OH MLO cheat sheet

SAFE Act: an MLO must hold a state license (or be a registered federally insured depository employee) before taking a residential mortgage loan application; registration/licensing is tracked through NMLS and requires pre-licensure education, testing, a background check, and annual renewal with continuing education.

RESPA Section 8: no fee, kickback, or thing of value may be given or received for referrals of settlement service business; bona fide compensation for services actually performed is permitted, and affiliated business arrangements require written disclosure of the affiliation plus no required use of the affiliate.

RESPA servicing rules: a servicer must provide an initial escrow statement, an annual escrow statement, and a notice of servicing transfer at least 15 days before the effective date; a qualified written request must be acknowledged within 5 business days and answered within 30 business days, extendable by 15.

TILA/Regulation Z: disclose the annual percentage rate (APR), finance charge, amount financed, total of payments, and payment schedule; the APR reflects the cost of credit as a yearly rate and differs from the note rate when fees are financed.

TILA right of rescission: 3 business days to cancel for a refinance or home equity loan secured by a principal dwelling; the right does not apply to a purchase-money mortgage, a business-purpose loan, or a second home.

ECOA/Regulation B: prohibits discrimination in credit on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, or good-faith exercise of rights under the Consumer Credit Protection Act; adverse action notice is due within 30 days of a completed application.

HMDA/Regulation C: covered institutions report application, origination, and purchase data, including loan type, purpose, occupancy, amount, property location, applicant ethnicity, race, sex, age, and pricing; the public loan/application register is available with certain fields redacted.

TRID (Regulation Z): the Loan Estimate must be delivered or placed in the mail within 3 business days of application and at least 7 business days before consummation; the Closing Disclosure must be received at least 3 business days before consummation.

SAFE Act anti-evasion: MLOs and their employers are prohibited from advising or encouraging an applicant to submit false information, and from structuring a loan to evade the licensing or registration requirements; a violation can result in license revocation and civil money penalties.

Loan-to-value (LTV) = loan amount ÷ lesser of appraised value or purchase price; combined LTV (CLTV) adds any subordinate lien to the first mortgage balance before dividing by value.

Conventional conforming limits are set annually by the FHFA; balances above the applicable limit are non-conforming (jumbo) and typically carry higher rates and stricter underwriting.

FHA loans are insured by HUD, require mortgage insurance premium (upfront and annual), and permit lower credit scores and higher DTI than most conventional programs; the maximum LTV for a purchase is generally 96.5%.

VA loans are guaranteed by the Department of Veterans Affairs, generally allow 100% LTV for eligible veterans, and require a funding fee that can be financed into the loan unless the borrower is exempt.

USDA Rural Development loans are for eligible rural properties and income-limited borrowers; they offer 100% LTV and a guarantee fee, and the property must be in an eligible area.

Fixed-rate mortgages have a constant rate and payment for the term; adjustable-rate mortgages (ARMs) have an initial fixed period, then adjust by an index plus margin, subject to periodic and lifetime caps.

PITI = principal + interest + taxes + insurance; the housing expense ratio compares PITI to gross monthly income, and the total debt ratio adds all other monthly obligations.

Escrow/impound accounts collect 1/12 of annual taxes and insurance with each payment; RESPA limits the cushion a servicer may hold to 1/6 of the annual escrow disbursements.

Title insurance protects against defects in ownership; a lender's policy covers the lender's interest, and an owner's policy covers the buyer and is typically issued at a simultaneous-issue discount.

Take the application completely and accurately: capture all borrowers, income, assets, debts, property details, and loan purpose, and never leave known fields blank or estimate figures without documenting the source.

Use the Loan Estimate within 3 business days of application; if a changed circumstance affects settlement charges, a revised Loan Estimate may be issued only within 3 business days of learning of the change and before the tolerance period closes.

Zero-tolerance fees (lender fees, transfer taxes, and fees paid to affiliates) cannot increase; the 10% cumulative tolerance applies to recording fees and certain third-party charges; no tolerance applies to services the borrower shops for and selects.

Verify ability to repay under the qualified mortgage rules: document and retain income, assets, debts, and employment, and confirm the loan meets product-feature and points-and-fees limits if it is a QM.

Order the appraisal through an approved channel and maintain appraiser independence; no one with a stake in the transaction may influence or attempt to influence the appraiser's value.

Gather and review supporting documents: pay stubs, W-2s, tax returns, bank statements, gift letters, and a fully executed purchase contract; note any large or unexplained deposits.

Lock the rate in writing and disclose the lock period, expiration, and any extension fee; a rate lock is a commitment that must be confirmed to the borrower in a revised disclosure when terms change.

Deliver the Closing Disclosure at least 3 business days before consummation; if the APR increases by more than 1/8 of a percentage point or the loan product changes, a corrected disclosure and a new 3-business-day waiting period are required.

Maintain the loan file with a complete audit trail: application date, disclosures sent and received, credit reports, verifications, and all borrower communications, because exam questions test documentation and timing rules.

The duty of good faith and fair dealing requires honest, accurate, and timely communication with borrowers, lenders, and counterparties; misrepresenting loan terms is a violation regardless of intent.

Confidentiality: nonpublic personal information may be shared only as permitted by the Gramm-Leach-Bliley Act privacy rules and the borrower's authorization; do not disclose borrower data to unauthorized third parties.

Conflicts of interest must be disclosed and avoided; steering a borrower to an affiliated title, appraisal, or insurance provider for personal gain violates RESPA Section 8 and fiduciary duties.

Fair lending: do not consider prohibited factors such as race, religion, national origin, sex, marital status, age, or public assistance income; treat similarly situated applicants consistently and document any exceptions.

Do not pressure or discourage applicants based on the neighborhood, the borrower's protected characteristics, or the loan amount; discouraging an applicant from applying can itself be unlawful discouragement.

Advertising must be truthful and not misleading, and must include required disclosures (such as the NMLS unique identifier and, where applicable, APR and equal housing opportunity statements).

Fraud prevention: verify income, employment, and occupancy claims, and refuse to assist in inflating values, misstating occupancy, or hiding debts; report suspected fraud to the lender and appropriate authorities.

Recordkeeping and cooperation: retain required records for the applicable period, cooperate with audits and examinations, and self-report errors or violations promptly rather than concealing them.