NMLS SAFE Mortgage Loan Originator Practice Exam Vocabulary

Vocabulary flashcards covering key federal laws, mortgage terminology, compliance rules, and valuation approaches from the 20-Hour SAFE Comprehensive MLO course.

Truth in Lending Act (TILA)

Federal law implemented by Regulation Z that requires creditors to provide clear disclosure of credit terms, including annual percentage rates and total finance charges.

Real Estate Settlement Procedures Act (RESPA)

Federal law implemented by Regulation X that governs real estate settlement services, limits escrow cushion accounts, and prohibits referral fees and kickbacks.

Equal Credit Opportunity Act (ECOA)

Federal law implemented by Regulation B that prohibits credit discrimination based on race, color, religion, national origin, sex, marital status, age, or public assistance receipt.

Home Mortgage Disclosure Act (HMDA)

Federal law implemented by Regulation C that mandates the collection and reporting of borrower demographic and mortgage transaction data to identify potential lending discrimination.

Fair Credit Reporting Act (FCRA)

Federal law that regulates credit reporting agencies to ensure the accuracy, fairness, and privacy of consumer credit information.

Gramm-Leach-Bliley Act (GLBA)

Federal law that protects nonpublic personal financial information (NPI) of consumers through financial privacy and pretexting restrictions.

Loan Estimate (LE)

A standardized disclosure integrating TILA and GFE requirements that outlines projected loan costs, interest rates, and settlement charges, required within 3 business days of application.

Closing Disclosure (CD)

A standardized disclosure integrating final TILA and HUD-1 disclosures that details actual loan costs and settlement charges, required at least 3 business days prior to loan consummation.

Affiliated Business Arrangement (AfBA) Disclosure

A disclosure required under RESPA to be given to a borrower upon referral when a settlement service provider refers business to an affiliated entity in which it holds an ownership interest.

Home Ownership and Equity Protection Act (HOEPA)

An amendment to TILA that establishes strict limitations, counseling requirements, and protections for high-cost mortgage loans.

Negative Amortization

A loan condition occurring when regular monthly mortgage payments are insufficient to cover the accrued interest, causing the remaining unpaid interest to be added to the principal balance.

Purchase Money Mortgage (PMM)

A mortgage instrument issued by the seller to the buyer as a credit instrument to secure part or all of the real estate purchase price.

Air Loan

A fraudulent scheme where a fictitious loan is originated for a non-existent borrower secured by a non-existent property.

Straw Buyer

An individual who accepts compensation to allow their name, credit, and personal details to be used on a mortgage loan application on behalf of another party.

Sales Comparison Approach

An appraisal strategy that estimates property value by evaluating a minimum of 3 comparable properties sold within the preceding 12 months.

Cost Approach

An appraisal valuation technique that estimates property value by adding the land value to the replacement or reproduction cost of improvements minus depreciation.

Average Prime Offered Rate (APOR)

A baseline reference interest rate derived from average annual percentage rates offered to highly qualified consumers for prime mortgage transactions.

Suspicious Activity Report (SAR)

A document filed with FinCEN within 30 calendar days after detecting suspicious or potentially illegal financial transactions.

Homeowners Protection Act (HPA)

Federal statute governing private mortgage insurance (PMI) requiring automatic cancellation once a mortgage reaches 78% loan-to-value ratio based on original value.

Red Flags Rule

A policy under the Fair and Accurate Credit Transactions Act enforced by the FTC requiring creditors to establish written identity theft detection and prevention protocols.