History

Question 1

Mortgage loan originator - MLO

Answer 1

An individual who: takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.

Question 2

title

Answer 2

Ownership - A legal document establishing the right of ownership to real property or properties.

Question 3

deed

Answer 3

A legal document that transfers ownership of a property from one person to another or grants ownership as long as its stipulations are upheld.
(shows who owns the property)

Question 4

property

Answer 4

The land and permanent structures and fixtures within legally described boundaries specified in a real estate contract.

Question 5

SAFE Act

Answer 5

Secure and Fair Enforcement of Mortgaging Licensing Act of 2008. requires all state-licensed mortgage loan originators (MLOs) to pass the SAFE Mortgage Loan Originator Test.

Question 6

Uniform Standard Test (UST)

Answer 6

For compliance with education requirements under the Secure and Fair Enforcement for Mortgage Licensing Act mortgage loan originators (MLO) are required to pass a “qualified written test” before they can be licensed. An applicant for licensing who passes this test will not need to take any additional state-specific tests to hold a license with those states participating.

Question 7

credit

Answer 7

A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest.

Question 8

mortgage loans

Answer 8

A loan from a bank or other financial institution that helps a borrower purchase a home. The collateral for the mortgage is the home itself, meaning that if the borrower doesn’t make monthly payments to the lender and defaults on the loan, the bank can sell the home and recoup its money.

Question 9

traditional mortgage

Answer 9

30-year fixed-rate loan

Question 10

agreements

Answer 10

A negotiated and typically legally binding arrangement between parties as to a course of action.

Question 11

person

Answer 11

An individual (natural person), partnership, limited liability company, trust, or corporation.

Question 12

borrower

Answer 12

A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms. Also known as debtor or mortgagor.

Question 13

balloon payment

Answer 13

The final lump sum payment due at the end of a balloon mortgage.

Question 14

Federal Deposit Insurance Corporation

Answer 14

Created to protect borrower deposits.

Question 15

Federal Housing Administration (FHA)

Answer 15

Created to reassure lenders in cases of borrower mortgage defaults.

Question 16

lenders

Answer 16

A person or company that makes loans for real estate purchases. Sometimes referred to as a “loan officer,” or a “mortgagee.”

Question 17

default

Answer 17

The inability to make timely monthly mortgage payments or otherwise comply with mortgage terms. A loan is in default when a payment has not been made after 60 t0 90 days.

Question 18

term

Answer 18

The period of time and the interest rate agreed upon by the lender and the borrower to repay a loan.

Question 19

VA

Answer 19

Department of Veterans Affairs: A federal agency that guarantees loans made to veterans. It is similar to mortgage insurance, a loan guaranty protects lenders against loss that may result from a borrower default.

Question 20

capital

Answer 20

An individual’s savings, investments, or assets. Also known as “cash reserves.”

Question 21

Fannie Mae

Answer 21

Federal National Mortgage Association (FNMA): A federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors. By purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers. Also known as a “ Government Sponsored Enterprise (GSE).”

Question 22

mortgage-backed securities (MBS)

Answer 22

A Fannie Mae or Freddie Mac security that represents an undivided interest in a group of mortgages. Principal and interest payments from the individual mortgage loans are grouped and paid out to the MBS holders.

Question 23

collateral

Answer 23

Security in the form of money or property pledged for the payment of the loan.

Question 24

sub-prime mortgage

Answer 24

Any “B” Loan or “B” paper with FICO scores from 620 -659, or andy “C” Loan or “C” Paper with FICO scores typically from 580 to 619. Carry less stringent lending and underwriting terms and conditions. Due to the higher risk, subprime loans charge higher rates and fees.

Question 25

fees

Answer 25

Money paid in conjunction with a mortgage loan other than the actual loan amount and interest. This also includes third-party fees, such as those paid for credit reports, appraisals, or origination/broker fees. Fees affect the total cost of the credit when obtaining a loan.

Question 26

interest rates

Answer 26

The amount of interest (expressed as a percentage) charged on a monthly loan payment.

Question 27

foreclosures

Answer 27

The legal process in which the lender (mortgagee) takes over the ownership of a property, thus terminating the owner’s rights to the possession of the home. There are two procedures; judicial foreclosure and non-judicial foreclosure.

Question 28

collect

Answer 28

receive monies that are due.

Question 29

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Answer 29

Changed the oversight and capitalization of financial institutions, added licensing and education standards for mortgage professionals, and limited the availability of riskier products in the marketplace. Signed into law on July 21, 2010. Outlawed UDAAPs.

Question 30

law

Answer 30

A system of rules that govern behavior and actions.

Question 31

consumer

Answer 31

An individual who has or will obtain financial services from a financial institution for any reason.

Question 32

Federal Banking Agencies

Answer 32

Includes the Board of Governors of the Federal Reserve System (FRB), the Comptroller of Currency (OCC), National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC).

Question 33

Consumer Protection Bureau (CFPB)

Answer 33

The Bureau. Established by the Dodd-Frank Act to consolidate the federal regulatory authority for consumer protection laws.

Question 34

UDAAPs

Answer 34

Unfair, deceptive, or abusive act or practice.

Question 35

Unfair

Answer 35

Activities that can cause injury (usually financial harm) to the consumer, especially if that harm cannot be avoided.

Question 36

Deceptive

Answer 36

Behaviors in which the mortgage loan originator deceives the consumer or plans to deceive the consumer, which could lead to the consumer making a poor decision because the consumer relies on the expertise of the originator as it pertains to mortgage loans.

Question 37

Abusive

Answer 37

Conduct in which the mortgage loan originator takes advantage of their position in the transaction to confuse the consumer.