Mortgage Acronyms Flashcards
AARMR
American Association of Residential Mortgage Realtors.
-responsible for the creation of the NMLS
AFBA
AFfiliated Business Arrangement.
This is an arrangement between 2 different companies involved in providing services in the closing of a real estate transaction. There can be no ownership interest. Requires disclosure under RESPA.
AMC
Appraisal Management Company.
The middleman between appraisers and mortgage companies.
AML
Anti-Money Laundering.
Law in place to require financial institutions to prevent, detect and report money laundering activities.
APOR
Average Prime Offer Rate.
Rates used to determine whether a loan is high cost or higher priced.
APR
Annual Percentage Rate.
The APR calculates the annual percentage rate you would pay on the loan once the costs of getting the loan are factored in.
ARM
Adjustable Rate Mortgage.
An adjustable rate mortgage is a mortgage that will have a fixed rate for a set period of time and then the rate is adjusted. The rate will normally be adjusted once or twice a year.
ATR
Ability to Repay.
Rule that requires lenders to determine whether a borrower has the ability to repay their loan and requires verification of the information provided to prove the ability to repay (under QM).
AUS
Automated Underwriting System.
Example: LP and DU. Used to automatically underwrite conforming loans.
BSA
Bank Secrecy Act.
Requires suspicious activity reports (SARS) regarding suspicious activities.
CAIVRS
Credit Alert Verification Reporting System.
Federal database of people who have delinquencies on any kind of federal debt.
CFPB
Consumer Financial Protection Bureau.
Federal regulator that regulates the mortgage industry. (The Boss)
CHARM
Consumer Handbook on Adjustable Rate Mortgages.
Required disclosure on ARM loans to educate the consumer about the type of loan they are on.
CLTV
Combined Loan to Value.
Calculated by dividing the amount of a 1st lien loan and the total line of the credit on a HELOC or total amount of a 2nd lien loan by the purchase price or the appraised value of the property, whichever is less.
COE
Certificate of Eligibility.
Required document on VA loans to determine the amount of eligibility that veteran borrower has.
COFI
Cost of Funds Index.
Index used on ARM loans (margin + index)
DTI
Debt to Income. Two ratios, front end and back end DTI.
Front end DTI (housing expense) is determined by dividing the amount of housing divided by the borrowers gross income.
Back end DTI is all debts divided by the borrowers gross income. (Examples of debts: credit cards, car loans, student loans. Not included: cell phone bill and utilities)
DU
Desktop Underwriter.
The AUS used by Fannie Mae.
ECOA
Equal Credit Opportunity Act.
A law in the US that makes it illegal for any creditor to discriminate against any applicant on the basis of race, religion, national origin, sex, etc.
FACT Act
Fair and Accurate Credit Transactions Act.
Prevents identity theft, puts limits on information sharing. Amendment to the FCRA.
FCRA
Fair Credit Reporting Act.
Regulates how consumer-reporting agencies use consumer information.
FDIC
Federal Deposit Insurance Corporation.
Regulates depository institutions.
FFIEC
Federal Financial Institutions Examination Council.
Collects and distributes HMDA information.
FHA
Federal Housing Administration.
The Federal Government Agency that oversees the US Housing Market. FHA mortgages are guaranteed by the Federal Government and offered by banks/lenders.
FHLMC
Federal Home Loan Mortgage Corporation.
A corporation authorized by congress to provide a secondary market for residential mortgages.
FICO
Fair Isaac Corporation.
The company that created the industry standard credit scores used by almost all lenders. The FICO score is a numeric summary of the information in your credit report that represents your potential credit risk.
FinCEN
Financial Crimes Enforcement Network.
The entity that a SAR would be reported to.
FNMA
Federal National Mortgage Association (Fannie Mae) a government sponsored entity created by Congress to increase access to mortgages. Mortgages offered under Fannie Mae guidelines are called “conforming mortgages”.
FTC
Federal Trade Commission
GFE
Good Faith Estimate.
A GFE is a document that the lender is required to give a prospective borrower when they apply for a loan. The GFE is an estimate of all closing costs and fees required for the proposed mortgage loan.
GLB
Gramm-Leach Bliley Act.
Requires disclosure of information sharing policies.
GNMA
Government National Mortgage Association (GNMA).
The Fannie and Freddie of government lending.
GPM
Graduated Payment Mortgage.
This is a type of mortgage on which the payment starts low and rises over time.
GSE
Government Sponsored Enterprise.
Financial services corporation created by the US Congress (Fannie and Freddie Mac)
HARP
Home Affordable Refinance Program.
HARP is a refinance program that allows eligible borrowers, with little to no equity in their homes, to take advantage of low interest rates and other refinancing benefits.
HECM
Home Equity Conversion Mortgage.
Loan for borrowers 62 years and older. Uses the equity in their home to create cash disbursements to the borrower.