Florida License Law and Regulation (20%)

Question 1

An individual who, directly or indirectly, solicits or offers to solicit a mortgage loan, accepts or offers to accept an application for a mortgage loan, negotiates or offers to negotiate the terms or conditions of a new or existing mortgage loan on behalf of a borrower or lender, processes a mortgage loan application, or negotiates or offers to negotiate the sale of an existing mortgage loan to a non-institutional investor for compensation or gain. An individual cannot act as a loan originator unless he/she is employed by a broker or lender or acting as an independent contractor for a broker or lender. Additionally, loan originators may only work for one mortgage broker at a time.

Answer 1

Loan originator

Question 2

A person conducting loan originator activities through one or more licensed loan originators employed by the mortgage broker or as independent contractors to the mortgage broker.(494.001(21)) Mortgage brokers are required to designate a qualified principal loan originator on their application.

Answer 2

Mortgage broker

Question 3

A person making a mortgage loan or servicing a mortgage loan for others, or, for compensation or gain, directly or indirectly, selling or offering to sell a mortgage loan to a non-institutional investor.

Answer 3

Mortgage lender

Question 4

What is defined as an individual who strictly engages in loan processing tasks which include:
 Receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan
 Communication with the consumer to obtain information necessary for processing or underwriting a loan, to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about loan rates or terms?

Answer 4

Loan Processor

Question 5

A loan processors must file what with the Office?

Answer 5

a “declaration of intent to engage solely in loan processing”

Question 6

Are loan processors required to be licensed like a loan originator?

Answer 6

Yes. Under Florida law, loan processors are required to maintain a loan originator license, although they are not restricted to working for a single broker or lender.

Question 7

A depository institution and subsidiaries that are owned and controlled by a depository institution and regulated by the Board of Governors of the Federal Reserve System are exempt from the licensing provisions.

Answer 7

Federally Controlled Entities

Question 8

Also exempt are depository institutions and subsidiaries regulated by the:(5)

Answer 8

 Comptroller of the Currency
 Director of the Office of Thrift Supervision
 National Credit Union Administration
 Federal Deposit Insurance Corporation
 Farm Credit Administration

Question 9

Additionally, the following agencies and associations are exempt from the statutes:

Answer 9

• Freddie
• Fannie
• Any agency of the federal government; any state, county, or municipal government; or any quasi-governmental agency that acts in such capacity under the specific authority of the laws of any state or the United States.

Question 10

The law exempts attorneys licensed in Florida who negotiate the terms of a mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client.

Answer 10

Licensed Attorneys

Question 11

If a person is involved solely in the extension of credit relating to the purchase of a timeshare plan…

Answer 11

that person is exempt from regulation.

Question 12

The licensing law that applies to loan originators includes a number of exemptions. The following persons are exempt from regulation under 693 part III of the law:

Answer 12

• Person acting on the behalf of the court
• Seller of property (seller financed)
• LO making non-residential loans (commercial) and selling them to institutional investors
• An individual buying a loan as an investment
• An individual selling an existing loan that they made with their own funds

Question 13

The MU1 form requires the business entity that is seeking a license to disclose whether it has:

Answer 13

 Within the past ten years, operated as a mortgage lender or broker that was the subject of a bankruptcy petition
 Ever had a bonding company deny, pay out, or revoke a bond
 Any unsatisfied judgments or liens pending

Question 14

The MU2 form requires control persons, which include principals and executive officers, to disclose whether they have:

Answer 14

 Within the past ten years, filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
 Within the past ten years, exercised control over an organization that has filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
 Ever had a bonding company deny, pay out, or revoke a bond
 Any unsatisfied judgments or liens pending

Question 15

Loan originator applicants are required to submit the MU4 form through the NMLS which requires the applicant to disclose whether he/she has:

Answer 15

 Within the past ten years, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition
 Within the past ten years, exercised control over an organization that has filed a bankruptcy petition or been the subject of an involuntary bankruptcy action
 Ever had a bonding company deny, pay out, or revoke a bond
 Any unsatisfied judgments or liens pending

Question 16

What disclosure require the applicant to disclose under oath whether it or its control affiliate has:
 At any time, been charged or convicted for a felony or pled guilty or nolo contendere (no contest) to a felony
 Within the past ten years, been charged, convicted, pled guilty, or pled nolo contendere to a misdemeanor, committed in any jurisdiction, that involves financial services or financial services related business, or an offense involving breach of trust or fraudulent or dishonest dealing, or money laundering?

