Section II: MLO Part A- Federal Law: Licensing and Registration

Question 1

Mortgage Loan Originator (MLO)

Answer 1

• Gathers all info needed to prequalify the borrower and offers loan product strategies to meet the needs of the customer
• The MLO assists the applicants in completing the loan application, provides proper disclosures and collects the initial documentation to being the loan process

Question 2

MLO qualifications and responsibilities

Answer 2

1. licensed/registered
2. prospecting/sales/marketing
3. prequalify the applicant
4. plan/recommend a loan strategy
5. assist borrower in completing the application
6. discuss loan pricing option
7. lock/float the interest rate
8. complete/deliver initial disclosures
9. receive/respond to intent to proceed
10. gather/review initial documentation provided by application
11. transfer file to processing

Question 3

Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)

Answer 3

-regulated by CFPB
-part of the Housing and Economic Recovery Act (HERA)
-address the subprime mortgage crisis but also intended to encourage new levels of oversight and professionalism by requiring states to license on a database
(increase licensing, consumer protection, customer access, oversight)
(decrease regulatory burden, fraud, information)

Question 4

MLO categories

Answer 4

• Registered MLO

- State Licensed MLO

Question 5

Registered MLO

Answer 5

originators work for a depository institution

Question 6

State Licensed MLO

Answer 6

originators work for a non-depository institution

Question 7

Bureau Authority

Answer 7

• If a state fails to meet/adopt standards of SAFE, the bureau has the authority to take over and provide/establish/maintain a system
• If the bureau determines that NMLS is failing to meet Title V, the CFPB will establish/maintain a system

Question 8

NMLS intend to

Answer 8

• Provide a comprehensive licensing and supervisory database
• streamline the licensing process
• reduce the regulatory burden on multi-state operations
• provide increased accountability and tracking of MLOs
• consumer complaints
• enhance consumer protections (to act int he best interest of the consumer) ( provide comprehensive education and examination requirements)

Question 9

Purpose of SAFE

Answer 9

• write rules/procedures for licensed persons
• deny/suspend/revoke licenses
• investigate/conduct enforcement actions
• subpoena witnesses/issue orders/order restitutions

Question 10

Loan Originator

Answer 10

an individual who

• takes a residential mortgage loan application
• offers/negotiates the terms of a residential mortgage loan for comensation

Question 11

Loan Originators do not include

Answer 11

• any individual who performs purely administrative or clerical tasks
• a person that only performs real estate brokerage activities
• a person or entity solely involved in extensions of credit relating to timeshare plans

Question 12

Real Estate Brokerage Activity

Answer 12

• acting as a real estate broker etc.
• bringing together the parties interested in sale
• negotiating on behalf of any party other than in connecting with providing financing

Question 13

administrative or clerical tasks

Answer 13

the receipt, collection, and distribution of information common for the processing or underwriting of a loan

Question 14

Loan Processor or Underwriter

Answer 14

an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction or either

• a state-licensed loan originator
• a registered loan originator

Question 15

Clerical or support duties

Answer 15

• the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan
• communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan (does not include offering/negotiating loan rates or terms, counseling consumers about residential mortgage rates or terms)

Question 16

Nationwide Multi-state Licensing System and Registry (NMLS)

Answer 16

recording and maintenance of State Licensed and Registered Loan Originator records, as well as other agencies

Question 17

Nontraditional mortgage product

Answer 17

any mortgage product other than a 30 year fixed rate motgage

Question 18

Registered MLO

Answer 18

employee of :
-a depository institution
-subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency
-or an institution regulated by the farm credit administration
(and is registered with a unique identifier through NMLS

Question 19

Registered Mortgage Loan

Answer 19

a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling of 1-4 units

Question 20

State Licensed LO

Answer 20

• is a LO
• not an employee of a (depository institution, a subsidiary that is owned/controlled by a depository institution/federal banking agency, or an institution regulated by the Farm Credit Administration)
• and is licensed by a state or by the secretary inter section 1508 and registered as an MLO through NMLS

Question 21

Unique Identifier (UI)

Answer 21

• permanently identifies a loan originator
• assigned by NMLS
• shall not be used for purposes other than those set forth by the title

Question 22

Person

Answer 22

a natural person, corporation, company, LLC, partnership, or association

Question 23

Individual

Answer 23

a natural person

Question 24

immediate family member

Answer 24

a child, sibling, parent, spouse, grandparent/child, step-parent/child/sibling, adoptive relationships

Question 25

exemptions from state licensing

Answer 25

1. Federally registered MLOs
2. on behalf of an immediate family member
3. negotiates terms of loans secured by a dwelling that previously served as his or her primary residence
4. unless the attorney is being compensated by the lender, broker, or originator
5. acts as a loan originator pursuant to official duties as an employee of
6. who acts only with respect to work duties associated with the non-profit organization

Question 26

Application Form

Answer 26

MU1- the company form
MU2- the qualifying individual form
MU3- the branch form
MU4- the individual licensee form

Question 27

background check

Answer 27

• fingerprints to the FBI

- personal history and experience, including authorization to obtain a credit report

Question 28

Issuance of License

Answer 28

• not previously had a license revoked

- not been convicted in teh past 7 years

Question 29

Demonstrate financial responsibility

Answer 29

• current outstanding judgements
• current outstanding tax liens or other gov. liens/filings
• foreclosure within the last 3 years
• patterns of seriously delinquent accounts within the past 3 years

Question 30

Pre-Licensed Education

Answer 30

• Complete 20 hours of NMLS approved education (live classroom, live equivalent [viewing a live class via internet] online instructor led [OIL])
• pass written test

Question 31

Surety Bond

Answer 31

3 party (insurance company, lender, MLO) like an insurance policy

Question 32

License renewal

Answer 32

• must renew annually and pay fees
• continue/maintain standards
• satisfy annual continuing education requirements (8 hours)

Question 33

Mortgage Call Reports (MCR)

Answer 33

submit one to NMLS to provide timely, comprehensive and uniform information concerning the financial condition of licensed mortgage companies, their mortgage loan activities and the production information of their MLO’s