Federal Comprehensive Pre-Licensing Education Course - Ethics in Mortgage Lending

Flashcards for key vocabulary and concepts covered in the Federal Comprehensive Pre-Licensing Education Course on Ethics in Mortgage Lending.

Fair Lending

Granting access to credit to everyone who wishes to obtain and qualifies for a loan.

Disparate Treatment

Overt discrimination or comparative evidence of discrimination against a credit applicant based on prohibited bases.

Overt Discrimination

Openly discriminating by a lender on a prohibited basis, either through a written policy or verbal statement.

Comparative Evidence

Treatment of a credit applicant differently based on prohibited bases that aren't explained by legitimate factors.

Disparate Impact

When a neutral policy disproportionately excludes or burdens certain groups of people on a prohibited basis.

Redlining

An unethical practice making it difficult for certain neighborhoods to access loans based on minority classification.

Reverse Redlining

Lending specifically to minority neighborhoods, often at higher rates compared to non-minority consumers.

Blockbusting

Tactics by agents to convince non-minority homeowners to sell cheaply through fear of minorities moving in.

Home Mortgage Disclosure Act (HMDA)

Requires reporting of mortgage lending data to prevent discrimination.

Higher-Priced Mortgage Loan (HPML)

A loan with an APR exceeding a certain percentage above the APOR.

Qualified Mortgage (QM)

A category of loans with features that reduce the likelihood of default.

Ability to Repay (ATR)

A rule that requires lenders to determine if borrowers can afford their loans.

Truth in Lending Act (TILA)

Regulates disclosures regarding the costs of obtaining credit, including APR.

Consumer Financial Protection Bureau (CFPB)

A federal agency that regulates the mortgage industry to protect consumers.

Fair Credit Reporting Act (FCRA)

Law that governs the collection and use of consumer credit information.

Gramm-Leach-Bliley Act (GLBA)

Regulates the disclosure of non-public personal information by financial institutions.

Electronic Signatures in Global and National Commerce Act (E-Sign Act)

Allows electronic signatures on mortgage documents.

Section 203(k) Loans

FHA loans that allow financing for both purchasing and rehabilitating a home.

Usury

The illegal action of charging excessively high-interest rates on loans.

Equity

The value of an owner's interest in property after deducting liabilities.

Default

The failure to make required payments on a loan.

Foreclosure

The legal process where a lender takes possession of the property due to default.

Appraisal

An evaluation of property value conducted by a licensed appraiser.

Debt-to-Income Ratio (DTI)

A measure of a borrower's monthly debt payments compared to monthly gross income.

Loan Estimate

A form that provides disclosures about a mortgage loan, required within three days of application.

Closing Disclosure

A document that details the final terms of a mortgage loan, provided three days before closing.