NE MLO key terms

A federal law requiring lenders to disclose settlement costs and prohibiting unearned fees and kickbacks in mortgage transactions. It also governs escrow accounts and servicing transfers for certain loans.

A federal consumer protection law that requires clear disclosure of credit costs and terms. For mortgages, it sets rules for the annual percentage rate, right of rescission, and loan disclosures.

The integrated disclosure rule combining Truth in Lending Act and RESPA disclosures. It requires a Loan Estimate within three business days of application and a Closing Disclosure at least three days before consummation.

A federal law prohibiting creditors from discriminating based on race, color, religion, national origin, sex, marital status, age, or receipt of public assistance. It also requires notice of adverse action.

A federal law requiring certain mortgage lenders to collect and report data about applications, approvals, denials, and borrower demographics. Regulators use the data to detect discrimination and ensure fair lending.

A federal law governing consumer credit reporting. It sets rules for accessing credit reports, disputing errors, and using credit information for mortgage underwriting decisions.

A federal law establishing minimum national standards for mortgage loan originator licensing and registration. It created the NMLS and requires education, testing, and background checks.

The federal regulation implementing the Truth in Lending Act. It covers annual percentage rate calculations, disclosure timing, advertising rules, and ability-to-repay requirements for mortgage loans.

Ability-to-Repay and Qualified Mortgage rules require lenders to evaluate a borrower's ability to repay and provide legal protections for loans meeting specific criteria.

A federal law prohibiting discrimination in the sale, rental, and financing of housing based on protected characteristics. It applies to lenders, real estate agents, and housing providers.

The process of paying off a mortgage through regular payments that include both principal and interest. Early payments are mostly interest; later payments reduce principal faster.

The four parts of a typical monthly mortgage payment: principal, interest, property taxes, and homeowners insurance. It is often used to qualify borrowers.

The loan amount divided by the property's appraised value or purchase price. It helps measure risk; higher ratios usually require mortgage insurance.

A borrower's total monthly debt payments divided by gross monthly income. Lenders use it to evaluate whether a borrower can handle a new mortgage payment.

An account where a lender holds money collected with monthly mortgage payments to pay property taxes and insurance on the borrower's behalf.

A mortgage with an interest rate that adjusts periodically after an initial fixed period. Payments can rise or fall based on a specified index and margin.

The annual percentage rate reflects the true yearly cost of credit, including interest and certain fees. It helps borrowers compare loan offers but may not reflect all closing costs.

Mortgage insurance required on many conventional loans when the down payment is below 20 percent. It protects the lender, not the borrower, if the loan defaults.

A government-insured mortgage backed by the Federal Housing Administration. It allows lower down payments and more flexible credit standards but requires mortgage insurance.

A mortgage guaranteed by the Department of Veterans Affairs for eligible veterans and surviving spouses. It often requires no down payment and no monthly mortgage insurance.

An informal estimate of how much a borrower might qualify for, based on stated financial information. It is not a loan approval or a commitment to lend.

A lender's conditional commitment to lend a specific amount after reviewing a borrower's verified financial documents. It strengthens an offer but is not a final approval.

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

A standardized five-page form that finalizes the loan terms and closing costs. The borrower must receive it at least three business days before loan consummation.

An agreement by a lender to hold a specific interest rate and points for a set period while the loan is processed. It may include a fee.

The standardized form, often called the URLA, on which a borrower provides personal, employment, asset, and property information to request a mortgage.

A legal obligation to act in another party's best interest, often requiring loyalty, disclosure of conflicts, and avoidance of self-dealing. It can apply to some mortgage professionals.

A situation where a person's personal interests or relationships could improperly influence professional decisions. Mortgage professionals should disclose and manage such conflicts.

Directing a borrower toward a loan product that benefits the loan originator financially rather than meeting the borrower's needs. It may violate fair lending and consumer protection laws.

Unfair or deceptive lending practices that impose abusive terms, excessive fees, or unaffordable loans on borrowers, often targeting vulnerable consumers.

Intentional misrepresentation or omission of material information in a mortgage transaction. It can include falsifying income, assets, occupancy, or property value.

The illegal practice of denying or limiting mortgage or housing services in certain neighborhoods based on race, ethnicity, or other protected characteristics.

The Nationwide Multistate Licensing System and Registry, a system used by state regulators to license and track mortgage loan originators and companies.

A number assigned to a mortgage loan originator through NMLS. It must appear on certain loan documents and advertising.

The required education courses a mortgage loan originator must complete before becoming licensed. The SAFE Act sets a minimum of 20 hours of instruction.

Ongoing education required to renew a mortgage loan originator license, including federal law, ethics, and state-specific topics. The SAFE Act minimum is eight hours annually.

A bond required by some state regulators to guarantee a mortgage loan originator or company complies with licensing laws and financial obligations.

The annual process of maintaining an active mortgage loan originator license by meeting education, fee, and reporting deadlines set by the state regulator.