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50 Cards in this Set

  • Front
  • Back
MIPMortgage Insurance Premium.
Similar to PMI (Private Mortgage Insurance), but is used for FHA mortgages. With FHA mortgages there is an upfront MIP payment as well as a monthly MI payment.
GLBAGraham Leach Bliley Act.
An act passed in 1999 primarily established Privacy Rules and Safeguard Rules for how creditors handled consumer's non-public information.
A right due an individual. Used with VA loans.

MBSMortgage Backed Security.

These are the investment instruments that are bundled by Fannie Mae, Freddie Mac, and Ginnie Mae for sale on Wall Street.

Real Estate Settlement Procedures Act (RESPA) Reg - X

a Federal statute that governs real estate lending practices and disclosures. It's main provisions pertain to the provision of the Good Faith Estimate (GFE) of loan settlement costs and the provision of the HUD settlement booklet within three business days of receiving a loan application.

How is the GFE (Good Faith Estimate) truly an "estimate?"

There are some costs contained on the GFE that ARE estimates. These are costs chosen by the borrower, that will be estimated and undoubtedly will change by the time of closing.

Direct sales comparison approach

process of estimating a property's value through examination of actual sales and comparable properties.

When a consumer requests credit, when does the MLO have to provide the estimated Truth In Lending Act disclosure to the consumer?

No less than 3 business days after the consumer's request for credit. Saturday DOES count as a business day.

How long does PMI have to be in place on an FHA insured loan?

5 years.( check this one it changed a few times)

What is FACTA (Fair and Accurate Credit Transactions Act)?

FACTA is an addition or amendment to FCRA (the Fair Credit Reporting Act) intended to help consumers fight identity theft.

Fee simple

the greatest possible interest a person can have in real estate, including the right to dispose of the property or pass it on to ones' heirs.

What is a 20-year fixed rate loan?

A loan that has a 20 year term and achieves a faster pay-off than a 30 year loan.

How must a consumer go about waiving their right to rescind.

They must provide the lender a written, dated statement that describes the emergency, specifically modifies or waives the right o rescind, and bears the signature of all the consumers entitled to rescind. This cannot be on a printed form.

When can the consumer waive their right to rescind?

If they determine that the extension of credit is needed to meet a bona fide personal financial emergency. They must provide the lender a written, dated statement that describes the emergency, specifically modifies or waives the right o rescind, and bears the signature of all the consumers entitled to rescind. This cannot be on a printed form.

Under RESPA Reg X. (Real Estate Settlement Procedures Act), what is an Affiliated Business Arrangement Disclosure, and what does it disclose?

It is a required disclosure when the consumer is being referred to a business in which the referring party has 1% or more interest or ownership in the referred business. It discloses that relationship and gives the borrower an estimate of the second provider's charges. It also informs the borrower they do not have to use the referred provider. In the case of a telephone referral, a written disclosure must be mailed within 3 business days of the conversation.

What act did the Financial Institutions Reform, Recovery, and Enforcement Act adjust?

HMDA (Home Mortgage Disclosure Act).

How is hazard insurance calculated?

Loan amount x insurance cost %, divided by 12 = monthly hazard insurance cost.

Under ECOA (Equal Credit Opportunity Act) can an applicant be given a copy of an appraisal used in connection with their application for a loan?

Yes, providing they make written request for it. The creditor may legally require the applicant to reimburse them for the cost of the appraisal.

What does CRA (Community Reinvestment Act) require of depository institutions?

That their record regarding equality in lending throughout their own community be evaluated annually.


The required element of all contracts by which a legal right or promise is exchanged for the act or promise of another person

Who commits mortgage fraud?

One or more individuals involved in a loan transaction - borrower, MLO, real estate agent, appraiser, title representative, attorney, or by multiple parties (fraud ring).

Under RESPA (Real Estate Settlement Procedures Act), under what conditions does a MLO NOT have to mail the required disclosures?

If the credit application is denied prior to the 3 business day deadline.

What is foreclosure?

a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan. It begins when the borrower defaults on loan payments and the lender files a public default notice, call a Notice of Default or Lis Pendent.

What advice can be given to help improve a credit score?

1. Time - the longer it has been since derogatory information, the better.

2. Credit balances - lowering credit balances has a positive effect on the credit score.

3. No additional credit - a borrower should NOT apply for additional credit while trying to improve credit scores.

4. On time payments - any late payments will result in a lower score than when they began

What is a foreclosure scheme?

