Glossary

SAFE MLO glossary

139 terms you’ll see on the exam, in plain English. Each one links to the lesson that teaches it and to the rule or official source it comes from.

Last checked October 25, 2026.

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A

Ability to repay (ATR): The Regulation Z rule that a lender must make a reasonable, good-faith determination, using eight factors, that the borrower can repay a closed-end home loan before making it.; Qualified and Non-Qualified Mortgages · 12 CFR 1026.43 Ability to repay and qualified mortgages
Acceleration clause: A clause that lets the lender demand the entire loan balance at once if the borrower defaults, such as by missing payments.; Mortgage Terms and Documents · Cornell LII Wex: Acceleration clause
Adjustable-rate mortgage (ARM): A loan whose rate changes after an initial period. The new rate is the index plus the margin, limited by the initial, periodic, and lifetime caps.; Fixed, Adjustable, and Other Loan Structures · CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM)
Adverse action: Under ECOA, a denial of credit, or credit on substantially different amounts or terms than requested, unless the applicant accepts a counteroffer.; ECOA and Regulation B · 12 CFR 1002.2 Definitions
Affiliated business arrangement (AfBA): When a referrer owns part of the company it refers borrowers to. It's legal under RESPA only with a written disclosure by the time of referral, no requirement to use the provider, and no payment beyond a return on ownership.; RESPA and Regulation X · 12 CFR 1024.15 Affiliated business arrangements
Amortization: Paying off a loan with regular payments so the balance goes down with each payment. Early payments are mostly interest; later ones are mostly principal.; Mortgage Terms and Documents · CFPB: What is negative amortization? (amortization defined)
Annual percentage rate (APR): The cost of credit expressed as a yearly rate. It includes interest plus points and certain fees, so it's usually higher than the note rate. A disclosed APR is accurate within 1/8 of a point on a regular loan, or 1/4 on an irregular one.; TILA and Regulation Z · 12 CFR 1026.22 APR accuracy
Anti-steering safe harbor: An MLO meets the steering rule by showing, for each loan type the borrower wants, the loan with the lowest rate, the lowest rate without risky features, and the lowest total points and fees.; Predatory Lending and Steering · 12 CFR 1026.36(e), (h), (i) Steering, arbitration, credit insurance
Appraisal: An appraiser's opinion of a property's value, reached through the sales comparison, cost, and income approaches.; Appraisals and Title · Fannie Mae Selling Guide B4-1.3-08 Comparable sales
Appraiser independence: The Regulation Z ban on pressuring an appraiser, such as naming a target value or tying the fee to the loan closing. You may ask for more comparables, an explanation, or a correction.; Appraisals and Title · 12 CFR 1026.42 Valuation independence
Approved-Inactive: The NMLS status of a state MLO license with no sponsoring company. The MLO may not originate until a new company sponsors the license and the state approves it.; Who Needs a License · NMLS: Approved-Inactive license status
Assumption: When a buyer takes over the seller's existing loan. A due-on-sale clause blocks it unless the lender agrees.; Mortgage Terms and Documents · 12 U.S.C. 1701j-3 Garn-St Germain due-on-sale
Average prime offer rate (APOR): A benchmark rate the CFPB publishes. A loan's APR is compared to it to decide whether the loan is higher-priced or high-cost.; TILA and Regulation Z · 12 CFR 1026.35 Higher-priced mortgage loans

B

Balloon payment: A large final payment of the remaining balance, due long before the payment schedule would have paid it off, such as after 5 or 7 years. A qualified mortgage generally can't have one.; Fixed, Adjustable, and Other Loan Structures · 12 CFR 1026.43(e)(2) and (f) Balloon and QM limits
Bank Secrecy Act (BSA): The anti-money-laundering law that requires nonbank mortgage lenders and originators to run an AML program and file suspicious activity reports.; Other Federal Laws · 31 CFR 1029.320 SARs by loan or finance companies
Bridge loan: A short-term loan that lets a buyer purchase a new home before selling the old one. One of 12 months or less is exempt from the ability-to-repay rule.; Reverse Mortgages, Home Equity, and Other Special Loans · 12 CFR 1026.43(a) ATR exemptions
Business day: For delivering the Loan Estimate, a day the creditor's office is open. For the 7-day wait, the Closing Disclosure, and the right to cancel, every day except Sundays and federal holidays.; TRID: Loan Estimate and Closing Disclosure · 12 CFR 1026.2 Business day

