Mortgage Acronyms Flashcards
AARMR (America Association of Residential Mortgage Regulators)
Responsible for the
creation of the National Mortgage Licensing System (NMLS).
AFBA (Affiliated Business Arrangement)
An arrangement between two different companies
involved in providing services in the closing of a real estate transaction. There can be no
ownership interest. Requires disclosure under Real Estate Settlement Procedures Act (RESPA)
AMC (Appraisal Management Company):
The middleman between appraisers and mortgage
companies.
AML (Anti-Money Laundering)
A law in place to require financial institutions to prevent, detect
and report money laundering activities
APOR (Average Prime Offer Rate):
Rate used to determine whether a loan is high-cost or higher priced.
APR (Annual Percentage Rate):
It 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):
is a mortgage that will have a
fixed rate for a set period and then the rate is adjusted. The rate will normally be adjusted once or
twice a year.
ATR (Ability to Repay):
The 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
AUS (Automated Underwriting System):
Example: Used to automatically underwrite
conforming loans.
BSA (Bank Secrecy Act):
Requires Suspicious Activity Reports (SARS) to be filed regarding dubious activities.
CAIVRS (Credit Alert Verification Reporting System):
A federal database of people who have
delinquencies on any kind of federal debt.
CFPB (Consumer Financial Protection Bureau):
The federal entity that regulates the entire
mortgage industry.
CHARM (Consumer Handbook on Adjustable Rate Mortgages):
Required disclosure on ARM loans to educate the consumer about the type of loan they have
CLTV (Combined Loan to Value):
This ratio is calculated by dividing the amount of a 1st lien loan and the amount drawn on a HELOC or total amount of a 2nd lien loan by the appraised
value of the property. 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
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 borrower’s gross income. Back
end DTI is all debts divided by the borrower’s gross income. (Examples of debts: credit cards,
car loans, student loans. Not included = cell phone bills and utilities)
DU (Desktop Underwriter):
The Automated Underwing System used by Fannie Mae.
ECOA (Equal Credit Opportunity Act):
A law in the US that makes it illegal for any lender to
dis- criminate against an applicant based on race, religion, national origin, sex, etc.
FACTA (Fair and Accurate Credit Transactions Act):
Prevents identity theft, puts limits on
information sharing. Amendment to 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. These mortgages are guaranteed by the Federal Government and offered by
banks/lenders.
FHLMC (Federal Home Loan Mortgage Corporation; Freddie Mac)
A corporation authorized
by Congress to provide a secondary market for residential mortgages. Mortgages offered under
Freddie Mac guidelines are called “conforming” mortgages.
FICO (Fair Isaac Corporation):
The company that created the industry standard credit scores used by almost all lenders. This is a numerical summary of the information in your credit reports 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
Enforces Red Flag Rules, Safeguard Rules and Do Not Call.
GFE (Good Faith Estimate):
is a document that the lender is required to give a
prospective borrower when they apply for a loan. it is an estimate of all closing costs and
fees required for the proposed mortgage loan. Only used for Reverse Mortgages and HELOC’s
after TRID was implemented.
GLBA (Gramm-Leach Bliley Act):
Requires disclosure of information sharing policies.
GNMA:
Ginnie Mae, Government National Mortgage Association. (the Fannie and Freddie of
government lending)
GPM (Graduated Payment Mortgage)
With this type of mortgage the payment starts low and
rises over time.
GSE: Government Sponsored Enterprise
is a 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
HELOC (Home Equity Line of Credit):
is a loan in which the lender agrees to lend a
maximum
amount within an agreed loan term, where the collateral is the borrower’s equity in his or her
house.
HMDA (Home Mortgage Disclosure Act):
Requires lenders to report their lending patterns geographically to prevent redlining and reverse redlining.
HOA:
Homeowner’s Association
HOEPA (Home Ownership and Equity Protection Act):
Regulates high cost home loans.
HPA (Homeowners Protection Act):
Regulates the cancellation of private mortgage insurance
HPML:
Higher Priced Mortgage Loan
HUD (U.S. Department of Housing and Urban Development):
is the primary housing and lending regulatory authority in the U.S.
IO (Interest Only)
a payment that only covers the interest on the loan.
