NJ 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.
- Regulation Z
- Implements TILA and requires creditors to disclose the annual percentage rate, finance charge, amount financed, and total payments before loan consummation.
- Right of rescission
- For certain refinances and home equity lines on a principal dwelling, borrowers have three business days after consummation to cancel the transaction without penalty.
- Loan Estimate timing
- The creditor must deliver or mail the Loan Estimate within three business days after receiving the consumer's application and at least seven business days before consummation.
- Closing Disclosure timing
- The consumer must receive the Closing Disclosure at least three business days before consummation; certain changes require a revised disclosure and a new three-day waiting period.
- ECOA adverse action
- Under Regulation B, a creditor generally must notify an applicant of adverse action within 30 days after receiving a completed application.
- Fair Housing Act bases
- Prohibits discrimination in housing and mortgage lending based on race, color, religion, sex, national origin, familial status, or disability.
- SAFE Act education
- State-licensed mortgage loan originators must complete 20 hours of pre-licensing education and 8 hours of annual continuing education through NMLS.
- Loan-to-value ratio
- LTV equals the loan amount divided by the lesser of the property's sales price or appraised value, expressed as a percentage.
- Debt-to-income ratio
- DTI equals total monthly debt payments divided by gross monthly income; it includes the proposed housing payment plus recurring debts.
- PMI termination
- Borrower-requested cancellation generally occurs at 80% original LTV; automatic termination generally occurs at 78% based on the original value and amortization schedule.
- Discount point
- One discount point equals 1% of the loan amount and is paid to reduce the interest rate; origination points compensate the lender or broker.
- ARM caps
- Adjustable-rate mortgages use initial, periodic, and lifetime caps to limit rate increases; the fully indexed rate equals index plus margin.
- Escrow account
- An escrow account holds borrower funds to pay property taxes and insurance; the housing payment is often called PITI: principal, interest, taxes, insurance.
- FHA mortgage insurance
- FHA loans are government-insured and require mortgage insurance premiums; they typically allow lower down payments and more flexible credit than conventional loans.
- TRID application elements
- For Loan Estimate purposes, an application includes borrower name, income, Social Security number, property address, estimated value, and loan amount.
- Rate lock
- A rate lock fixes the interest rate for a specified period; the agreement should state the expiration date and any float-down or extension terms.
- Automated underwriting system
- An AUS evaluates credit, capacity, and collateral data against investor guidelines and returns an eligibility recommendation and conditions.
- RESPA tolerance categories
- Zero-percent tolerance applies to lender-controlled fees; a 10% cumulative tolerance applies to certain third-party fees; changed circumstances may permit revised disclosures.
- Preapproval vs prequalification
- Prequalification estimates affordability using unverified information; preapproval generally involves credit, income, and asset verification and is stronger.
- Closing Disclosure changes
- If certain fees increase or the loan terms change before consummation, the creditor must provide a revised Closing Disclosure and restart the three-business-day review period.
- RESPA Section 8
- Prohibits giving or receiving fees, kickbacks, or things of value for referrals of settlement services, unless a bona fide service is performed and reasonably compensated.
- Steering
- Directing a borrower toward a loan product that benefits the originator financially but is not in the borrower's best interest, often without disclosure.
- Fraud red flag
- Altered documents, inflated income, undisclosed debts, suspicious identities, or pressure to close quickly can indicate mortgage fraud and require escalation.
- Disparate impact
- A neutral policy or practice that disproportionately excludes protected groups may violate fair lending law even without discriminatory intent.
- UDAAP
- Federal law prohibits unfair, deceptive, or abusive acts or practices in consumer financial products; intent is not required for a violation.
- Confidentiality
- Nonpublic personal information such as credit reports and tax returns may be shared only for permissible purposes or with consumer authorization.
- NJDFI
- The New Jersey Department of Banking and Insurance licenses and examines mortgage bankers, brokers, correspondents, servicers, and mortgage loan originators in New Jersey.
- RMLA
- The New Jersey Residential Mortgage Lending Act, N.J.S.A. 17:11C, governs licensing and conduct of residential mortgage lenders and brokers in the state.
- NJ MLO sponsorship
- A New Jersey mortgage loan originator must be licensed through NMLS and sponsored by a licensed mortgage entity; individuals cannot originate independently.
- NJ foreclosure process
- New Jersey residential foreclosures are judicial, filed in Superior Court; the Fair Foreclosure Act requires a notice of intention at least 30 days before filing.
- NJ high-cost loan
- New Jersey's Home Ownership and Equity Protection Act, N.J.S.A. 46:10B-22 et seq., imposes extra limits and disclosures on high-cost home loans.
- NJ recording priority
- Mortgage priority is generally determined by the date of recording with the county clerk; the first recorded mortgage has priority over later liens.