SAFE MLO Exam Prep
SAFE MLO Exam Glossary - 39 Terms
Search the terminology pack for SAFE Mortgage Loan Originator Test. Use these definitions with the study guide and practice questions.
A
- Adverse action notice
- A notice required under ECOA informing an applicant of a credit denial or other adverse action within a specified timeframe.
- Appraised value
- The value of a property as determined by a licensed appraiser for lending purposes.
B
- Bankruptcy filing
- A legal proceeding involving debtor relief that may need to be disclosed in an MLO license application but is not always an automatic bar.
- BSA/AML
- Bank Secrecy Act and Anti-Money Laundering rules requiring financial institutions to detect and report suspicious financial activity.
- Business day
- A defined counting standard in mortgage regulations that determines deadlines for disclosures and rescission periods.
C
- Closed-end mortgage loan
- A mortgage loan with a fixed amount borrowed and scheduled repayment terms, as opposed to open-end credit.
- Continuing education
- Required annual education that licensed MLOs must complete to maintain active licensure.
D
- Discount point
- A prepaid finance charge equal to 1% of the loan amount used to reduce the interest rate on a mortgage.
E
- ECOA
- Equal Credit Opportunity Act; federal law prohibiting discrimination in credit transactions based on protected characteristics.
- Escrow account
- An account maintained by a lender to collect and pay property taxes, insurance, and other related charges on behalf of the borrower.
- Escrow cushion
- The maximum extra amount a lender may require in an escrow account beyond projected taxes and insurance, limited under RESPA to one-sixth of annual escrow payments.
F
- Fair Housing Act
- Federal law prohibiting discrimination in housing-related transactions based on protected classes such as race, color, religion, sex, national origin, familial status, and disability.
- Float-down option
- A mortgage rate-lock feature allowing the borrower to obtain a lower interest rate if market rates decline before closing.
G
- GLBA
- Gramm-Leach-Bliley Act; federal law requiring financial institutions to provide privacy notices and safeguard consumer information.
H
- HMDA
- Home Mortgage Disclosure Act; federal law requiring collection and reporting of mortgage lending data to monitor lending patterns and possible discrimination.
I
- Income fraud
- A form of mortgage fraud involving misrepresentation of a borrower's income on a loan application.
- Initial privacy notice
- A disclosure provided under GLBA at the time a customer relationship is established, explaining information-sharing practices.
L
- Loan application
- The formal submission of borrower financial and personal information used by a lender to evaluate a mortgage request.
- Loan Estimate
- A disclosure required under TRID that provides key loan terms, projected payments, and closing costs to the consumer early in the mortgage process.
- LTV
- Loan-to-value ratio; a lending risk measure comparing the loan amount to the lesser of the property's purchase price or appraised value.
O
- Origination fee
- A fee charged by a lender for processing, underwriting, and originating a mortgage loan, often expressed as a percentage of the loan amount.
P
- Principal dwelling
- The consumer's primary residence, relevant for determining applicability of rescission rights and other mortgage rules.
- Protected class
- A group of people legally protected from discrimination under laws such as ECOA or the Fair Housing Act.
- Public assistance income
- Income derived from government assistance programs; protected from discrimination under ECOA.
R
- Rate lock
- An agreement by a lender to hold a specific mortgage interest rate for a set period during loan processing.
- Redlining
- An illegal discriminatory practice of denying, restricting, or imposing less favorable credit terms in certain neighborhoods, often based on racial or ethnic composition.
- Refinance
- A new loan used to replace an existing mortgage, often to change the interest rate, term, or loan features.
- Regulation Z
- The regulation implementing TILA, governing credit disclosures, advertising rules, and rescission rights.
- RESPA
- Real Estate Settlement Procedures Act; federal law governing mortgage settlement practices, including limits on escrow accounts and disclosure requirements.
- Right of rescission
- A consumer's right under TILA to cancel certain credit transactions secured by a principal dwelling within a specified period.
S
- SAFE MLO
- Secure and Fair Enforcement for Mortgage Licensing mortgage loan originator; an individual licensed or registered to originate residential mortgage loans.
- SAFE MLO National Exam
- The national licensing examination for mortgage loan originators, requiring a minimum passing score set by the licensing authority.
- Structuring
- Breaking cash transactions into smaller amounts to avoid currency reporting requirements, often considered suspicious activity.
- Suspicious activity
- Financial behavior that may indicate money laundering, fraud, or other illegal conduct and may require reporting.
T
- TILA
- Truth in Lending Act; federal law requiring meaningful disclosure of credit terms and providing certain consumer protections.
- TRID
- TILA-RESPA Integrated Disclosure rule requiring standardized mortgage disclosures, including the Loan Estimate and Closing Disclosure.
- Trigger term
- A term in advertising, such as a down payment amount, that requires additional disclosures under Regulation Z.
U
- Underwriting criteria
- The standards and guidelines a lender uses to evaluate a borrower's creditworthiness and eligibility for a loan.
V
- VA funding fee
- A fee charged on most VA loans to help support the VA loan program, with certain borrowers exempt.
About These Definitions
These definitions are loaded from the shared release pack. Use them with the study guide and practice questions to connect vocabulary to exam scenarios.