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RFC Mortgage Analyst Training > Terms > Flashcards

Terms Flashcards

1
Q

Balloon Loan

A

a mortgage where the homeowner only paus the interest on a monthly payment

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2
Q

Subprime Lender

A

any lender that will take a client with a credit score lower than 620

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3
Q

Depository Loan Officer

A

works for a depository institution and is only registered (regulation G)

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4
Q

Non-depository Loan Officer

A

works for a non-depository institution; and is registered AND licensed (regulation G & H)

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5
Q

Primary Market

A

the first points of contact for consumers to get a mortgage depository or non-depository

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6
Q

Secondary Market

A

who’s backing where the money is coming from; they buy loans and pay service companies to service loan

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7
Q

Securitization

A

providing a source of funds for lenders

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8
Q

Application

A

a request, in any form, of residential mortgage loan terms; and information about the borrower that is necessary in a decision on whether or not to make such an offer

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9
Q

Pre-qualification

A

an informal review of information; a conversation had with a client that holds no legal/monetary weight

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10
Q

Pre-approval

A

looking at W-2’s to determine actual income of customer and go forward with appraisal; determine total income, assets, and homeowner’s insurance

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11
Q

Stacking Order

A

the order that the processor puts all paperwork in to send to underwriting; underwriting then orders appraisal and title report (1008)

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12
Q

Title Report

A

the history of ownership of the house keeping track of any encumbrances (liens) against the property; underwriter requests the report from a title company for a fee

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13
Q

Abstractor

A

the person at the title company who looks into the last 3 years of home ownership to find previous home values and liens

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14
Q

Good Faith Estimate

A

the best estimate you can give to a client; also a form with the same name to help work out best estimate

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15
Q

Finance Charge

A

the cost of consumer credit as a dollar amount; it is the $ value of prepaid finance charges combined with $ value of charges paid over the lifetime of the loan

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16
Q

Bait & Switch

A

advertising a loan at very attractive terms and then informing potential customers that that loan is no longer available, but another loan is

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17
Q

Trigger Terms

A

refers to the following terms: APR [Annual Percentage Rate], number of payments or period of repayment, the amount of any payment, or the amount of any finance charge

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18
Q

Steering

A

advertising a loan to a specific race to steer them to buy your product (i.e. explaining the low APR in spanish, while explaining overall loan cost in english)

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19
Q

High-cost Loan

A

a larger than 6.5% discrepancy between the APOR avg. APR index on the first purchase of a loan; 8.5% or higher for second loan

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20
Q

Disclosure

A

translates certain wording of the loan documents into understandable terms and provides the borrower with a clear picture of the type of loan, length of the loan & payment schedule, and good faith estimate of loan costs

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21
Q

No tolerance

A

(TRID) the borrower is fully allowed to shop and pick their 3rd party mortgage service provider (i.e. title company)

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22
Q

Zero Tolerance

A

(TRID) once the total is put into the LE [Loan Estimate] it cannot change at all; typically only applies to companies that force you to use their specific mortgage provider

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23
Q

10% Tolerance

A

(TRID) cannot charge more than 10% over LE; typically only used when a client asks for a recommendation for a title company

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24
Q

Disparate Treatment

A

(ECOA) violating any of the MS NORA SPARC categories in any situation (i.e. making a loan more difficult to receive for a Mexican family vs. their white counterparts)

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25
Q

Covert Discrimination

A

actively discriminating against an individual for one or more of the ECOA guidelines, while trying to hide the fact of discrimination (i.e. avoiding calling a client for discriminatory reasons)

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26
Q

Overt Discrimination

A

(ECOA) openly expressing discrimination against an individual and refusing them service due to one of the MS NORA SPARC categories

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27
Q

Pretexting

A

Pretending to be someone else over the phone to get account information; one step below identity theft

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28
Q

Safeguards

A

policies put in place to protect the private information of clients

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29
Q

Asset Fraud

A

a client lying about financial reserves

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30
Q

Occupancy Fraud

A

client lying about primary residence in order to get a lower interest rate (buying a rental property and saying that it’s your primary residence

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31
Q

Employment Income Fraud

A

client faking W-2’s, bank statements, billing statements, etc. in order to get approved for a loan

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32
Q

Debt Elimination Fraud

A

client pays off debt with a credit card in order to qualify for a loan, or to get a lower monthly rate

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33
Q

Identity Theft

A

client whose information is being used is entirely unaware that someone is buying a loan in their name

