MLO Exam Flashcards — NMLS Study Cards

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For covered settlement services, Section 8 prohibits referral kickbacks and splitting charges except for services actually performed. Permitted payments and exceptions must be distinguished from prohibited referral compensation.

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3 business days. The application is triggered when the lender receives 6 data points: borrower name, income, SSN, property address, estimated property value, and loan amount.

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Conventional loans above 80% LTV often require PMI, depending on the program. For covered borrower-paid PMI, cancellation may be requested at 80% of original value subject to conditions; automatic termination generally uses the scheduled 78% date if current. FHA mortgage insurance and other exceptions follow different rules.

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Current General QM under §1026.43(e)(2) uses price-based criteria and other product and underwriting requirements, not a universal 43% DTI ceiling. The creditor must consider and verify income/assets and debts and consider DTI or residual income. Historical 43% and temporary GSE QM shortcuts are not a current blanket approval rule; program and lender criteria remain separate.

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1) Borrower name, 2) Income, 3) Social Security Number, 4) Property address, 5) Estimated property value, 6) Loan amount sought.

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For covered transactions secured by a principal dwelling, rescission generally runs until midnight of the third business day after the latest of consummation, delivery of material disclosures or delivery of the rescission notice. Purchase-money residential mortgages are exempt; some same-creditor refinancings are also exempt except for new advances. Check §1026.23 for scope and exceptions.

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A straw-buyer fraud scheme uses a nominal borrower to conceal the true borrower, ownership or material transaction facts from the lender. A disclosed, legitimate agency or co-borrowing arrangement is not automatically fraud.

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Unfair, deceptive, or abusive lending practices that take advantage of borrowers. Signs include: excessive fees, loan flipping, equity stripping, balloon payments without disclosure, and steering to higher-cost products.

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NMLS assigns an identifier to each company, branch and individual record. It supports tracking across states and over time. Display duties depend on the applicable document, federal rule and state requirements; do not assume one rule covers every document.

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20 hours minimum: 3 hours federal law + 3 hours ethics + 2 hours non-traditional lending + 12 hours electives. Some states require additional state-specific hours.