IP (Investment Property)
a non-owner-occupied property that is rented out by the borrower
IRRRL:VA Interest Rate Reduction Refinance Loan
This refinance loan allows you to lower
your interest rate on an existing VA home loan.
LP: Loan Prospector.
The Automated Underwiring System used by Freddie Mac.
LTV (Loan-to-Value):
is a ratio used by the lender that divides the amount of money
borrowed by the appraised value or purchase price, whichever is the lowest, of the home
expressed as a percentage. For example, a borrower may purchase a home appraised at $200,000
with a down payment of $40,000. This means he has a loan-to-value ratio of 80 percent.
MARS:
Mortgage Assistance Relief Services Rule
MBS (Mortgage Backed Security):
These are investment instruments that are bundled by Fannie,
Freddie and Ginnie Mae for sale on Wall Street.
NINA: No income No Asset loan
A loan that doesn’t require income or assets.
MMI: Monthly Mortgage Insurance
Mortgage insurance charged monthly on an FHA loan.
NIV: No income verification
a loan that requires no income verification
NOO (Non-owner occupied)
A loan on a property not occupied by the owner. (investment property, vacation/ second home).
O/O (Owner-occupied):
A loan on a property owned and occupied by the owner
PITI (Principal, Interest, Taxes and Insurance):
These are the four main components of your
monthly mort- gage payment. Principal is the loan amount. Interest is the rate at which the
finance charge you pay for borrowing is calculated. Taxes are the real estate taxes for which you
are responsible, and insurance is the homeowner’s insurance that your lender requires you to
have.
PMI (Private Mortgage Insurance):
If you put down less than 20 percent most lenders or banks require you to have private mortgage insurance. It is required on any conventional conforming
loan over 80% LTV. This can be put into your monthly mortgage payment or calculated into
your rate.
PPP (Prepayment Penalty)
A penalty charged to a borrower if they pay their loan in full before
the end of its term.
PUD (Planned Urban Development):
A type of development is designed real estate, usually a combination of housing, recreation, commercial and industrial parks all within one
development or subdivision
QM (Qualified Mortgage)
A type of loan that requires the lender to make sure that borrower can repay the loan
SAR (Suspicious Activity Report):
Report required to be made to FinCEN under the Bank Secrecy Act (BSA) when there is a suspicion of money laundering or fraud.
SISA (Stated Income)Stated Asset
The loan only requires the borrower to state their income and assets, doesn’t require verification.
SRP (Service Release Premium):
payment received by a lender on the sale of a closed mortgage loan to the secondary market
TIL (Truth in Lending):
is an important document you will receive from the lender or bank within three days of your application. Within the document certain disclosures are set forth. Such as, finance charges, annual percentage rate (APR), amount financed, total of payments, and total sales price will be disclosed. This document is required on Reverse Mortgages and HELOC’s,
since the implementation of TRID.
TIN
Tax Identification Number
TLTV (Total Loan to Value): Total Loan to Value.
is calculated by dividing the sum of the 1st lien mortgage amount and the total amount of a HELOC or 2nd lien by either the property’s purchase price or appraised value (whichever is less)
TRID (TILA-RESPA Integrated Disclosure Rule):
New legislation as of October 2015, requires
the Loan Estimate and Closing Disclosure, replaces the GFE, TIL and HUD-1 disclosures.
UFMIP (Upfront Mortgage Insurance Premium):
Mortgage insurance premium paid in a lump
sum upfront on an FHA loan
UST (Uniform State Test)
25 question addition to the National Test Component that replaced
most individual state tests.
VA (Department of Veterans Affairs):
This federal government agency guarantees mortgages
that assist eligible veterans in buying homes.
VOD (Verification of Deposit)
Used to verify that X amount of money is in a borrower’s bank
account.
VOE (Verification of Employment):
Used to verify that a borrower is employed.
VOM (Verification of Mortgage):
Used to verify that a borrower has X mortgage
VOR (Verification of Rent):
Used to verify that a borrower pays rent and pays their rent on time.
YSP (Yield Spread Premium):
Paid to the broker for giving a borrower a higher interest rate on a loan in exchange for lower up-front costs generally paid in origination fees, broker fees or
discount points
