TX MLO flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Application Trigger Under TRID

Receipt of six items - consumer name, income, Social Security number, property address, estimated value, and loan amount - constitutes an application and starts Loan Estimate timing.

Loan Estimate Delivery Deadline

The Loan Estimate must be delivered or placed in the mail no later than three business days after application and received at least seven business days before consummation.

Closing Disclosure Delivery Timing

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

Zero Tolerance Fees

Charges that cannot increase regardless of changed circumstance: fees paid to the creditor or its affiliates, lender-paid broker compensation, and transfer taxes.

Ten Percent Tolerance Category

Recording fees and charges paid to unaffiliated third parties the lender selects from its written list; the category total may not exceed the disclosed amount by more than ten percent.

Unlimited Tolerance Charges

Items that may increase without tolerance limits: prepaid interest, escrow deposits, homeowners insurance premiums, and services the borrower shops for with a provider not on the lender's list.

Right of Rescission

The borrower may cancel a refinance or home equity loan secured by a principal dwelling within three business days after consummation or disclosure delivery, whichever is later; purchase loans have no rescission.

Changed Circumstance

An unexpected event or new information affecting settlement charges that permits revised disclosures; the revised Loan Estimate must be delivered within three business days of receipt.

Note Versus Security Instrument

The promissory note evidences the borrower's promise to repay; the mortgage or deed of trust pledges the property as collateral and creates the lien.

Loan-to-Value Ratio

Loan amount divided by the lesser of the purchase price or appraised value, expressed as a percentage; it drives mortgage insurance and pricing decisions.

Automatic PMI Termination

On conventional loans, private mortgage insurance terminates automatically when the balance reaches 78 percent of original value per the amortization schedule, if payments are current.

FHA Mortgage Insurance Premium

FHA charges an upfront premium of 1.75 percent plus an annual premium, and coverage lasts the life of the loan when the down payment is under 10 percent.

VA Funding Fee

One-time charge paid to VA, typically 2.15 percent for first use with no down payment and higher for subsequent use; exempt for veterans with a service-connected disability.

ARM Interest Rate Caps

Adjustable-rate mortgages set the rate as index plus margin, limited by periodic caps and a lifetime cap; payment changes follow the rate adjustment.

Prequalification Versus Preapproval

Prequalification is an unverified estimate based on stated information, while preapproval follows review of documented income, assets, and credit and is a conditional commitment.

Intent to Proceed

The borrower's affirmative statement, which need not be signed, allowing the lender to collect fees other than the credit report; it does not obligate the borrower to close.

ECOA Adverse Action Timing

A creditor must notify the applicant of action taken within 30 days of receiving a completed application, or of taking adverse action on an incomplete one.

Adverse Action Notice Contents

Must include the action taken, the ECOA anti-discrimination notice, the creditor's name and address, and either specific reasons or the right to request them.

HMDA Data Collection

Lenders record ethnicity, race, sex, age, income, property location, loan purpose, and amount; the applicant may decline to provide demographic information.

Servicing Disclosure Statement

Provided within three business days after application, it tells the applicant whether the lender intends to service the loan or may transfer servicing.

Loan Originator Compensation Rule

Originator pay may not vary with loan terms or conditions other than the loan amount, and an originator may not be paid by both the consumer and the lender.

Steering Prohibition

A loan originator may not direct a consumer to a transaction that is not in the consumer's interest in order to increase the originator's compensation.

GLBA Privacy Rule

Requires financial institutions to safeguard nonpublic personal information, give privacy notices, and offer opt-out before sharing certain data with nonaffiliated third parties.

Mortgage Fraud

Intentional misstatement, concealment, or omission of a material fact on a loan application or supporting document for financial gain.

Dual Compensation

Paying a loan originator from both the consumer and the lender on the same transaction; prohibited under Regulation Z regardless of disclosure.

ECOA Record Retention

Creditors keep application records for 12 months after adverse action and 25 months after notifying an approved or incomplete applicant.

Texas Home Equity 80% Cap

Under Article XVI, Section 50(a)(6), the combined loan-to-value of a home equity loan on a Texas homestead cannot exceed 80 percent of fair market value.

Texas Home Equity 12-Day Notice

The lender must deliver the notice of rights and advance disclosures at least 12 days before closing, and the loan may not close sooner than 12 days after application.

Texas Home Equity 3% Fee Cap

Points and fees on a Texas home equity loan may not exceed 3 percent of the loan principal; interest, appraisal, title, and survey charges are generally excluded.

Texas HELOC Prohibition

The Texas Constitution does not allow open-end home equity lines of credit on a homestead; equity borrowing must be closed-end with a fixed principal amount.

RESPA Section 8

Prohibits giving or accepting any fee, kickback, or thing of value in exchange for referrals of settlement service business on federally related mortgages.

SAFE Act

Federal law creating nationwide licensing and registration of mortgage loan originators through NMLS, with education, testing, and background requirements.