C

Cash-out refinance: A refinance where the borrower takes out cash from equity. Fannie Mae caps a principal-residence cash-out refinance at 80% LTV.; Conventional Loans and the Secondary Market · Fannie Mae Eligibility Matrix (Aug. 5, 2026)
Cease and desist order: An order from a regulator to stop an activity. A state commissioner may issue one, including an immediate temporary order.; State Enforcement and Prohibited Acts · CSBS/AARMR Model State Law, MSL XX.XXX.130, .160, .170, and .210
Certificate of Eligibility (COE): The document that shows a veteran, service member, or surviving spouse qualifies for a VA loan.; FHA, VA, and USDA Loans · VA: Purchase loan
Changed circumstance: An extraordinary event, inaccurate or changed information the creditor relied on, or new information about the borrower or transaction. It can allow a revised Loan Estimate. A lender's own error isn't one.; Disclosure Timing and Tolerances · 12 CFR 1026.19(e) and (f) Loan Estimate and Closing Disclosure
CHARM booklet: The Consumer Handbook on Adjustable-Rate Mortgages. For an ARM, it goes out with the ARM program disclosure when the application form is given or before a non-refundable fee is paid, whichever is earlier.; Taking the Application · 12 CFR 1026.19 Early disclosures, ARM disclosures, and the Toolkit
Closing Disclosure (CD): The TRID form with the final loan terms and closing costs. The borrower must receive it at least 3 business days before consummation.; TRID: Loan Estimate and Closing Disclosure · 12 CFR 1026.19 Early and final disclosures
Combined loan-to-value (CLTV): All loans secured by the property (such as a first mortgage plus a second) divided by the property's value.; Processing and Underwriting the Borrower · Fannie Mae Selling Guide B2-1.2-01 LTV ratios
Commissioner: The state regulator who licenses MLOs, examines licensees as often as needed, investigates complaints, and takes enforcement action.; State Enforcement and Prohibited Acts · CSBS/AARMR Model State Law, MSL XX.XXX.130, .160, .170, and .210
Comparable sales (comps): Recent sales of similar homes used in the sales comparison approach. Fannie Mae wants at least three closed comparables, generally from the last 12 months.; Appraisals and Title · Fannie Mae Selling Guide B4-1.3-08 Comparable sales
Conforming loan: A loan that meets Fannie Mae and Freddie Mac rules, including the conforming loan limit ($832,750 for one unit in most areas in 2026).; Conventional Loans and the Secondary Market · FHFA: Conforming loan limit values for 2026
Conservatorship: Government control of a company. Fannie Mae and Freddie Mac have been in FHFA conservatorship since September 6, 2008.; Conventional Loans and the Secondary Market · FHFA: Conservatorship
Construction-to-permanent loan: One loan that pays for building a home and then converts to a regular mortgage. A construction phase of 12 months or less is exempt from the ability-to-repay rule.; Reverse Mortgages, Home Equity, and Other Special Loans · 12 CFR 1026.43(a) ATR exemptions
Consumer Financial Protection Bureau (CFPB): The federal agency created by the Dodd-Frank Act in 2010. It writes Regulations X, Z, B, C, P, and N, supervises nonbank mortgage companies, and enforces the UDAAP ban.; Who Enforces What · CFPB: About us
Continuing education (CE): The 8 hours of NMLS-approved courses a state-licensed MLO takes each year: 3 on federal law, 2 on ethics, 2 on nontraditional lending, and 1 elective.; Keeping the License: Renewal, CE, and Temporary Authority · 12 CFR 1008.107 Minimum annual license renewal requirements (Regulation H)
Conventional loan: Any mortgage that isn't insured or guaranteed by a government agency such as FHA, VA, or USDA.; Conventional Loans and the Secondary Market · FHFA: Conforming loan limit values for 2026
Cost approach: An appraisal method: land value plus the cost to build the home new, minus depreciation. Useful for new construction; Fannie Mae requires it only for manufactured homes.; Appraisals and Title · Fannie Mae Selling Guide B4-1.3-10 Cost and income approaches
Counteroffer: An offer of credit on different terms than requested. If the applicant doesn't accept it, the creditor must send an adverse action notice within 90 days.; ECOA and Regulation B · 12 CFR 1002.9 Notifications

