Fair lending laws, prohibited practices, and ethical standards for mortgage loan originators.
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- What does SAFE stand for in mortgage licensing?
- Secure and Fair Enforcement for Mortgage Licensing Act
- What is the primary requirement of the SAFE Act for mortgage loan originators?
- Licensing and registration with the Nationwide Multistate Licensing System (NMLS)
- What is steering in mortgage lending?
- Directing borrowers to less favorable loan terms based on protected characteristics rather than financial qualifications
- What is redlining?
- Denying credit or imposing unfavorable terms based on neighborhood or property location, often correlated with race or ethnicity
- What does the Fair Housing Act prohibit in mortgage lending?
- Discrimination based on race, color, religion, sex, handicap, familial status, or national origin
- What does the Equal Credit Opportunity Act (ECOA) protect?
- Prohibits discrimination in lending based on race, color, religion, national origin, sex, marital status, age, or participation in public assistance programs
- What is predatory lending?
- Unfair or deceptive practices that take advantage of borrowers' lack of knowledge, inability to pay, or other vulnerabilities
- What is loan flipping?
- Repeatedly refinancing a loan with little or no benefit to the borrower and charging fees each time
- What is packing in mortgage lending?
- Adding unnecessary products, services, or warranties to a loan without the borrower's knowledge or consent
- What does the Truth in Lending Act (TILA) require?
- Clear, accurate disclosure of credit terms including APR, finance charges, payment schedule, and other material terms
- What must be disclosed about Adjustable Rate Mortgages (ARMs)?
- Initial rate, adjustment schedule, index and margin used, rate caps, and worst-case payment scenario
- What is Annual Percentage Rate (APR)?
- The yearly cost of credit expressed as a percentage, including interest and fees, required to be disclosed by TILA
- What is a qualified written request under TILA?
- A written request for an accounting or information regarding an account that the servicer must respond to within specified timeframes
- What are the rules governing mortgage escrow accounts?
- Lenders must maintain accounts for taxes and insurance, conduct annual escrow analyses, and limit permitted balances and shortages
- What is a reverse mortgage?
- A loan that allows homeowners age 62 and older to convert home equity into cash while retaining ownership