NMLS SAFE Exam Review: Missed Questions & Memory Hooks

Flashcards covering key missed questions and memory hooks for the NMLS SAFE Exam, focusing on federal laws, disclosure documents, loan thresholds, and ethics.

FACTA (Fair and Accurate Credit Transaction Act)

A federal law that gives consumers the right to a free annual credit report from each bureau and the ability to place fraud alerts or freezes on their credit report to combat identity theft.

Closing Disclosure (CD)

A TRID document that combines the FINAL Truth in Lending (TIL) disclosure and the HUD-1 Settlement Statement, as per 12 CFR §1026.38.

Loan Estimate (LE)

A TRID document that combines the INITIAL Truth in Lending (TIL) disclosure and the RESPA Good Faith Estimate (GFE), as per 12 CFR §1026.37.

Mortgage Servicing Disclosure Statement

A disclosure required under RESPA Section $6$ that informs the borrower whether the lender intends to service the loan or transfer/sell the servicing; it must be provided at application or within $3$ business days.

Total Interest Percentage (TIP)

A disclosure found on page $3$ of the LE and page $5$ of the CD that shows the total interest paid over the life of the loan expressed as a percentage of the loan amount.

ESIGN Act

The Electronic Signatures in Global and National Commerce Act, which governs electronic delivery of disclosures and requires consumer consent and the right to withdraw that consent.

Special Information Booklet

A document required for consumers applying for purchase-money, refinance, investment property, and $1-4$ family transactions, with the specific exception of refinance transactions.

HOEPA Points & Fees Threshold (High Loan Amount)

For loans $\ge \$24,866$, the threshold is $5\%$ of the total loan amount.

HOEPA Points & Fees Threshold (Low Loan Amount)

For loans < $\$24,866$, the threshold is $8\%$ of the total loan amount or $\$1,243$, whichever is LESS.

HPML (Higher-Priced Mortgage Loan)

A loan regulated under Regulation Z where the APR exceeds the Average Prime Offer Rate (APOR) by $1.5$ percentage points for first liens ($2.5$ for jumbo) or $3.5$ percentage points for subordinate liens.

HOEPA / Section 32 (High-Cost Mortgage) Test

A test based on points and fees as a percentage of the loan amount, which is a separate criterion from the APR-spread test used for HPML.

Consumer Financial Protection Bureau (CFPB)

An independent bureau established by the Dodd-Frank Act (Consumer Financial Protection Act of $2010$) housed within the Federal Reserve System.

Regulation G (12 CFR §1007)

The regulation requiring federal registration of Residential Mortgage Loan Originators employed by covered financial institutions such as banks and credit unions.

NMLSR (Nationwide Mortgage Licensing System & Registry)

A registry that manages the licensing process, unique identifiers, and background checks; however, it does NOT have the authority to grant or deny licenses.

Bank Secrecy Act (BSA)

A law requiring non-bank residential mortgage lenders and brokers to develop a written Anti-Money Laundering (AML) Program.

Dodd-Frank Wall Street Reform Act

A law intended to promote the financial stability of the U.S. by improving accountability and transparency in the marketplace.

Established Business Relationship (EBR) - Last Transaction

An exception to the Do-Not-Call Registry allowing an originator to call for up to $18$ months from the date of the person's last transaction with the company.

Established Business Relationship (EBR) - Inquiry

An exception to the Do-Not-Call Registry allowing an originator to call for up to $3$ months from the date of an inquiry made with the company.

Consummation

The legal moment the consumer becomes contractually obligated to the creditor on the loan.

FERA (Fraud Enforcement and Recovery Act of 2009)

Established a statute of limitations of $10$ years for federal prosecution of mortgage fraud against a federally chartered bank.

Financial Privacy Rule (GLB Act)

A rule that makes it illegal and unethical for an originator to share nonpublic personal information, such as the appraised value, with a real estate agent.

CFPB Loan Originator Compensation Rule

A rule prohibiting steering by ensuring compensation does not vary based on loan terms like interest rates, prepayment penalties, or fees.

Appraiser Independence

A standard that prohibits communicating a minimum necessary value for approval or conditioning appraiser pay on a specific value or loan closing.

FHA Maximum Insurable Loan Amount

A calculation determined by multiplying the Appraised Value by $96.5\%$, which is the reciprocal of the $3.5\%$ minimum down payment.

Commission Income Qualification

The requirement that commission income must be received for a minimum of $12$ months and verified using tax returns to be used as qualifying income for conforming loans.

Combined Loan-to-Value (CLTV)

A ratio used during a refinance with an existing second lien, calculated by dividing the combined balance of both loans by the property value.