Section II: MLO Part A- Federal Law: Licensing and Registration Flashcards
Mortgage Loan Originator (MLO)
- 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
MLO qualifications and responsibilities
- licensed/registered
- prospecting/sales/marketing
- prequalify the applicant
- plan/recommend a loan strategy
- assist borrower in completing the application
- discuss loan pricing option
- lock/float the interest rate
- complete/deliver initial disclosures
- receive/respond to intent to proceed
- gather/review initial documentation provided by application
- transfer file to processing
Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act)
-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)
MLO categories
- Registered MLO
- State Licensed MLO
Registered MLO
originators work for a depository institution
State Licensed MLO
originators work for a non-depository institution
Bureau Authority
- 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
NMLS intend to
- 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)
Purpose of SAFE
- write rules/procedures for licensed persons
- deny/suspend/revoke licenses
- investigate/conduct enforcement actions
- subpoena witnesses/issue orders/order restitutions
Loan Originator
an individual who
- takes a residential mortgage loan application
- offers/negotiates the terms of a residential mortgage loan for comensation
Loan Originators do not include
- 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
Real Estate Brokerage Activity
- 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
administrative or clerical tasks
the receipt, collection, and distribution of information common for the processing or underwriting of a loan
Loan Processor or Underwriter
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
Clerical or support duties
- 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)
Nationwide Multi-state Licensing System and Registry (NMLS)
recording and maintenance of State Licensed and Registered Loan Originator records, as well as other agencies
Nontraditional mortgage product
any mortgage product other than a 30 year fixed rate motgage
Registered MLO
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
Registered Mortgage Loan
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
State Licensed LO
- 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
Unique Identifier (UI)
- permanently identifies a loan originator
- assigned by NMLS
- shall not be used for purposes other than those set forth by the title
Person
a natural person, corporation, company, LLC, partnership, or association
Individual
a natural person
immediate family member
a child, sibling, parent, spouse, grandparent/child, step-parent/child/sibling, adoptive relationships
exemptions from state licensing
- Federally registered MLOs
- on behalf of an immediate family member
- negotiates terms of loans secured by a dwelling that previously served as his or her primary residence
- unless the attorney is being compensated by the lender, broker, or originator
- acts as a loan originator pursuant to official duties as an employee of
- who acts only with respect to work duties associated with the non-profit organization
Application Form
MU1- the company form
MU2- the qualifying individual form
MU3- the branch form
MU4- the individual licensee form
background check
- fingerprints to the FBI
- personal history and experience, including authorization to obtain a credit report
Issuance of License
- not previously had a license revoked
- not been convicted in teh past 7 years
Demonstrate financial responsibility
- 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
Pre-Licensed Education
- Complete 20 hours of NMLS approved education (live classroom, live equivalent [viewing a live class via internet] online instructor led [OIL])
- pass written test
Surety Bond
3 party (insurance company, lender, MLO) like an insurance policy
License renewal
- must renew annually and pay fees
- continue/maintain standards
- satisfy annual continuing education requirements (8 hours)
Mortgage Call Reports (MCR)
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