D

Debt-to-income ratio (DTI): Monthly debts divided by gross monthly income. The front-end ratio counts only housing; the back-end ratio adds all other monthly debts.; Processing and Underwriting the Borrower · Fannie Mae Selling Guide B3-6-02 Debt-to-income ratios
Deed of trust: A security instrument with three parties: the borrower, the lender, and a trustee who holds the property interest until the loan is paid. Its power of sale allows foreclosure without a court.; Mortgage Terms and Documents · Cornell LII Wex: Deed of trust
Discount points: Fees paid at closing to permanently lower the interest rate. One point is 1% of the loan amount.; Mortgage Math · CFPB: Points and lender credits
Disparate impact: A neutral policy that falls disproportionately on a protected group. It can be illegal with no intent to discriminate, unless it meets a legitimate business need that couldn't be met a less harmful way.; Fair Lending and Discrimination · Interagency Fair Lending Examination Procedures
Disparate treatment: Treating applicants differently because of a protected trait, such as asking some groups for extra documents.; Fair Lending and Discrimination · Interagency Fair Lending Examination Procedures
Dodd-Frank Act: The 2010 law that created the CFPB and added the ability-to-repay rule, the loan originator compensation rules, and expanded HOEPA protections.; Who Enforces What · CFPB: About us
Dual compensation: Being paid by both the borrower and someone else on the same loan. If the borrower pays the MLO directly, nobody else may also pay the MLO.; Kickbacks, Referral Fees, and How MLOs Get Paid · 12 CFR 1026.36(d)-(e) Loan originator compensation and steering
Due-on-sale clause: A clause that lets the lender demand payoff if the property is sold or transferred without its consent. The Garn-St Germain Act blocks it for certain family and trust transfers.; Mortgage Terms and Documents · 12 U.S.C. 1701j-3 Garn-St Germain due-on-sale

E

E-SIGN Act: The law that makes electronic signatures and records valid, as long as consumers consent before getting disclosures electronically.; Other Federal Laws · 15 U.S.C. 7001 Electronic records and signatures
Equal Credit Opportunity Act (ECOA): The law that bans credit discrimination based on race, color, religion, national origin, sex, marital status, age, public assistance income, or exercising consumer credit rights. Its rules are in Regulation B.; ECOA and Regulation B · 12 CFR 1002.2 Definitions
Equity stripping: Lending against a home's equity to a borrower who can't repay, so the lender ends up with the house.; Predatory Lending and Steering · FDIC: Predatory lending policy (FIL-6-2007)
Escrow account: An account the servicer uses to pay the borrower's property taxes and insurance. The cushion can be no more than one-sixth of a year's escrow payments.; RESPA and Regulation X · 12 CFR 1024.17 Escrow accounts

