Licensee Qualifications and Application Process

Question 1

What are the reasons a person could not qualify to be a MLO?

Answer 1

• Had a loan originator license revoked in any governmental jurisdiction (unless the revocation is subsequently vacated)
• Been convicted of or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court:
  1. During the seven-year period preceding the date of the application for licensing, or
  2. At any time preceding the date of application, if the felony involved an act of fraud, dishonesty, a breach of trust, or money laundering

Question 2

What are MLO’s required to do once they pass their exams?

Answer 2

• Submit fingerprints for use in the conduct of a background check
• Disclose information related to any civil or criminal proceedings which involved, or which currently involve, the applicant, and
• Authorize the NMLS to obtain the applicant’s credit report

Question 3

What must pre-licensing education include?

Answer 3

• Three hours of federal law and regulations
• Three hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues, and
• Two hours of training on lending standards for the nontraditional mortgage product marketplace

Question 4

What happens if an MLO who is inactive for 5 years?

Answer 4

A formerly-licensed individual who has not held a valid license for five years or more must retake and pass the test again before attaining re-licensure.

Question 5

What happens if an MLO who is inactive for 5 years but works as an MLO?

Answer 5

This five-year timeline will not consider any time that the individual spent working as a registered mortgage loan originator.

Question 6

What must an MLO do in relation to a surety bond?

Answer 6

• Meet a minimum net worth requirement or
• Be covered under a surety bond
• Individual state law may require the applicant to pay into a state fund

Question 7

True or False: The net worth requirement or the amount of the surety bond or state fund payment varies by state.

Answer 7

True, every state is different

Question 8

What are grounds for denying a license?

Answer 8

1. Fails to comply with any of the following requirements:
   - Completion of pre-licensing education
   - Achieving at least a 75% score on the licensing test, or
   - Fulfilling the net worth or surety bond requirement
2. Fails to disclose any material information
3. Fails to demonstrate financial responsibility, character, and general fitness necessary to command the confidence of the community and to warrant a determination that the applicant will operate honestly, fairly, and efficiently when performing loan origination activities. An applicant fails to demonstrate financial responsibility if he or she has:
   - Current outstanding judgments (excluding those solely resulting from medical expenses)
   - Current outstanding tax liens or other government liens and filings, and/or
   - Foreclosures or a pattern of seriously delinquent accounts within the prior three years