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NMLS > A > Flashcards

A Flashcards

1
Q

Ability to Repay

A

A potential borrower’s ability to afford the purchase of a home. Consideration of a borrower’s ability to repay involves the review of income, assets, liabilities, the type of product, and other factors. The federal Ability to Repay Rule sets forth the specific underwriting factors that mortgage professionals must examine when determining a borrower’s ability to repay.

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2
Q

Absolute Title

A

A title that is clear of any liens, judgments, or other encumbrances.

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3
Q

Abstractor

A

A professional in the title industry (sometimes an attorney) who conducts a title search and produces an abstract.

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4
Q

Acceleration Clause

A

A clause in a mortgage or deed of trust that allows the lender to demand immediate repayment of the balance of a loan under certain conditions, such as default by the borrower.

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5
Q

ADJUSTABLE-RATE MORTGAGE (ARM)

A

A mortgage in which the interest rate is adjusted periodically based on a pre-determined margin, index, and adjustment interval.
a.k.a.: Variable-rate mortgage

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6
Q

ADJUSTED BASIS

A

The cost of a property, plus the value of any capital expenditures for improvements to the property and minus any depreciation.

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7
Q

ADJUSTMENT DATE

A

The date on which the interest rate for an ARM may change.

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8
Q

ADJUSTMENT INTERVAL

A

and is typically one, three, or five years.

a.k.a.: Adjustment period, change frequency

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9
Q

ADJUSTMENTS (IN APPRAISAL)

A

The dollar value that is added to or subtracted from the sale price of a comparable property used to provide an indication of value of the subject property.

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10
Q

ADVANCE

A

A partial disbursement of funds under a note, usually made as part of a construction loan or a reverse mortgage.

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11
Q

ADVERSE ACTION

A

A refusal to grant credit as requested; a termination of an account or an unfavorable change in the terms of an account; or a refusal to increase the amount of credit available to a person who has applied for an increase.

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12
Q

AIR LOAN

A

An instance where a fictitious borrower obtains a mortgage loan “secured” by fictitious property.

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13
Q

AMORTIZATION

A

Scheduling the periodic payments on a loan so that each installment requires enough principal and interest to ensure complete repayment of the loan by the end of its term.

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14
Q

AMORTIZATION SCHEDULE

A

A table showing the portion of each payment that will be applied to interest and to principal, and the balance remaining after each payment has been applied.

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15
Q

AMORTIZATION TERM

A

The length of time required to amortize a mortgage loan, expressed as a number of months.

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16
Q

ANNUAL MORTGAGE INSURANCE PREMIUM (ANNUAL MIP)

A

A fee paid for mortgage insurance on an FHA-insured loan. Annual MIP is paid on a monthly basis. See also Mortgage Insurance Premium.

17
Q

ANNUAL PERCENTAGE RATE (APR)

A

A uniform measurement of the cost of a loan, including interest and financed costs of closing, expressed as a yearly percentage rate.

18
Q

ANNUITY

A

Payments made at specified intervals, such as with insurance contracts or certain types of investments.

19
Q

ANTI-MONEY LAUNDERING PROGRAM (AML PROGRAM)

A

A program established in an effort to detect and guard against money laundering. These programs involve safeguards including internal procedures and controls, designated compliance officers, ongoing employee training, and independent audits. Anti-money laundering programs are required for certain institutions under the Bank Secrecy Act (BSA).

20
Q

APPLICATION

A

The method by which a consumer formally applies to obtain a mortgage loan. The application form is known as the Uniform Residential Loan Application (URLA) or Form 1003.

21
Q

APPLICATION FEE

A

A fee charged for processing a mortgage loan application. An application fee may be a flat fee or a percentage of the loan amount.

22
Q

APPRAISAL

A

An opinion of the fair market value of a property, based on the appraiser’s knowledge and experience and on an analysis of the property utilizing recent comparable sales and market conditions.
a.k.a.: Valuation

23
Q

APPRAISED VALUE

A

An estimate of the fair market value of real or personal property.

24
Q

APPRAISER

A

A person qualified through state licensing procedures to estimate the value of real property.

25
Q

APPRECIATION

A

An increase in the value of property that occurs over time.

26
Q

APR THRESHOLD

A

One of several standards used to identify high-cost mortgage loans. If the APR of a loan meets or exceeds the threshold established under the law, the loan qualifies as a high-cost mortgage and must comply with corresponding regulations and requirements. See also High-Cost Mortgage.

27
Q

ASSESSMENT

A

A local tax levied against a property for a specific purpose, such as for sewage or street lights.

28
Q

ASSET

A

Things that a person owns and that can be converted to cash, such as property, investments, savings, etc.

29
Q

ASSIGNMENT

A

The transfer of the rights and obligations under a mortgage loan from one person to another.

30
Q

ASSUMABILITY CLAUSE

A

A provision in a mortgage loan that allows for the transfer of the mortgage from one party to another.

31
Q

ASSUMABLE MORTGAGE

A

A mortgage that a seller can transfer to a new buyer, with the buyer taking over the payments on the seller’s existing mortgage. Lenders may require a credit review of the new borrower and payment of a fee for the assumption. If a mortgage contains a due-on-sale clause, the mortgage is not assumable by a new buyer.

32
Q

ASSUMPTION FEE

A

The fee paid to a lender (usually by the purchaser of real property) when an assumption takes place.

33
Q

ATTACHMENT

A

A legal seizure of property to force repayment of a debt. An attachment creates a lien on real property.

34
Q

ATTEST

A

To witness by observation and signature.

35
Q

AVERAGE PRIME OFFER RATE (APOR)

A

An annual percentage rate that is based on average interest rates, fees, and other terms on mortgages that are offered to qualified borrowers. The APOR is used as a benchmark rate in identifying high-cost home loans and higher-priced mortgage loans under federal law.

NMLS (17 decks)

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