F

Fair Housing Act: The law that bans housing discrimination, including in home loans and appraisals, based on race, color, religion, sex, handicap, familial status, or national origin. HUD enforces it.; Fair Lending and Discrimination · 42 U.S.C. 3605 Fair Housing Act: real estate-related transactions
Familial status: A Fair Housing Act protected trait: having a child under 18 living with you, being pregnant, or getting custody of a child under 18.; Fair Lending and Discrimination · 42 U.S.C. 3602(k) Familial status
Fannie Mae and Freddie Mac: The two government-sponsored enterprises (GSEs) that buy conventional loans on the secondary market and pool them into mortgage-backed securities.; Conventional Loans and the Secondary Market · FHFA: Conservatorship
Federal Housing Administration (FHA): The part of HUD that insures loans made by FHA-approved lenders. FHA loans need at least 3.5% down and carry upfront and annual mortgage insurance premiums.; FHA, VA, and USDA Loans · 12 U.S.C. 1709(b)(9) FHA minimum cash investment
Finance charge: The cost of credit in dollars, as disclosed under TILA.; TILA and Regulation Z · 12 CFR 1026.22 APR accuracy
Flood insurance: Required on a building in a Special Flood Hazard Area when the loan is federally related. Coverage must be at least the lesser of the loan balance or the NFIP maximum ($250,000 for a home's building).; Flood, Hazard, and Mortgage Insurance · 12 CFR 22.3 Flood insurance requirement
Force-placed insurance: Insurance a lender or servicer buys when the borrower's coverage lapses, after the required notices, and charges to the borrower.; Flood, Hazard, and Mortgage Insurance · 12 CFR 1024.37 Force-placed insurance
Fraud for housing: A borrower lies about income, job, or assets to get or keep a home they'll live in.; Spotting and Reporting Mortgage Fraud · FBI: Complex Financial Crime (mortgage fraud)
Fraud for profit: Insiders or organized groups take cash or equity out of deals, often with inflated appraisals, straw buyers, and fake documents. The FBI treats it as the bigger priority.; Spotting and Reporting Mortgage Fraud · FBI: Complex Financial Crime (mortgage fraud)
Fully indexed rate: The index plus the margin on an adjustable-rate loan, before any caps are applied.; Mortgage Math · CFPB: ARM index and margin

G

Garn-St Germain Act: The law that stops a lender from enforcing a due-on-sale clause on homes with fewer than five units for certain transfers, such as to a relative after death, to a spouse in a divorce, or into a living trust.; Mortgage Terms and Documents · 12 U.S.C. 1701j-3 Garn-St Germain due-on-sale
Gift letter: A donor-signed letter stating the gift amount, that no repayment is expected, and the donor's name, address, phone number, and relationship to the borrower.; Taking the Application · Fannie Mae Selling Guide B3-4.3-04 Personal gifts
Ginnie Mae: A corporation inside HUD that guarantees timely payment on securities backed by FHA, VA, and USDA loans, with the full faith and credit of the United States. It doesn't buy loans.; Conventional Loans and the Secondary Market · Ginnie Mae: Who we are
Government-sponsored enterprise (GSE): A privately owned company created by Congress, such as Fannie Mae and Freddie Mac.; Conventional Loans and the Secondary Market · FHFA: Conservatorship
Gramm-Leach-Bliley Act (GLBA): The privacy law that requires a privacy notice and an opt-out before sharing nonpublic personal information with nonaffiliated third parties. Its rules are in Regulation P.; Other Federal Laws · 12 CFR 1016.4 Initial privacy notice

H

HECM (Home Equity Conversion Mortgage): The FHA-insured reverse mortgage. The borrower must be 62 or older, live in the home, and complete counseling with a HUD-approved counselor first.; Reverse Mortgages, Home Equity, and Other Special Loans · HUD: Home Equity Conversion Mortgages
High-cost mortgage (HOEPA loan): A loan whose APR is more than 6.5 points over APOR on a first lien (8.5 on a subordinate lien), whose points and fees top 5%, or whose prepayment penalties go past 36 months or 2%. It requires counseling first and bans several practices.; TILA and Regulation Z · 12 CFR 1026.32 High-cost mortgages
Higher-priced mortgage loan (HPML): A loan whose APR is 1.5 points or more over APOR on a first lien, 2.5 on a jumbo first lien, or 3.5 on a subordinate lien. First-lien HPMLs need an escrow account.; TILA and Regulation Z · 12 CFR 1026.35 Higher-priced mortgage loans
Home equity line of credit (HELOC): An open-end credit line secured by the home, usually with a variable rate, a draw period, and a repayment period. A lender may terminate it only for fraud, failure to pay, or harm to the security.; Reverse Mortgages, Home Equity, and Other Special Loans · 12 CFR 1026.40 Home equity plans
Home Mortgage Disclosure Act (HMDA): The law that requires lenders to report home lending data, used to spot discrimination and community lending gaps. The data is due March 1 each year. Its rules are in Regulation C.; Other Federal Laws · 12 CFR 1003.5 HMDA reporting
Homeowners Protection Act: The law that lets a borrower ask to cancel PMI at 80% of the original value, ends it automatically at 78%, and ends it by the loan's midpoint if the borrower is current.; Other Federal Laws · 12 U.S.C. 4902 PMI termination
HomeReady: Fannie Mae's program for borrowers whose income is no more than 80% of the area median income. It allows up to 97% LTV.; Conventional Loans and the Secondary Market · Fannie Mae Selling Guide B5-6-01 HomeReady
HUD (Department of Housing and Urban Development): The federal agency that runs FHA mortgage insurance, enforces the Fair Housing Act, and approves housing counseling agencies.; Who Enforces What · HUD: Fair Housing

