Concepts Definitions
nnnn• Negative Amortization: An increase in a loan’s outstanding balance because the periodic payments are less than the interest due, causing the principal amount to grow.
nnnn• Truth-in-Lending Act (TILA) / Regulation Z: A federal law that requires lenders to fully and properly disclose all financial contract items in advertising and loan documents, ensuring consumers receive clear and non-misleading information.
nnnn• Annual Percentage Rate (APR): The total cost of credit expressed as an annual rate, including the interest rate and all other loan fees and charges. TILA requires its clear disclosure in advertisements.
nnnn• Blind Ad: An advertisement placed by a real estate licensee that does not clearly identify the individual or their professional status as a licensed agent or broker, which is generally prohibited.
nnnn• Qualified Mortgage (QM): A category of mortgage loans designed with specific criteria, generally prohibiting risky features like negative amortization, to ensure a borrower’s ability to repay.
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