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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
Covert Discrimination
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)
26
Overt Discrimination
(ECOA) openly expressing discrimination against an individual and refusing them service due to one of the MS NORA SPARC categories
27
Pretexting
Pretending to be someone else over the phone to get account information; one step below identity theft
28
Safeguards
policies put in place to protect the private information of clients
29
Asset Fraud
a client lying about financial reserves
30
Occupancy Fraud
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
31
Employment Income Fraud
client faking W-2's, bank statements, billing statements, etc. in order to get approved for a loan
32
Debt Elimination Fraud
client pays off debt with a credit card in order to qualify for a loan, or to get a lower monthly rate
33
Identity Theft
client whose information is being used is entirely unaware that someone is buying a loan in their name
34
Straw Buyers
client will give the information of another individual (with that individuals consent) in order to qualify for a loan
35
Silent Second
clients making internal deals with seller in order to obtain a house
36
Appraisal Fraud
lender colluding to raise or lower an appraisal in order to make more money for themselves or their company
37
Fraudulent Flipping
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
38
Money Laundering
making false currency to slowly place into the regular financial market in order to make real estate transactions
39
State
any state of the United States or its surrounding territories
40
Individual
a natural person
41
Person
a natural person, company, corporation, limited liability company, partnership, or association
42
Mortgage Loan Originator
an individual who, for compensation or gain, takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan
43
Residential Mortgage Loan
any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent document
44
Dwelling
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
Residential Real Estate
any real property located in a state upon which is constructed, or intended to be constructed, a dwelling
46
Real Estate Brokerage Activity
any activity that involves offering or providing real estate brokerage services to the public
47
Assists a customer in obtaining residential mortgage loan
includes advising on loan terms, preparing loan packages, and/or collecting information on behalf of the consumer (processing)
48
Loan Processor/Underwriter
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
Clerical/Support Duties
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
Origination of a Residential Mortgage Loan
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
Registered Loan Originator
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
Employee
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
Federal Banking Agencies
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
State-Licensed Loan Originators
any individual who is a loan originator employed by a non-depository organization; they are state licensed and have an NMLS unique identifier
55
Unique Identifier
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
Creditor
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
Prepaid Finance Charge (PFC)
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
Amount Financed
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
Total of Payments
usually, the total finance charge (prepaid and ongoing) + the amount financed
60
Redisclosures
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
Appraisal
Opinion of Value
62
Seller Concessions
a note of general happiness in a neighborhood placed in the appraisal document
63
Payment Shock
when a client panics because their ARM rate jumps so high
64
Index
fluctuates/moves based on current stock market conditions (Indices are Index providers)
65
Margin
Origination and servicing of loan fees; NEVER moves or changes
66
Amortization
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
Negative Amortization
even when you pay, the amount you owe will still go up because you are not paying enough to cover the interest
68
Closing Costs
processing fees a client pays to the lender when closing on a loan
69
Debt-to-Income Ratio
the percentage of your gross monthly income that goes to paying your monthly debt payments
70
Discount Point
lower a clients interest rate in exchange for paying an up front fee
71
Earnest Money
the sum of money a client puts down to demonstrate commitment to buying a home
72
Equity
the difference between what you owe on your mortgage and what your home is currently worth
73
Escrow Account
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
Fees
also called Fee Simple; an estate of inheritance (land or other real estate) over which a person has absolute ownership
75
Prepayment Penalty
a fee that some lenders charge if you pay off part or all of your mortgage early
76
Sales Contract
a written agreement between buyer and seller to transact real estate
77
Seller Carry-Back
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
Service Release Premiums
SRP; the payment received by a lending institution on the sale of a closed mortgage loan in the secondary mortgage market
79
Servicer
a company that collects and handles the daily administrative tasks related to collecting a mortgage loan
80
Yield Spread Premiums
YSP; additional compensation paid to mortgage brokers as compensation for placing a higher interest loan with a borrower
81
Adverse Action
a type of notice given by a lender when a borrower's credit application has been denied
82
Affiliated Business Arrangement
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
Par Rate
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
Note Rate
the rate a client has locked in and is used to calculate monthly principal and interest payment
85
Deed
a legal document that grants its holder ownership of a piece of real estate or other assets such as a car
86
Deed of Trust
a type of secured real estate transaction that some states use instead of mortgages
87
Mortgage Loan Originator
a person or institution that helps a prospective borrower get the right mortgage for a real estate transaction
88
Note
simply an IOU secured by property
89
Foreclosure
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
Interest
the amount of money a lender or financial institution receives for lending out money
91
Points
fees a borrower pays a mortgage lender to trim the interest rate on the loan; also called "buying down the rate"
92
Promissory Note
a written agreement between a lender and borrower to repay a loan
93
Fully Indexed Rate
a variable interest rate that is set at a fixed margin above some reference interest rate (ARM's)
94
Conventional Loan
any mortgage that is not backed by a government agency
95
Conforming Conventional Loan
a mortgage that meets the dollar limits set by the FHFA according to Fanny Mae and Freddie Mack
96
Non-conforming Conventional Loan
a loan that exceeds the dollar limits set by the FHFA according to Fanny Mae and Freddie Mack
97
Purchase Money
a person buying real property gives the seller a mortgage on the property as part of the deal to buy the property
98
Qualifying Ratios
debt-to-income ratios that tell the lender whether or not a client is eligible for a certain mortgage
99
Reconveyance
a creditor returning the property title to the borrower after debt is completely paid off
100
Refinance
trading an old mortgage for a new one, and possibly a new balance
101
Revolving Debt
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
Lien
a legal claim against property that can be used as collateral to repay debt
103
Subordinate Lien
these liens can only be paid off after the more senior liens are released
104
Table Funding
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
Underwriting
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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