I

Income approach: An appraisal method that values a property by the rent it could earn. Fannie Mae requires it for 2- to 4-unit properties.; Appraisals and Title · Fannie Mae Selling Guide B4-1.3-10 Cost and income approaches
Index: The market interest rate an adjustable-rate loan follows. The lender doesn't control it.; Fixed, Adjustable, and Other Loan Structures · CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM)
Interest-only loan: A loan where the borrower pays only interest for a set period, so the balance doesn't go down. A qualified mortgage can't have interest-only payments.; Fixed, Adjustable, and Other Loan Structures · CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM)
IRRRL: The VA Interest Rate Reduction Refinance Loan, or streamline: a VA-to-VA refinance to lower or stabilize the rate.; FHA, VA, and USDA Loans · VA: Interest rate reduction refinance loan

J

Jumbo loan: A loan above the conforming loan limit for its county. Fannie Mae and Freddie Mac can't buy it.; Conventional Loans and the Secondary Market · CFPB: What is a jumbo loan?

K

Kickback: A fee or thing of value given for referring settlement business. RESPA Section 8 bans it, with up to a $10,000 fine, a year in prison, and civil liability of three times the charge.; Kickbacks, Referral Fees, and How MLOs Get Paid · 12 U.S.C. 2607 (RESPA Section 8)

L

Lien theory: The rule in most states: the borrower keeps title and the lender has a lien. In title-theory states, title rests with the lender until payoff.; Mortgage Terms and Documents · Cornell LII Wex: Mortgage
Loan Estimate (LE): The TRID form with estimated loan terms and costs. It's due within 3 business days of application and at least 7 business days before consummation.; TRID: Loan Estimate and Closing Disclosure · 12 CFR 1026.19 Early and final disclosures
Loan flipping: Getting a borrower to refinance again and again so the lender can charge new points and fees each time.; Predatory Lending and Steering · FDIC: Predatory lending policy (FIL-6-2007)
Loan processor: Someone who does clerical or support work for a licensed or registered MLO, such as collecting information. An employee processor needs no license; an independent contractor processor does.; Who Needs a License · 12 CFR 1008.103 State license requirement and exemptions (Regulation H)
Loan-to-value ratio (LTV): The loan amount divided by the property value. On a purchase, the value is the lower of the sales price or the appraised value.; Mortgage Math · Fannie Mae Selling Guide B2-1.2-01 LTV ratios

M

Margin: The fixed number of points a lender adds to the index on an adjustable-rate loan. It's set at closing and never changes.; Fixed, Adjustable, and Other Loan Structures · CFPB: Consumer Handbook on Adjustable-Rate Mortgages (CHARM)
Mortgage Acts and Practices (MAP) Rule: Regulation N, which bans misleading claims in mortgage ads and requires keeping ads and related materials for 24 months.; Honest Advertising and UDAAP · 12 CFR 1014.3 MAP Rule prohibited misrepresentations
Mortgage Call Report: A report companies file in NMLS. The loan activity section is due quarterly, within 45 days after each quarter ends.; Keeping the License: Renewal, CE, and Temporary Authority · NMLS: Mortgage Call Report user guide
Mortgage loan originator (MLO): An individual who, for pay or gain, takes a residential mortgage loan application and offers or negotiates loan terms.; Who Needs a License · 12 U.S.C. 5102 Definitions
Mortgage-backed security (MBS): An investment backed by a pool of mortgages, sold on the secondary market.; Conventional Loans and the Secondary Market · Ginnie Mae: Who we are
Mortgagee: The lender in a mortgage, the party that receives the pledge of the home.; Mortgage Terms and Documents · Cornell LII Wex: Mortgage
Mortgagor: The borrower in a mortgage, the party that gives the pledge of the home.; Mortgage Terms and Documents · Cornell LII Wex: Mortgage

