NJ MLO key terms

Federal law requiring lenders to disclose settlement costs on federally related mortgage loans, limiting escrow practices, and prohibiting fees paid for the mere referral of settlement service business.

The rule implementing the Truth in Lending Act, now issued by the Consumer Financial Protection Bureau, covering disclosure of credit costs, the annual percentage rate, advertising rules, and high-cost mortgage protections.

The integrated disclosure rule that combined RESPA and Truth in Lending disclosures into two forms, the Loan Estimate and the Closing Disclosure, and set strict delivery and timing requirements.

A three-page disclosure giving a mortgage applicant good-faith estimates of loan terms, projected payments, and closing costs, which must be delivered within three business days after the application is received.

A five-page form stating the final loan terms and closing costs, which must reach the borrower no later than three business days before the loan is consummated.

Federal law barring creditors from discriminating against applicants on protected bases such as race, color, religion, national origin, sex, marital status, age, or receipt of public assistance income.

A written notice a creditor must send when it denies credit, reduces terms, or fails to act on a completed application, stating the specific reasons or explaining how to request them.

Federal law requiring mortgage lenders to collect and report data about applications, originations, and denials, including borrower race, ethnicity, sex, income, and census tract, so regulators can detect discrimination and unmet credit needs.

Federal law prohibiting discrimination in the sale, rental, and financing of housing because of race, color, religion, sex, disability, familial status, or national origin.

Federal law requiring mortgage loan originators to be licensed or registered through the Nationwide Multistate Licensing System, meet minimum character and testing standards, and complete pre-licensing and continuing education.

Requirement that a creditor make a reasonable, good-faith determination the borrower can repay before originating a mortgage; loans meeting specified product and pricing criteria are Qualified Mortgages with presumptions of compliance.

A loan whose points, fees, or rate exceed federal HOEPA thresholds, which triggers extra disclosures, a ban on certain features, and limits on prepayment penalties and balloon payments.

Under the Flood Disaster Protection Act, a lender must require adequate flood insurance on improved property located in a special flood hazard area before making, increasing, or extending a federally related mortgage loan.

Giving or receiving anything of value in exchange for referring settlement service business; it is prohibited unless a specific safe harbor, such as a permitted affiliated business arrangement, applies.

The cost of credit expressed as a yearly rate, including interest and certain finance charges such as points and fees, allowing borrowers to compare the true cost of competing loan offers.

The borrower's written promise to repay a mortgage loan, stating the principal amount, interest rate, payment schedule, late charges, and the lender's remedies upon default.

The document pledging real property as collateral for a loan; in New Jersey a mortgage gives the lender a lien on the property, while some states instead use a deed of trust with a trustee.

The ranking of liens against a property for repayment, generally set by the date each is recorded, so a first mortgage is satisfied before junior liens such as home equity loans.

The four parts of a borrower's monthly housing payment: principal, interest, property taxes, and homeowners insurance, with the tax and insurance portions often collected through an escrow account.

An account where the servicer holds part of each monthly payment to pay taxes and insurance when due, subject to limits on the cushion and rules on statements, analysis, and refunds.

The loan amount divided by the property's appraised value or purchase price, used to measure lending risk and to decide whether mortgage insurance is required.

A borrower's total monthly debt payments divided by gross monthly income, used by underwriters to judge whether the borrower can comfortably carry the new mortgage payment.

A loan whose interest rate changes periodically based on a financial index, governed by an initial fixed period, periodic and lifetime adjustment caps, and a margin added to the index.

Insurance protecting the lender against loss on a conventional loan with a high loan-to-value ratio, usually required above eighty percent LTV and cancellable under specified conditions.

A mortgage insured by the Federal Housing Administration, known for low down payments and mortgage insurance premiums, underwritten under FHA credit, documentation, and property standards.

A loan made to an eligible veteran, active-duty service member, or surviving spouse with a partial federal guaranty, typically requiring a Certificate of Eligibility and little or no down payment.

An informal estimate of how much a prospective borrower might be able to borrow, based on self-reported income and credit information, and not a commitment or approval to lend.

A lender's written, conditional commitment to lend up to a stated amount after reviewing verified income, assets, and credit, commonly used by buyers shopping for a home.

A lender's agreement to hold a specific interest rate and points for a set period, protecting the borrower from market movement between application and closing.

The standard loan application form (Fannie Mae Form 1003) that gathers the borrower's personal, employment, income, asset, liability, and property information for underwriting.

Software such as Fannie Mae's Desktop Underwriter that tests application data against an investor's rules and returns an approve/eligible or refer decision with conditions.

Directing a borrower toward a loan product or pricing that benefits the originator's compensation rather than the borrower's needs, or away from a more suitable option.

Lending practices that rely on unfair or deceptive terms, excessive fees, or loans the borrower cannot repay, causing harm especially to vulnerable or disadvantaged borrowers.

Intentional misrepresentation of income, assets, occupancy, property value, or other material facts to obtain a mortgage or better terms than the borrower actually qualifies for.

Refusing credit or varying its terms for residents of particular neighborhoods, usually on racial or ethnic grounds, instead of judging each applicant's individual creditworthiness.

A situation in which an originator's personal or financial interest, such as a referral fee or ownership stake in an affiliated company, could improperly influence the advice given to a borrower.

The state agency that licenses mortgage bankers, brokers, and loan originators in New Jersey, examines them for compliance, investigates complaints, and enforces state consumer protection law.

New Jersey statute N.J.S.A. 17:11C governing the licensing, conduct, recordkeeping, and supervision of residential mortgage lenders, brokers, and loan originators doing business in the state.

New Jersey's high-cost home loan law, which adds protections for loans above stated rate or fee triggers, including limits on prepayment penalties, balloon payments, and financed points and fees.

The online system created under the SAFE Act for licensing and registering mortgage companies and originators, tracking education, testing, sponsorship, and disciplinary history across participating states.