40-100 Mortgage Loan Originator (MLO) Licensing Overview

Flashcards to help understand key concepts and terminology related to Mortgage Loan Originator licensing and mortgage products.

Temporary Authority

The ability for an eligible MLO to operate after submitting a license application and required information, ending under specific circumstances.

License Maintenance

The process by which an MLO renews their license annually, including continuing education and fees.

Continuing Education Requirements

MLOs must complete at least eight hours annually, including specific federal and state educational topics.

Successive Year Rule

MLOs may not retake the same continuing education course in successive years.

Prohibited Conduct

Actions considered illegal or unethical in the mortgage industry, including deception, unlicensed activity, and failure to disclose.

FHA Loan Eligibility

FHA loans require a minimum down payment, specific credit scores, and compliance with property condition regulations.

Reciprocity

The acknowledgment that education hours completed in one state may fulfill another state's requirements for licensing.

Loan-to-Value (LTV) Ratio

A financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

Debt-to-Income (DTI) Ratio

A measure of an individual's monthly debt payments in relation to their gross monthly income.

Private Mortgage Insurance (PMI)

Insurance that protects lenders against borrower default, required for conventional loans with less than 20% down.

Home Equity Line of Credit (HELOC)

A type of revolving loan that allows homeowners to borrow against their home equity.

Adjustable-Rate Mortgage (ARM)

A mortgage where the interest rate can change periodically based on changes in a corresponding financial index.

Balloon Mortgage

A loan that requires a one-time payment at the end of the term which is larger than the regular payments.

Reverse Mortgage

A type of loan that allows homeowners, typically older, to convert part of their home equity into cash.

Dodd-Frank Act

Legislation designed to promote financial stability by improving accountability and transparency in the financial system.

SAFE Act

The Secure and Fair Enforcement for Mortgage Licensing Act aimed at enhancing consumer protection and reducing fraud.

Fixed-Rate Mortgage

A mortgage loan that has a fixed interest rate for the entire term.

Conventional Loan

A type of mortgage that is not insured by the federal government and adheres to targets set by Fannie Mae and Freddie Mac.

VA Loan

A mortgage option for veterans and active military members that offers favorable terms and no down payment.

USDA Loan

A loan backed by the U.S Department of Agriculture for rural property financing, providing low-interest rates and no down payments.