A perpetrator identifies homeowners at risk of foreclosure and misleads them into thinking he can save their homes in exchange for cash or a transfer of deed.

What are the prohibited acts and practices for loans covered by HOEPA (Home Ownership and Equity Protection Act)?

1. Loan proceeds cannot be paid directly to the home improvement contractor.

2. Selling or assigning of the loan without a disclosure that the purchaser of the loan could be liable for all claims and defenses.

3. Refinancing one HOEPA loan with another to the same borrower within the first 12 months (unless in the borrowers best interest).

4. Extending credit to the borrower based on the collateral without regard to the consumer's ability to repay.

5. HOEPA loans cannot be revolving credit-type loans.

Under ECOA (Equal Credit Opportunity Act), what should be included on the written statement of adverse action?

1. The reasons for denial of credit.

2. The identity of the persons or office from which the statement may be obtained.

Under RESPA (Real Estate Settlement Procedures Act), what is the definition of "thing of value" when applied to possible kickbacks?

"Thing of value" is broadly defined as being "any payment, advance, funds, loan, service, or other consideration

What are air loans?
When there is a non-existent property that a loan is taken to secure.

Farmers Home Administration (FMHA)

a govt agency within the department of agriculture that provides financing to farmers and other qualified borrowers who are unable to obtain loans elsewhere.

What are FHA, Title II, Section 255 loans?

Home equity conversion mortgages (reverse mortgage) HECM

HUD refers to this product as a loan

Used for senior citizens - 62 years of age or older Upfront MIP is 2.0%

Loan is not payable until borrower moves or passes away

What benefits are there to the HECM (Home Equity Conversion Mortgage) loan?

Homeowners over the age of 62 can convert the equity in their homes into cash and still keep their homes. There are no credit or income requirements for the loan and borrowers do not make any mortgage payments. Eligibility is solely based on the age of the borrower and the amount of equity in the home.

SRPService Release Premium.

Similar to YSP (Yield Spread Premium), except that SRP is usually not available to brokers, but only to direct lenders. In addition, unlike YSP, SRP is not shown on the HUD-1. Yield spread premium (YSP) is paid to the broker at closing but SRP is paid to the bank after the closing when they bundle up loans and sell them into the secondary market. YSP has to be disclosed on the Good Faith Estimate at application and the HUD1 at closing but SRP does not have to be disclosed at a

What is the name for form 1003?

The Uniform Residential Loan Application

Covered loan

a consumer credit mortgage loan that is secured by the consumer's principal dwelling and meets certain credit criteria.

What is the name of form 1004?

The Uniform Residential Appraisal Report?


to determine and delineate the from, extend, and position of a tract of land by taking measurements.

Cash outA loan transaction

in which the borrower receives funds at the time of closing.

POCPaid Outside of Closing.This reflects any closing charges that were paid outside of the actual closing.

POCPaid Outside of Closing.This reflects any closing charges that were paid outside of the actual closing.


A written document signed, delivered, and usually recorded which conveys title to property from one owner to another.

What is Sub-Prime lending?

Lending that refers to the credit characteristics of individual borrowers. Sub prime borrowers typically have weakened credit histories that include payment delinquencies, and possibly more severe problems such as charge-offs, judgments, and bankruptcies. Sub prime loans are loans given to borrowers who display one or more of these characteristics at the time of origination or purchase.


an amount withheld from loan proceeds by a lender for the purpose of decreasing the rate.

What is the HUD-1 closing statement?

a standard form that clearly shows all charges imposed on borrowers and sellers in connection with the settlement. Borrowers are allowed (under RESPA) to see the HUD-1 one day before the actual settlement

Freddie Mac

Another name for the Federal Home Loan Mortgage Corporation (FHLMC).
O/OOwner Occupied.
The mortgager's principal or primary residence.
the use of property as a full time residence, either by the title holder (owner-occupancy) or by another party through formal agreement.
the ratio of investment income to the total amount invested over a given period of time.
Rate caps
a limit on the amount of which the interest rate charged to the borrower can be changed.
When through a court proceeding, a person is relieved of payment of all debts after the surrender of all assets to a court appointed trustee, for the protection of creditors. Chapter 7 - covers liquidation of businesses, Chapter 11 which covers reorganization of businesses, Chapter 12, which covers farm bankruptcies, and chapter 13 which covers debts owed by individuals.
What are impounds (escrow funds)?
These are mortgage insurance amounts required up front for most loans above 80% LTV. They include 3 to 6 months of real estate taxes, two months of hazard insurance, and mortgage insurance. These are part of the closing costs.