NAMP CMLP key terms

A person who takes a residential mortgage application, offers or negotiates loan terms, or assists a consumer in obtaining a loan, and who must hold a state license or federal registration.

The legal obligation of a loan originator to act in the borrower's best interest, placing the borrower's interests ahead of the originator's compensation or the lender's convenience when recommending loan options.

Directing a borrower toward a loan product or terms that benefit the originator or lender rather than the borrower, often by misrepresenting options or withholding cheaper alternatives for which the borrower qualifies.

The Nationwide Multistate Licensing System: a web-based registry that tracks state licenses, registrations, testing, and disciplinary history for mortgage loan originators, branch offices, and licensed companies.

Loan practices that impose unfair or abusive terms, such as excessive fees, hidden costs, or loans made without regard to the borrower's ability to repay, typically targeting vulnerable or unsophisticated consumers.

The TILA-RESPA Integrated Disclosure rule: Regulation Z requirements that replaced the GFE and HUD-1 with the Loan Estimate and Closing Disclosure and set timing and tolerance rules for mortgage disclosures.

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

The Equal Credit Opportunity Act and its implementing rule, which prohibit lenders from denying credit based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income.

A written notice a lender must send when denying an application, approving it on different terms, or failing to act, stating the specific reasons for the decision and the applicant's rights.

The Home Mortgage Disclosure Act, which requires covered lenders to collect and report data on mortgage applications, originations, denials, pricing, and borrower demographics to regulators and the public.

The Ability-to-Repay rule requires lenders to verify a borrower can repay; Qualified Mortgage status gives a rebuttable presumption of compliance or a safe harbor when specified product and pricing limits are met.

The principle that credit decisions must be free of discrimination, including practices neutral on their face that disproportionately exclude protected classes, unless justified by a legitimate business necessity.

The Fair Credit Reporting Act: the law governing how credit information is collected, shared, and disputed, including permissible purpose requirements, adverse action notices, and accuracy standards for reported data.

A mortgage not insured or guaranteed by a federal agency, typically underwritten to Fannie Mae or Freddie Mac guidelines or held in a private lender's portfolio under its own standards.

A mortgage insured by the Federal Housing Administration, allowing lower down payments and more flexible credit standards in exchange for mortgage insurance premiums paid by the borrower for the loan's life or until removed.

A mortgage guaranteed by the Department of Veterans Affairs for eligible veterans, active-duty service members, and surviving spouses, often requiring no down payment and no monthly mortgage insurance premium.

A mortgage through the Department of Agriculture's rural development programs for eligible low- and moderate-income borrowers in designated rural areas; some versions offer full financing with a guarantee fee.

A mortgage whose original balance exceeds the conforming loan limit set annually for Fannie Mae and Freddie Mac, so it is underwritten to investor-specific standards, often with larger reserve requirements.

A mortgage whose interest rate stays fixed for an initial period, then adjusts periodically based on an index plus a margin, subject to periodic and lifetime caps.

A lender's commitment to hold a specified interest rate and points for a set period, usually ending at closing; extensions may cost a fee, and some locks include a float-down option.

An upfront fee paid at closing to lower the loan's interest rate, with each point equal to one percent of the loan amount; the benefit depends on how long the borrower keeps the loan.

A cost-of-credit measure that combines the interest rate with certain finance charges and is expressed as a yearly rate, helping borrowers compare competing loan offers on a common basis.

Insurance protecting the lender if a borrower defaults, generally required on conventional loans with down payments below twenty percent; it can usually be removed as equity grows or by request.

The percentage of a borrower's gross monthly income consumed by the proposed housing payment plus all other monthly debt obligations; a key underwriting measure of repayment capacity.

Software such as Fannie Mae's Desktop Underwriter or Freddie Mac's Loan Product Advisor that evaluates credit, income, assets, and collateral data to issue an eligibility and documentation recommendation.

Strengths in a loan file, such as substantial reserves, low payment shock, or long stable employment, that offset a higher-risk characteristic and support an approval guidelines alone might not permit.

The process of evaluating a loan file against published guidelines by human judgment without an automated approval, commonly used when the AUS returns a refer or the borrower's circumstances are nontraditional.

A report combining the credit files of the three national repositories, Equifax, Experian, and TransUnion, with merged scores, tradelines, inquiries, and public records used in mortgage underwriting.

Qualifying income for a borrower who owns a business, documented through personal and business federal tax returns and profit-and-loss statements, with adjustments for depreciation, depletion, and nonrecurring items.

Liquid or readily convertible assets remaining after closing, measured in months of housing payments, that demonstrate the borrower's capacity to withstand a temporary disruption in income.

The relationship between the loan amount and the property's appraised value or purchase price, whichever is lower; it drives mortgage insurance requirements, pricing adjustments, and program eligibility.

A five-page form delivered at least three business days before consummation that finalizes loan terms, projected payments, closing costs, and the cash the borrower must bring to closing.

The borrower's written promise to repay the loan, stating the principal amount, interest rate, payment schedule, prepayment terms, and default and late-charge provisions.

A security instrument used in many states that conveys title to a trustee to secure the loan, allowing nonjudicial foreclosure if the borrower defaults; it accompanies the promissory note.

Coverage protecting the lender or owner against losses from defects in title, such as prior liens, forgeries, or recording errors, that existed at closing but are discovered later.

An insurer's written assurance to a lender that it will cover losses caused by the settlement agent's fraud, dishonesty, or failure to follow the lender's written closing instructions.

A scheme in which criminals impersonate a lender, real estate agent, or title company to trick a buyer into sending closing funds to a fraudulent account; verbal verification through a known number is required.

A borrower's right to cancel certain refinances and home equity loans secured by a principal residence within three business days of consummation without penalty, with the lender returning all fees.