NE MLO flashcards
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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 any fee, kickback, or thing of value in exchange for referrals of settlement service business on federally related mortgage loans.
- TRID Loan Estimate timing
- The Loan Estimate must be delivered or mailed within three business days after the loan application and received by the borrower no later than seven business days before consummation.
- Right of rescission
- Under TILA, a borrower may cancel a refinance or home equity loan secured by the principal dwelling within three business days of consummation or disclosure delivery.
- ECOA adverse action notice
- When an application is denied or terms are changed, the creditor must send a notice of action taken within 30 days with specific reasons for the decision.
- SAFE Act education hours
- The SAFE Act requires 20 hours of pre-licensing education and 8 hours of continuing education annually, covering federal law, ethics, and non-traditional mortgage content.
- HMDA reporting purpose
- Regulation C requires covered lenders to collect and report loan-level data, including applicant demographics, loan purpose, and pricing, to detect discrimination and monitor credit needs.
- Flood insurance requirement
- Federally related loans secured by improved property in a Special Flood Hazard Area require flood insurance, and lenders must escrow for higher-priced mortgage loans.
- Loan-to-value ratio
- Loan-to-value is the loan amount divided by the lesser of the appraised value or purchase price, expressed as a percentage of that value.
- Amortizing payment formula
- Monthly payment equals principal times the monthly rate times (1 plus rate) to the power of payments, divided by (1 plus rate) to the power of payments minus one.
- Debt-to-income ratio
- DTI divides total monthly debt payments by gross monthly income; the housing ratio includes only principal, interest, taxes, and insurance.
- PMI cancellation at 80% LTV
- Borrowers may request cancellation of private mortgage insurance when the loan balance reaches 80% of original value; automatic termination occurs at 78%.
- FHA mortgage insurance premium
- FHA loans require a 1.75% upfront mortgage insurance premium and an annual premium paid monthly; the minimum down payment is 3.5%.
- ARM fully indexed rate
- The fully indexed rate is the index value plus the lender's margin; caps limit increases at the initial, periodic, and lifetime adjustment points.
- Escrow cushion limit
- RESPA permits escrow deposits of one-sixth of the total annual escrow charges, approximately two months, as a cushion above the required amount.
- Six pieces of information
- An application is taken when the lender receives the borrower's name, income, Social Security number, property address, estimated value, and loan amount.
- Closing Disclosure timing
- The borrower must receive the Closing Disclosure at least three business days before consummation; the period restarts if the APR increases beyond tolerance.
- Rate lock disclosure
- A rate lock must be confirmed in writing with the interest rate, lock expiration date, and any lock fee; changed terms require redisclosure.
- Appraisal copy requirement
- Under ECOA, the borrower must receive a copy of the appraisal and other valuations at least three business days before closing unless the timing is waived.
- Occupancy fraud
- Occurs when a borrower misrepresents intent to occupy a property as a primary residence, often to obtain better pricing on an investment property.
- Trigger terms in advertising
- Quoting a payment amount, down payment, interest rate, or loan term triggers a requirement to disclose the APR and other terms in the advertisement.
- Kickback prohibition
- A kickback is a thing of value exchanged for a referral; RESPA Section 8 bans it on federally related mortgages even if the borrower is not charged.
- UDAAP standard
- UDAAP prohibits unfair, deceptive, or abusive practices; a practice can violate the standard without proof of intent to deceive the borrower.
- Fair lending protected classes
- ECOA and the Fair Housing Act prohibit discrimination based on race, color, religion, national origin, sex, familial status, disability, age, or public assistance receipt.
- Steering
- Steering directs a borrower toward a loan with less favorable terms or higher cost when a better option is available, potentially violating fair lending law.
- Loan flipping
- A predatory practice that repeatedly refinances a borrower's loan to generate fees, stripping equity without a genuine benefit to the borrower.
- Conflict of interest disclosure
- An ownership or financial interest in a settlement service provider must be disclosed to the borrower and may be restricted or prohibited by law.
- NMLS license renewal
- State mortgage licenses renew annually through NMLS, generally by December 31; late renewals incur fees and may require reinstatement.
- SAFE continuing education
- Eight hours annually: three hours federal law, two hours ethics, two hours non-traditional lending, and one hour general mortgage knowledge.
- National SAFE test score
- Candidates must score at least 75% on the national SAFE Act test; some states add a separate state-specific test component.
- Surety bond requirement
- Many states require mortgage brokers or lenders to maintain a surety bond, with the amount set by state law based on loan volume.
- Unlicensed activity
- Originating mortgage loans without a valid state license is prohibited and can result in fines, license denial, and criminal penalties.
- NMLS unique identifier
- Each licensed MLO receives a unique NMLS identifier that must appear on business cards, websites, and advertisements as required by state law.