N

Negative amortization: When a payment doesn't cover the interest, so the unpaid interest is added to the balance and the borrower owes more over time.; Fixed, Adjustable, and Other Loan Structures · CFPB: What is negative amortization?
NMLS: The Nationwide Mortgage Licensing System and Registry, built by CSBS and AARMR. Every MLO, licensed or registered, gets a permanent NMLS unique identifier there.; The SAFE Act, NMLS, and Who Regulates MLOs · 12 U.S.C. 5101 Purposes and methods
NMLS unique identifier (NMLS ID): The permanent number NMLS assigns each MLO. It must appear on applications, ads, business cards, and the main loan documents.; The SAFE Act, NMLS, and Who Regulates MLOs · 12 U.S.C. 5102 Definitions
Non-QM loan: A loan that doesn't meet a qualified mortgage definition, such as an interest-only loan. It's legal, but the lender must show it met ability-to-repay without QM protection.; Qualified and Non-Qualified Mortgages · 12 CFR 1026.43 Ability to repay and qualified mortgages
Nonrecourse: A loan where the borrower isn't liable for any shortfall if the home sells for less than the debt. Reverse mortgages are nonrecourse.; Reverse Mortgages, Home Equity, and Other Special Loans · 12 CFR 1026.33 Reverse mortgages

O

Occupancy fraud: Claiming a home will be a primary residence to get better terms when it will really be a rental or second home.; Spotting and Reporting Mortgage Fraud · Fannie Mae: Mortgage fraud prevention (red flags)

P

Pre-licensing education: The 20 hours of NMLS-approved courses needed for a first MLO license: 3 on federal law, 3 on ethics, 2 on nontraditional lending, and 12 elective.; Getting Licensed: Background, Education, and the Test · 12 CFR 1008.105 Minimum loan originator license requirements (Regulation H)
Prepaid interest: Interest collected at closing from the closing date through the end of that month. Mortgage interest is paid in arrears, so the first payment skips a month.; Closing and Funding · CFPB: What are prepaid interest charges?
Prepayment penalty: A charge for paying a loan off early. Allowed only on a fixed-rate qualified mortgage that isn't higher-priced: up to 2% in years 1 and 2, 1% in year 3, and none after.; Qualified and Non-Qualified Mortgages · 12 CFR 1026.43 Ability to repay and qualified mortgages
Private mortgage insurance (PMI): Insurance that protects the lender on a conventional loan, generally needed when the LTV is above 80%.; Flood, Hazard, and Mortgage Insurance · 12 U.S.C. 4902 PMI termination
Promissory note: The borrower's written promise to repay the loan, with the amount, rate, and payment terms.; Closing and Funding · CFPB: Mortgage closing forms guide

Q

Qualified mortgage (QM): A loan that meets extra product and price limits (no negative amortization, interest-only, or balloon, a term of 30 years or less, and capped points and fees) and in return gets legal protection under the ability-to-repay rule.; Qualified and Non-Qualified Mortgages · 12 CFR 1026.43 Ability to repay and qualified mortgages

