TX MLO key terms

A person who for compensation takes a residential mortgage loan application, offers or negotiates loan terms, or directs a borrower to someone who does. Federal and Texas law require licensing or registration for this role.

A broker shops a borrower's file to outside lenders and does not fund with its own money, while a banker funds loans with its own credit lines and then sells them to investors.

The lender's review of a borrower's credit, income, assets, and the collateral property to decide whether the loan meets lender and investor guidelines and may be approved.

A lender's written commitment to hold a specific interest rate and points for a set period, usually through closing. If closing runs past the expiration date, the pricing can change.

Administering a loan after closing: collecting payments, managing escrow, handling payoffs, and working with delinquent borrowers. Servicing rights may be sold or transferred to another company.

The loan amount divided by the property's appraised value or purchase price, whichever is lower, shown as a percentage. It reflects borrower equity and affects pricing and mortgage insurance.

All mortgage liens against a property added together and divided by the property value. Lenders use it when a borrower has a second lien or a piggyback structure.

Total monthly debt payments, including proposed housing costs and minimum payments on other debts, divided by gross monthly income. Lenders use it to gauge repayment capacity.

Principal, interest, taxes, and insurance: the four parts of a typical monthly housing payment on an amortizing mortgage loan.

An account a servicer uses to collect part of the property taxes and insurance with each payment and to pay those bills when due. Federal rules limit the cushion that may be held.

The cost of credit expressed as a yearly rate under Regulation Z. It combines the interest rate with certain finance charges such as origination fees and points, so it is usually higher than the note rate.

Insurance protecting the lender against loss if a borrower defaults, typically required when the loan exceeds a set percentage of property value. The borrower usually pays the premium.

The borrower's written promise to repay a stated principal sum with interest on a set schedule. It creates the debt obligation that the security instrument secures.

A security instrument used in Texas that conveys title to a trustee to hold for the lender, permitting nonjudicial foreclosure if the borrower defaults on the note.

A policy protecting a lender or owner against loss from title defects that existed before the policy date, such as undisclosed liens, forged documents, or competing claims of ownership.

For disclosure timing, an application is received once the borrower supplies six items: name, income, Social Security number, property address, estimated value, and loan amount.

The borrower's statement, in any written or recorded form, that they wish to continue with the loan after receiving the Loan Estimate. It must be received before certain fees may be collected.

A new or revised fact that affects the borrower's eligibility or the settlement charges, permitting the lender to issue a revised Loan Estimate within three business days of learning of it.

An informal, often no-cost estimate of how much a borrower might be able to borrow, usually based on self-reported information without a credit review or documented income and assets.

A lender's conditional commitment to lend a specific amount after verifying income, assets, and credit, typically still subject to a satisfactory appraisal and other stated conditions.

A three-page disclosure the lender must deliver or mail within three business days after receiving an application, showing estimated loan terms, projected payments, and closing costs.

A form the borrower must receive at least three business days before consummation, showing the final loan terms and the actual settlement charges paid at closing.

The federal ban on giving or accepting anything of value in exchange for referrals of settlement service business, and on splitting fees when no service was actually performed.

A Regulation Z rule limiting how originators are paid: compensation cannot vary with loan terms or conditions, and an originator generally cannot be paid by both the borrower and a lender on the same loan.

Directing a borrower toward a loan with less favorable terms than the borrower could otherwise obtain, often to raise the originator's pay. It is unlawful when not in the borrower's interest.

Refusing credit or varying its terms based on the racial or ethnic makeup of a neighborhood rather than on an individual applicant's qualifications. It violates fair lending laws.

Knowingly misstating or concealing material facts, such as income, occupancy, employment, or appraisal data, to obtain a loan or better terms. It includes fraud for property and fraud for profit.

The Nationwide Multistate Licensing System, the online platform used to apply for, maintain, and renew mortgage licenses and registrations, and to record required education and testing.

Federal law setting national minimum standards for mortgage loan originator licensing, including pre-licensing education, testing, background checks, continuing education, and NMLS registration.

The TILA-RESPA Integrated Disclosure rule, which replaced older forms with the Loan Estimate and Closing Disclosure and established their delivery timing and cost tolerance rules.

Regulation Z rules requiring lenders to make a reasonable, good-faith determination that a borrower can repay before originating most closed-end loans, with a defined Qualified Mortgage category offering legal protection.

Federal law prohibiting credit discrimination based on race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good-faith exercise of consumer rights.

A written notice required when an application is denied or terms are changed unfavorably, giving the reasons and the applicant's rights. It is generally due within 30 days of a completed application.

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

The Home Mortgage Disclosure Act, which requires covered lenders to collect and report data on applications, originations, and denials so regulators and the public can spot possible discriminatory patterns.

The Texas agency that licenses and examines mortgage bankers, mortgage companies, and residential mortgage loan originators, and enforces the state's residential mortgage loan statutes.

The body that adopts rules and sets policy for the Texas Department of Savings and Mortgage Lending and the Department of Banking, and that appoints the savings and mortgage lending commissioner.

The state credential needed to originate residential mortgage loans in Texas, obtained through the NMLS and requiring pre-licensing education, a passing test, a background check, and sponsorship.

A loan secured by a Texas homestead that must satisfy strict constitutional requirements, including an 80 percent combined loan-to-value cap, a 3 percent fee cap, a 12-day waiting period before funding, and refinance limits.

A Texas owner's principal residence and the land around it, protected by the state constitution from forced sale except for limited purposes such as taxes, purchase-money debt, and properly made home equity loans.