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34
Q

Straw Buyers

A

client will give the information of another individual (with that individuals consent) in order to qualify for a loan

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35
Q

Silent Second

A

clients making internal deals with seller in order to obtain a house

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36
Q

Appraisal Fraud

A

lender colluding to raise or lower an appraisal in order to make more money for themselves or their company

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37
Q

Fraudulent Flipping

A

lender purposefully refinancing a client’s mortgage while packing the loan with unnecessary charges; the goal is to push the client into foreclosure and collect a bigger check

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38
Q

Money Laundering

A

making false currency to slowly place into the regular financial market in order to make real estate transactions

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39
Q

State

A

any state of the United States or its surrounding territories

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40
Q

Individual

A

a natural person

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41
Q

Person

A

a natural person, company, corporation, limited liability company, partnership, or association

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42
Q

Mortgage Loan Originator

A

an individual who, for compensation or gain, takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan

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43
Q

Residential Mortgage Loan

A

any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent document

44
Q

Dwelling

A

a residential structure that contains 1-4 units; includes condominium unit, cooperative unit, mobile home, or trailer as long as it is the primary residence of the borrower

45
Q

Residential Real Estate

A

any real property located in a state upon which is constructed, or intended to be constructed, a dwelling

46
Q

Real Estate Brokerage Activity

A

any activity that involves offering or providing real estate brokerage services to the public

47
Q

Assists a customer in obtaining residential mortgage loan

A

includes advising on loan terms, preparing loan packages, and/or collecting information on behalf of the consumer (processing)

48
Q

Loan Processor/Underwriter

A

an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of a state licensed loan originator or registered loan originator

49
Q

Clerical/Support Duties

A

includes the receipt, collection, distribution, and analysis of information common for the processing and underwriting of a residential mortgage loan; and communicating with customers to obtain necessary information for loan sale

50
Q

Origination of a Residential Mortgage Loan

A

all residential mortgage loan related activities from the taking of the loan application through the completion of all required loan closing documents and funding of the mortgage plan

51
Q

Registered Loan Originator

A

an individual who meets the definition of a loan originator; is an employee of a depository institution, a subsidiary of a depository, or an institution regulated by the FCA; and is registered with NMLS with a unique identifier

52
Q

Employee

A

an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person; and whose compensation is reported on a W-2 form

53
Q

Federal Banking Agencies

A

includes the Board of Governors of the Federal Reserve System; the Comptroller of the Currency; the National Credit Union Administration; and the Federal Deposit Insurance Corporation [FRS; OCC; NCUA; FDIC]

54
Q

State-Licensed Loan Originators

A

any individual who is a loan originator employed by a non-depository organization; they are state licensed and have an NMLS unique identifier

55
Q

Unique Identifier

A

a number or other identifier that permanently identifies a loan originator; it is assigned by NMLS to facilitate the electronic tracking of nd uniform identification of a loan originator

56
Q

Creditor

A

a person, excluding a lender and a table funding mortgage broker, that regularly extends credit that is subject to a finance charge or is payable by written agreement in more than 4 installments; or a credit card issuer

57
Q

Prepaid Finance Charge (PFC)

A

any finance charge paid separately, in cash or by check, before or at consummation of transaction, or withheld from the proceeds of the loan at any time

58
Q

Amount Financed

A

the actual amounf of credit the borrower will receive from the creditor; not the total loan amount; loan amount - prepaid finance charges = amount financed

59
Q

Total of Payments

A

usually, the total finance charge (prepaid and ongoing) + the amount financed

60
Q

Redisclosures

A

if an event before closing makes the TIL Disclosures inaccurate, the lender must provide corrected disclosures if the APR at time of consummation varies from the disclosed APR by 1/4 or 1/8 of 1%

61
Q

Appraisal

A

Opinion of Value

62
Q

Seller Concessions

A

a note of general happiness in a neighborhood placed in the appraisal document

63
Q

Payment Shock

A

when a client panics because their ARM rate jumps so high

64
Q

Index

A

fluctuates/moves based on current stock market conditions (Indices are Index providers)

65
Q

Margin

A

Origination and servicing of loan fees; NEVER moves or changes

66
Q

Amortization

A

a way to pay off debt in equal installments that include varying amounts of interest and principal payments over the life of the loan

67
Q

Negative Amortization

A

even when you pay, the amount you owe will still go up because you are not paying enough to cover the interest