R

Rate lock: A lender's agreement to hold an interest rate until closing, if the borrower closes in time and the application doesn't change.; Mortgage Terms and Documents · CFPB: What is a rate lock?
Real Estate Settlement Procedures Act (RESPA): The law that keeps settlement costs honest (including the Section 8 kickback ban) and sets servicing rules. Its rules are in Regulation X.; RESPA and Regulation X · 12 U.S.C. 2607 (Section 8)
Red Flags Rule: The rule that requires a written identity theft prevention program to spot warning signs, such as mismatched IDs or a suspicious address change.; Other Federal Laws · 16 CFR 681.1 Identity theft red flags
Redlining: Giving unequal access to credit, or unequal terms, because of the race, national origin, or other protected traits of the people who live in an area.; Fair Lending and Discrimination · Interagency Fair Lending Examination Procedures
Registered MLO: An MLO employed by a bank, savings association, credit union, their regulated subsidiary, or a Farm Credit institution. They register in NMLS under Regulation G and need no state license.; The SAFE Act, NMLS, and Who Regulates MLOs · 12 CFR 1007.103 Registration (Regulation G)
Regulation B: The CFPB's rules for the Equal Credit Opportunity Act (12 CFR Part 1002).; ECOA and Regulation B · 12 CFR 1002.2 Definitions
Regulation G: The CFPB's SAFE Act registration rules for MLOs at depository institutions (12 CFR Part 1007).; The SAFE Act, NMLS, and Who Regulates MLOs · 12 CFR 1007.103 Registration (Regulation G)
Regulation H: The CFPB's SAFE Act rules setting minimum standards for state MLO licensing (12 CFR Part 1008).; Getting Licensed: Background, Education, and the Test · 12 CFR 1008.105 Minimum loan originator license requirements (Regulation H)
Regulation X: The CFPB's rules for RESPA (12 CFR Part 1024).; RESPA and Regulation X · 12 CFR 1024.15 Affiliated business arrangements
Regulation Z: The CFPB's rules for the Truth in Lending Act (12 CFR Part 1026), including TRID, high-cost loans, LO compensation, and ability to repay.; TILA and Regulation Z · 12 CFR 1026.2 Definitions (business day)
Residual income: The money a borrower has left each month after major expenses. The VA uses it along with a 41% DTI guideline.; Processing and Underwriting the Borrower · 38 CFR 36.4340 VA underwriting standards
Reverse mortgage: A loan against home equity with no monthly payments required. It comes due when the borrower dies, transfers the home, or stops living there.; Reverse Mortgages, Home Equity, and Other Special Loans · 12 CFR 1026.33 Reverse mortgages
Reverse redlining: Targeting certain borrowers or areas with worse products, like pushing high-cost loans in a minority neighborhood.; Fair Lending and Discrimination · Interagency Fair Lending Examination Procedures
Right of rescission: The right to cancel a refinance or home equity loan on a principal dwelling with a new lender until midnight of the third business day after closing, or up to 3 years if the disclosures weren't given. Purchase loans have no rescission right.; TILA and Regulation Z · 12 CFR 1026.23 Right of rescission

S

SAFE Act: The Secure and Fair Enforcement for Mortgage Licensing Act, law since July 30, 2008. It set national minimum standards for licensing and registering MLOs and created NMLS.; The SAFE Act, NMLS, and Who Regulates MLOs · 12 U.S.C. 5101 Purposes and methods
Sales comparison approach: The main appraisal method for homes: compare the property to recent sales of similar homes and adjust for differences.; Appraisals and Title · Fannie Mae Selling Guide B4-1.3-08 Comparable sales
Secondary market: Where loans are bought, pooled, and sold as mortgage-backed securities, which gives lenders cash to make new loans.; Conventional Loans and the Secondary Market · Ginnie Mae: Who we are
Security instrument: The mortgage or deed of trust that pledges the home as collateral for the note.; Closing and Funding · CFPB: Mortgage closing forms guide
Settlement agent: The title company, escrow company, or attorney who runs the closing, collects and pays out funds, and records documents. The creditor stays responsible for the Closing Disclosure.; Closing and Funding · 12 CFR 1026.19(f) Closing Disclosure and settlement agents
Silent second: A second loan, often from the seller, hidden from the first lender so the borrower appears to have made a down payment. It's fraud.; Spotting and Reporting Mortgage Fraud · Fannie Mae: Mortgage fraud prevention (red flags)
Special Flood Hazard Area (SFHA): A high-risk flood zone. A home there in an NFIP community needs flood insurance when the loan is federally related.; Flood, Hazard, and Mortgage Insurance · 12 CFR 22.3 Flood insurance requirement
Sponsorship: A licensed company's link to an MLO's state license in NMLS. Without one, the license is Approved-Inactive.; Who Needs a License · NMLS: Approved-Inactive license status
Steering: Pushing a borrower into a loan because it pays the MLO more, or into a worse product because of a protected trait.; Predatory Lending and Steering · 12 CFR 1026.36(e), (h), (i) Steering, arbitration, credit insurance
Straw buyer: Someone who lends their name and credit to buy a property for another person who couldn't qualify.; Spotting and Reporting Mortgage Fraud · Fannie Mae: Mortgage fraud prevention (red flags)
Subordination agreement: An agreement by a junior lienholder, such as a HELOC lender, to stay in second position when the first mortgage is refinanced.; Mortgage Terms and Documents · Fannie Mae Selling Guide B2-1.2-04 Subordinate financing
Suspicious Activity Report (SAR): A confidential report nonbank lenders and originators file on suspicious transactions of $5,000 or more, within 30 days of detection. Never tell the borrower one was filed.; Other Federal Laws · 31 CFR 1029.320 SARs by loan or finance companies

