TX MLO cheat sheet

TRID application trigger: receipt of the consumer's name, income, Social Security number, property address, estimated property value, and loan amount - in any form - starts disclosure timing.

Loan Estimate must be delivered or placed in the mail within 3 business days of application and received by the consumer no later than 7 business days before consummation.

A revised Loan Estimate is due within 3 business days of receiving information that supports a valid changed circumstance; it may never be delivered on or after the day of consummation.

The Closing Disclosure must be received by the consumer at least 3 business days before consummation; these business days are all calendar days except Sundays and federal legal public holidays.

The 3-business-day Loan Estimate delivery clock runs from the day the LE is delivered or placed in the mail (general definition), while the 7-day and 3-day waiting periods use the stricter calendar-day definition.

Tolerance categories: zero tolerance = creditor and affiliate fees, lender-paid broker compensation, transfer taxes; 10 percent cumulative = recording fees and lender-selected unaffiliated providers; unlimited = prepaid interest, escrow deposits, insurance premiums, and borrower-shopped providers.

Disclosed charges may not exceed the applicable tolerance absent a documented changed circumstance plus a revised disclosure delivered within 3 business days of the triggering event.

Intent to proceed must be obtained before collecting any fee other than the credit report; it need not be a signed document and does not obligate the borrower to close.

Right of rescission: 3 business days for a refinance or home equity loan secured by a principal dwelling; not available on purchase-money loans; the clock starts at the later of consummation or delivery of disclosures.

LTV = first-lien amount divided by the lesser of purchase price or appraised value; CLTV = all liens divided by value, expressed as a percentage.

Conventional PMI: the borrower may request cancellation at 80 percent LTV based on original value when current, and coverage terminates automatically at 78 percent of original value per the amortization schedule.

FHA mortgage insurance: 1.75 percent upfront premium plus an annual premium; coverage lasts the life of the loan when the down payment is less than 10 percent.

VA: the guaranty is 25 percent of the loan; the funding fee is typically 2.15 percent for first use with no down payment and 3.3 percent for subsequent use, waived for service-connected disability.

Fixed-rate amortization: total principal and interest is constant each month while the interest share declines and the principal share rises as the balance falls.

ARM pricing: the fully indexed rate equals the index plus margin, limited by initial, periodic, and lifetime caps.

Recording perfects a lien and priority generally follows recording order; a purchase-money lien typically outranks earlier judgment liens against the buyer.

Higher-priced mortgage loan: an escrow account is generally required on first liens (limited exemptions), and the lender must obtain a property-visit-based appraisal and give the consumer a free copy.

Prequalification is an unverified estimate based on stated figures; preapproval follows underwriting review of documented income, assets, credit, and collateral and is a conditional commitment.

FCRA permissible purpose is required before pulling credit: a credit transaction, employment, or another legitimate business need initiated by the consumer.

Mortgage rate-shopping inquiries falling within a 14-day window are treated as a single inquiry under current credit scoring models.

An application exists once the six trigger pieces of information are received, regardless of whether a form was completed or a property identified specifically.

ECOA/Reg B timing: notice of action taken within 30 days of a completed application; within 30 days of adverse action on an incomplete application.

Adverse action notice content: the action taken, the ECOA anti-discrimination notice, the creditor's name and address, and specific reasons or the right to request them within 60 days.

Appraisal copy rule for first liens on a dwelling: provide the appraisal promptly on completion and no later than 3 business days before consummation.

Servicing disclosure statement is provided within 3 business days after application and states whether servicing may be transferred.

HMDA: collect and report ethnicity, race, sex, age, income, property location, loan purpose, and amount; the applicant may decline to supply demographic information.

Regulation Z loan originator compensation: pay may not vary with loan terms or conditions other than the loan amount; dual compensation from consumer and lender on the same transaction is prohibited.

Steering prohibition: an originator may not direct a consumer to a transaction that is not in the consumer's interest in order to increase compensation.

SAFE Act minimum standards: no fraud or deceit, no unfair or deceptive practices, no prohibited acts; MLOs must be licensed or registered and renew annually.

GLBA privacy rule: provide a privacy notice, safeguard nonpublic personal information, and offer an opt-out before sharing with nonaffiliated third parties, subject to exceptions.

Mortgage fraud red flags: altered pay stubs or statements, income inconsistent with job history, undisclosed debts, pressure to inflate value, and undisclosed parties to the transaction.

Material misrepresentation on the application - occupancy, income, assets, or debts - exposes the originator to civil liability and criminal prosecution.

Record retention: ECOA requires 12 months after adverse action and 25 months after notifying approval; loan originator compensation records are kept 3 years.

Affiliated business arrangement: a written disclosure of the relationship and estimated charge is required, and the consumer may not be required to use the affiliate.

Consumer information may be shared with third parties only with authorization or as permitted by law, such as underwriting, servicing, or a GLBA exception.

TILA/Regulation Z requires the APR - the finance charge expressed as an annual rate - to be disclosed on both the Loan Estimate and the Closing Disclosure.

RESPA Section 8 prohibits giving or accepting any fee, kickback, or thing of value for referrals of settlement service business, including unearned fee splits.

RESPA Section 9: a seller may not condition the sale on the buyer's use of a particular title insurance company.

RESPA Section 10: an escrow cushion is limited to one-sixth of estimated total annual disbursements.

ECOA prohibited bases: race, color, religion, national origin, sex, marital status, age, receipt of public assistance income, and good-faith exercise of rights under the Consumer Credit Protection Act.

SAFE Act: licensure through NMLS with 20 hours of pre-licensure education and 8 hours of annual continuing education (3 federal law, 2 ethics, 2 nontraditional, 1 general).

Texas home equity under Article XVI, Section 50(a)(6): combined LTV capped at 80 percent, points and fees capped at 3 percent, and a minimum 12-day notice period before closing.

Texas home equity loans must be closed at a title company or an attorney's office, are closed-end only (no HELOCs on a homestead), carry no prepayment penalty, and only one may exist at a time.

Texas mortgage loan originators and mortgage companies are licensed and examined by the Texas Department of Savings and Mortgage Lending, with licenses renewed annually through NMLS.