explain to the borrower in writing that the APR reflects the cost of credit over the full term, not just the note rate.
Uses line 31 net profit as qualifying self-employment income without adding back depreciation, depletion, amortization, business use of home, or deductible retirement contributions, and without subtracting non-deductible meals and other add-backs, and averages only the most recent year.
Candidates take the tax return at face value because the net profit figure looks authoritative, and they do not know that qualifying income is a cash-flow calculation rather than a tax calculation.
What to do instead
Use a self-employment cash-flow worksheet: start with net profit, add back non-cash deductions, subtract non-deductible expenses, then average the prior two years. Analyze the trend and require a written explanation for declines of 20% or more, and confirm the business exists and is likely to continue.
Omits liabilities from the debt-to-income ratio, such as student loans in deferment, timeshare or HELOC payments, or a loan that will be paid off but has not closed, and calculates the housing ratio without taxes, hazard insurance, mortgage insurance, or HOA dues.
Candidates rely on the credit report's minimum payment fields and forget that underwriting guidelines require imputing payments for deferred or undisclosed debt, and they treat PITI as principal and interest only.
What to do instead
Build the DTI from all three sources: credit report, application, and documentation. Impute payments per guideline for deferred student loans, include all housing expenses in the front-end ratio, and verify payoff only with a closing statement or updated credit report. Recalculate the ratio whenever a liability changes.
Mails or emails the Closing Disclosure exactly three business days before consummation and counts the day it was sent as day one, or fails to re-disclose and cure when the APR changes beyond tolerance or a changed circumstance occurs after delivery.
Candidates confuse the CD timing rule with the revised LE rule and underestimate that receipt, not sending, starts the waiting period, and that the APR tolerance triggers a new three-business-day review.
What to do instead
Deliver the CD and confirm receipt at least three business days before consummation, counting the day after receipt. Compare the final CD to the LE for APR and tolerance changes; if the APR moves beyond tolerance or a changed circumstance occurs, re-disclose and restart the waiting period. Document the delivery method, date, and confirmation in the file.
Confuses the promissory note with the mortgage or deed of trust, misstates who signs each instrument, or applies the three-day right of rescission to a purchase transaction or to a refinance where it does not apply.
Closing documents are reviewed as a stack rather than by function, and candidates memorize rescission as a general rule instead of tying it to the security instrument and transaction type.
What to do instead
Learn each document by purpose: the note is the promise to repay and is signed by the borrower; the mortgage or deed of trust is the security instrument and is recorded; the CD and settlement statement account for funds. Apply the right of rescission only to certain refinances and home equity transactions secured by the principal residence, and confirm the rescission date on the CD and notice of right to cancel.