T

Temporary authority: Permission for a qualified MLO to originate in a new state while the license application is pending. It ends when the application is withdrawn, denied, or granted, or after 120 days if still incomplete.; Keeping the License: Renewal, CE, and Temporary Authority · 12 U.S.C. 5117 Temporary authority to originate loans
Temporary buydown: An upfront payment that lowers the borrower's rate for the first years, rising no more than 1% a year for up to 3 years. The borrower qualifies at the note rate.; Fixed, Adjustable, and Other Loan Structures · Fannie Mae Selling Guide B2-1.4-04 Temporary buydowns
Title insurance: Insurance against problems with ownership. A lender's policy protects only the loan; an optional owner's policy protects the buyer's equity.; Appraisals and Title · CFPB: What is lender's title insurance?
Tolerance: How much a closing cost may rise from the Loan Estimate: zero for the lender's own fees, 10% in total for recording fees and providers from the lender's list, and no limit for items like prepaid interest and insurance.; Disclosure Timing and Tolerances · 12 CFR 1026.19(e) and (f) Loan Estimate and Closing Disclosure
TRID: The TILA-RESPA Integrated Disclosure rule, which created the Loan Estimate and the Closing Disclosure.; TRID: Loan Estimate and Closing Disclosure · 12 CFR 1026.19 Early and final disclosures
Triggering terms: Ad terms (down payment, number of payments, payment amount, or finance charge) that require the ad to also state the down payment, repayment terms, and APR.; TILA and Regulation Z · 12 CFR 1026.24 Advertising
Truth in Lending Act (TILA): The law that makes the cost of credit visible so consumers can compare loans. Its rules are in Regulation Z.; TILA and Regulation Z · 12 CFR 1026.2 Definitions (business day)

U

UDAAP: Unfair, deceptive, or abusive acts or practices, which the Dodd-Frank Act bans for anyone offering consumer financial products. Deception doesn't require intent.; Honest Advertising and UDAAP · 12 U.S.C. 5531 Unfair, deceptive, or abusive acts or practices
Underwriter: The person who decides whether the borrower can and will repay and whether the property is enough security.; Processing and Underwriting the Borrower · 12 CFR 1026.43 Ability to repay
Uniform Residential Loan Application (URLA): The standard mortgage application, Fannie Mae Form 1003 and Freddie Mac Form 65.; Taking the Application · Fannie Mae: Uniform Residential Loan Application
USDA guaranteed loan: A Rural Development loan for low- and moderate-income buyers in eligible rural areas: no down payment, income up to 115% of the area median, 30-year fixed only.; FHA, VA, and USDA Loans · USDA RD: Guaranteed loan program flyer

V

VA funding fee: A one-time fee on VA loans instead of monthly mortgage insurance. Veterans receiving VA disability compensation are exempt.; Flood, Hazard, and Mortgage Insurance · VA: Funding fee and closing costs
VA loan: A loan guaranteed by Veterans Affairs for eligible veterans and service members, with no down payment and no monthly mortgage insurance.; FHA, VA, and USDA Loans · VA: Purchase loan
Verification of Employment (VOE): A check with the employer that confirms the borrower's job, dates, and pay.; Taking the Application · Fannie Mae: Uniform Residential Loan Application