68
Q

Closing Costs

A

processing fees a client pays to the lender when closing on a loan

69
Q

Debt-to-Income Ratio

A

the percentage of your gross monthly income that goes to paying your monthly debt payments

70
Q

Discount Point

A

lower a clients interest rate in exchange for paying an up front fee

71
Q

Earnest Money

A

the sum of money a client puts down to demonstrate commitment to buying a home

72
Q

Equity

A

the difference between what you owe on your mortgage and what your home is currently worth

73
Q

Escrow Account

A

managed by an outside party in order to hold valuables (i.e. money, property deeds, and personal finance documents) on behalf of 2 agreeing parties until specified conditions are met during a financial transaction

74
Q

Fees

A

also called Fee Simple; an estate of inheritance (land or other real estate) over which a person has absolute ownership

75
Q

Prepayment Penalty

A

a fee that some lenders charge if you pay off part or all of your mortgage early

76
Q

Sales Contract

A

a written agreement between buyer and seller to transact real estate

77
Q

Seller Carry-Back

A

owner-provided financing; the seller acts as the bank or lender and carries a mortgage on the property, collecting monthly payments from the buyer (aka owner financing or seller financing)

78
Q

Service Release Premiums

A

SRP; the payment received by a lending institution on the sale of a closed mortgage loan in the secondary mortgage market

79
Q

Servicer

A

a company that collects and handles the daily administrative tasks related to collecting a mortgage loan

80
Q

Yield Spread Premiums

A

YSP; additional compensation paid to mortgage brokers as compensation for placing a higher interest loan with a borrower

81
Q

Adverse Action

A

a type of notice given by a lender when a borrower’s credit application has been denied

82
Q

Affiliated Business Arrangement

A

AfBA; when a person in a position to refer real estate settlement services has an affiliated relationship with, or a direct beneficial ownership interest in, an entity to which settlement business is referred such as a joint venture title or mortgage entity

83
Q

Par Rate

A

the special mortgage interest rate that any given financial lender will charge a client (how much interest a client can expect to pay over the lifetime of a loan)

84
Q

Note Rate

A

the rate a client has locked in and is used to calculate monthly principal and interest payment

85
Q

Deed

A

a legal document that grants its holder ownership of a piece of real estate or other assets such as a car

86
Q

Deed of Trust

A

a type of secured real estate transaction that some states use instead of mortgages

87
Q

Mortgage Loan Originator

A

a person or institution that helps a prospective borrower get the right mortgage for a real estate transaction

88
Q

Note

A

simply an IOU secured by property

89
Q

Foreclosure

A

a catch-all term for the processes used by mortgage-holders, or mortgagees, to take mortgaged property from borrowers who default on their mortgages

90
Q

Interest

A

the amount of money a lender or financial institution receives for lending out money

91
Q

Points

A

fees a borrower pays a mortgage lender to trim the interest rate on the loan; also called “buying down the rate”

92
Q

Promissory Note

A

a written agreement between a lender and borrower to repay a loan

93
Q

Fully Indexed Rate

A

a variable interest rate that is set at a fixed margin above some reference interest rate (ARM’s)

94
Q

Conventional Loan

A

any mortgage that is not backed by a government agency

95
Q

Conforming Conventional Loan

A

a mortgage that meets the dollar limits set by the FHFA according to Fanny Mae and Freddie Mack

96
Q

Non-conforming Conventional Loan

A

a loan that exceeds the dollar limits set by the FHFA according to Fanny Mae and Freddie Mack

97
Q

Purchase Money

A

a person buying real property gives the seller a mortgage on the property as part of the deal to buy the property

98
Q

Qualifying Ratios

A

debt-to-income ratios that tell the lender whether or not a client is eligible for a certain mortgage

99
Q

Reconveyance

A

a creditor returning the property title to the borrower after debt is completely paid off

100
Q

Refinance

A

trading an old mortgage for a new one, and possibly a new balance

101
Q

Revolving Debt

A

all debt that isn’t a set loan amount for a set period; instead borrowers are able to use loan like a credit card and accept varying monthly payment rates as a result

102
Q

Lien

A

a legal claim against property that can be used as collateral to repay debt

103
Q

Subordinate Lien

A

these liens can only be paid off after the more senior liens are released

104
Q

Table Funding

A

a settlement at which a loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds

105
Q

Underwriting

A

verifying a borrowers income, assets, debt, and property details in order to issue final approval for a loan

RFC Mortgage Analyst Training (1 decks)

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