Answer 16

Criminal Disclosures

Question 17

What disclosures require the applicant and its control affiliate to disclose under oath whether a regulatory agency has taken any of the following actions against it within the past ten years:
 Found the applicant involved in the making of false statements or omissions
 Found the applicant involved in the violation of financial-services regulations
 Denied, revoked, or suspended a license?

Answer 17

Regulatory Action Disclosures

Question 18

What disclosures require the applicant to disclose under oath whether it has, within the past ten years, been:
 Subject to an injunction in connection with an activity related to providing financial services
 Found to have violated any laws of regulations that relate to financial services
 A party to a settlement agreement, which it entered to resolve an action brought against it for alleged violation of laws and regulations that relate to financial services?

Answer 18

Civil Judicial Disclosures

Question 19

The nonrefundable NMLS processing fees are the same for every state, and they are:

Answer 19

 $100 for mortgage company applications
 $30 for mortgage loan originator applications
 $20 for branch office applications

Question 20

to pay (someone) for something he has done.

Answer 20

Remunerate

Question 21

What is The licensing fees for:
1. residential mortgage lender license

2. residential mortgage broker license
3. mortgage loan originator license

Answer 21

1. $758.25 for a residential mortgage lender license (includes $500 application fee, $100 guaranty fee, $43.25 FBI and state background check fee, $15 credit report fee, and $100 NMLS processing fee)
2. $683.25 for a residential mortgage broker license (includes $425 application fee, $100 guaranty fee, $43.25 FBI and state background check fee, $15 credit report fee, and $100 NMLS processing fee)
3. $332 for a mortgage loan originator license (includes $195 application fee, $20 guaranty fee, $39 federal background check fee, $33 state background check fee, $15 credit report fee and $30 NMLS processing fee)

Question 22

When making the decision to approve or deny an application based on these factors, the Office considers the following information:

Answer 22

 The applicant’s credit history as reflected by a credit report
 Information provided by the applicant
 Responses in the license application
 Any previous licensing history of the applicant with the Office
 Any other information that reflects on character, general fitness or financial responsibility
 Time and context of information and any patterns of behavior

Question 23

The Office may determine that an applicant is not financially responsible if “adverse credit history” appears on his/her financial records. Adverse credit history may include:

Answer 23

 Personal bankruptcy within the previous year
 Bankruptcy within the previous year of any organization where the individual was a control person
 Outstanding tax or other government liens
 Outstanding judgments based on fraud, embezzlement, misrepresentation or deceit
 Open collection accounts or charged off accounts that remain unpaid (with the exception of medical expenses)
 Foreclosures within the previous five years

Question 24

What is the net worth requirement If applicant is not seeking a servicing endorsement?

Answer 24

$63,000

Question 25

What is the net worth requirement If applicant is seeking a servicing endorsement?

Answer 25

$250,000

Question 26

Mortgage lenders are required to continually maintain the net worth requirements to keep their licenses valid. If a mortgage lender fails to satisfy the net worth requirements, the mortgage lender must…

Answer 26

immediately cease taking any new mortgage loan applications

Question 27

How long do mortgage lenders have to satisfy the net worth requirements?

Answer 27

Within 60 days

Question 28

If the licensee makes the Office aware, prior to an examination, that the licensee no longer meets the net worth requirements, the mortgage lender has ___ days within which to satisfy the net worth requirements.

Answer 28

120

Question 29

In making this determination to approve or deny a license, the Office will consider the following information:

Answer 29

 The relevant person’s entire credit history as reflected in the credit report
 Application responses
 Previous licensing history
 Previous regulatory actions
 Other information that reflects upon an applicant’s character, general fitness, or financial responsibility

Question 30

The Commissioner will deny a license if the applicant is in violation of the law or is the subject of a pending felony criminal prosecution that involves:

Answer 30

 Fraud
 Dishonesty
 Breach of trust
 Money laundering
 Any other act of moral turpitude

Question 31

When reviewing the financial responsibility of a loan originator applicant, the Commissioner will look at the applicant’s own financial affairs. The Commissioner may conclude that an applicant has shown disregard for his/her financial affairs if any of the following are found:

Answer 31

 Current outstanding judgments, except relating from medical expenses
 Current tax or other governmental liens
 Foreclosures within the past three years
 Seriously delinquent accounts in the last seven years

Question 32

How longer are licenses valid and when do they expire?

Answer 32

Licenses are valid for one year and expire on December 31st of the year they were issued.

Question 33

Continuing education is ___ hours and include what?

