NM MLO flashcards

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 anything of value for referrals of settlement-service business. Routine referral fees and fee splits for services not actually performed violate the rule.

Loan Estimate timing

Must be delivered or mailed within 3 business days of receiving the application. Revised estimates are generally due within 3 business days of the triggering event.

Closing Disclosure timing

Consumer must receive the Closing Disclosure at least 3 business days before consummation. A changed APR beyond tolerance requires a new 3-day review.

Zero tolerance fees

Fees paid to the lender, mortgage broker, or affiliate and transfer taxes may not increase unless a valid changed circumstance applies.

ECOA adverse action

Notice of action taken must be provided within 30 days of a completed application. The notice states the reasons for denial or the right to request them.

SAFE Act CE hours

Licensed MLOs complete 8 hours of annual continuing education: 3 federal law, 2 ethics, 2 non-traditional mortgage lending, and 1 elective.

Flood insurance requirement

Lenders must require flood insurance for improved structures in Special Flood Hazard Areas, provide notice, and verify coverage before closing. NFIP maximum is $250,000 for a 1-4 family home.

HMDA reporting threshold

Covered lenders report closed-end mortgage loan data if they originated at least 25 covered loans in each of the two preceding calendar years.

Conforming loan limit

The baseline single-unit limit set by the FHFA was $766,550 for 2024. High-cost areas may go up to 150% of the baseline.

FHA down payment

Borrowers with a 580 or higher credit score may put down 3.5%. Scores from 500 to 579 require 10% down.

VA funding fee

A fee paid by the veteran, ranging from 1.25% to 3.3% of the loan, based on down payment and whether it is a first or subsequent use.

PITI components

Principal, interest, property taxes, and homeowners insurance. Housing expense may also include HOA dues and mortgage insurance.

Loan-to-value formula

LTV equals the loan amount divided by the property value. Combined LTV includes all liens divided by value.

ARM caps structure

A 2/2/6 ARM means a 2% initial adjustment cap, a 2% periodic cap, and a 6% lifetime cap above the starting rate.

Discount points

Prepaid interest equal to 1% of the loan amount per point. Paying points lowers the interest rate over the loan term.

USDA guarantee fee

Rural Development loans charge a 1% upfront guarantee fee plus an annual fee. Eligible borrowers may finance 100% of the purchase price.

Debt-to-income ratio

Total monthly debt obligations, including proposed PITI, divided by gross monthly income. Underwriters compare it against program or AUS limits.

Complete application

Exists when the lender has borrower name, income, SSN, property address, estimated value, and loan amount. It triggers disclosure timelines.

Right of rescission

For refinances of a principal residence, the borrower has 3 business days after consummation to cancel. Purchases and business-purpose loans are exempt.

Appraisal delivery rule

The lender must provide a copy of the appraisal promptly and no later than 3 business days before closing, unless the borrower waives the review.

Rate lock agreement

States the locked rate, term, and expiration date. Extensions usually cost a fee, and a float-down may be available at a cost.

Self-employed documentation

Self-employed borrowers typically provide two years of personal and business tax returns plus a year-to-date profit and loss statement.

Servicing transfer notice

The servicer must notify the borrower at least 15 days before transferring servicing. The notice states the effective date and new servicer.

Credit report age

Many investors require a credit report no older than 120 days at closing. An older report must be re-pulled before closing.

Disparate treatment

Intentional discrimination where a lender treats a borrower differently because of a protected characteristic. It violates the Fair Housing Act and ECOA.

Disparate impact

A neutral policy that disproportionately affects a protected class without a business necessity. It can violate fair lending law even without intent.

GLBA privacy notice

Requires lenders to provide a privacy notice and opt-out rights for sharing nonpublic personal information with nonaffiliated third parties, subject to exceptions.

Steering prohibition

Directing a borrower to a higher-cost loan or a particular provider for the MLO's compensation, rather than the borrower's benefit, is prohibited.

Document falsification

Altering or fabricating income, asset, or identity documents is fraud. It can lead to license revocation, fines, and criminal prosecution.

NMLS ID in advertising

The unique identifier must appear on certain solicitation materials as required by state and federal rules. Ads cannot claim government approval.

Conflicts of interest

Any relationship that could bias the MLO's recommendation must be disclosed. Accepting referral fees from settlement providers violates RESPA.

Suspected fraud reporting

An MLO who identifies red flags such as inflated appraisals or straw buyers must report the suspicion to the lender and not proceed with the loan.