Answer 33

• 8 hours
• 3 hrs Fed Law
• 2 hrs Ethics
• 2 hrs Nontraditional mortgage products

Question 34

30-day Reporting Requirements:

Answer 34

 Any conviction of, or plea of nolo contendere (no contest)
o A crime or administrative violation that involves fraud, dishonest dealing, or any other act of moral turpitude
o Any felony committed by the licensee
o A report must be made to the Office no later than 30 days after the date of conviction, entry of a plea, or final administrative action (494.004(1)(a))
 Any change to the information contained in any initial application form or any amendment to the application (494.004(1)(d))
 Any action in bankruptcy, voluntary or involuntary
o Report must be made no later than 30 days after the action is instituted (494.004(1)(c))

Question 35

Each person licensed as a loan originator, mortgage broker, or mortgage lender which proposes to change its name, form of business organization, or any other information contained in any initial application form or any amendment thereto, must file an amendment through the NMLS no later than ___ days after the effective date of the change.

Answer 35

30 days

Question 36

In order to renew a mortgage broker license, a licensee must submit the following:

Answer 36

 A completed license renewal form
 A renewal fee of $375, plus the $100 for the Trust Fund and $25.25 for further background checks
 Fingerprints for any new control persons who have not previously been screened by the Office
 Authorization for the Office to obtain credit reports on all control persons
 Any additional information requested by the Commissioner such as criminal histories, disciplinary events, and plea agreements

Question 37

How much is the nonrefundable renewal fee for each branch office license through the NMLS at the time of renewing the mortgage broker license?

Answer 37

$225 for each branch

Question 38

All mortgage lender licenses must be renewed annually by _______ ___ of each year. If a license is not renewed, it will expire.

Answer 38

December 31st

Question 39

In order to renew a mortgage lender license, a mortgage lender must submit a completed license renewal application. Additionally, the following must be submitted:

Answer 39

 A nonrefundable renewal fee of $475, and a nonrefundable fee of $100 for the Trust Fund
 Fingerprints for any new control persons who have not been screened
 Proof that the mortgage lender continues to meet the applicable net worth requirement
 Authorization to the registry to obtain an independent credit report on the mortgage lender from a consumer reporting agency, and transmit or provide access to the report to the Office
 Submit any additional information or documentation requested by the Office such as prior disciplinary and criminal history events, or other comparable documents that may provide the Office with the information they need to determine if the lender’s license should be renewed

Question 40

In order to renew a loan originator license, the licensee must:

Answer 40

 Submit a renewal form
 Submit a renewal fee of $195.25, which includes $150 renewal fee, $20 for the mortgage recovery fund and fingerprint processing fees, and $25.25 to cover further costs of criminal background check.
 Complete eight hours of continuing education
 Authorize the registry to obtain a credit report
 Submit any other documentation required by the Office

Question 41

Violations of the rules 494.00313 Loan originator license renewal result in what?

Answer 41

license suspension and a fine of $500

Question 42

Records of loan transactions, discolsures, etc must be maintained for at least how many years after the date of the original entry?

Answer 42

3 years after the date of original entry.

Question 43

The penalty for maintaining books, accounts, and records at a location other than the principal place of business, without written notification to the Office of Financial Regulation, must be the issuance of a “notice of noncompliance” for a first offense How much is the fine?

Answer 43

Will be deemed “noncompliant” and may result in a fine of $500.

Question 44

If books and records are requested by the OFR, and those items are kept at a location other than their principle place of buisiness, how many days must they be provided after written request.

Answer 44

3 business days of written request

Question 45

As with general books and records, mortgage broker files must be maintained for a period of?

Answer 45

three years from the date of original entry

Question 46

The following documents must be retained by a mortgage broker

Answer 46

Mortgage Brokerage Agreement
GFE
Copy of written commitment supplied by the lender
Copy of written lock in agreement supplied by the lender
HUD settlement statement
Notice of Adverse Action of denial document
Other required disclosures
Name of borrower and date of application

Question 47

What is The fund that ensures payment to consumers who suffer a financial loss due to fraud or deception on behalf of a mortgage originator?

Answer 47

Mortgage Guaranty Trust Fund

Question 48

How much is the fee that is required to pay into the Mortgage Guaranty Trust Fund?

1. Individual licensee
2. Mortgage Broker & Lender

Answer 48

1. $20

2. $100

Question 49

When can the Mortgage Guaranty Trust Fund be discontinued?

Answer 49

Collection continues annually until the fund reaches $5 million at which time the collection fee will be discontinued. Following discontinuation, the fee is not re-imposed until the fund’s value drops below $1 million

Question 50

Persons applying for compensation from the trust fund will receive payment equal to the unsatisfied portion of that person’s judgment, or ________, whichever is less.

Answer 50

$50,000

Question 51

Payments for claims are limited in the aggregate to ___________ against any one licensee under the law.

Answer 51

$250,000