Mortgage Loan Originator Licensing Quiz

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Questions and Answers

What action must a company take before initiating a sponsorship for an individual mortgage loan originator?

Conduct criminal background checks

Establish a company relationship (correct)

Request state background checks

Obtain NMLS approval

Which entity must approve the sponsorship between a company and a mortgage loan originator?

NMLS regulator (correct)

The state housing authority

The company's board of directors

The individual mortgage loan originator

What must happen if an individual mortgage loan originator loses their sponsorship?

They can still maintain an 'approved' status

They will lose their 'approved' status (correct)

They automatically receive a state license

They must reapply for a sponsorship as soon as possible

What is the minimum passing score on the National Test for mortgage loan originators?

75% Signup and view all the answers

What is included in the 20 hours of pre-licensing education for mortgage loan originators?

Federal law and regulation Signup and view all the answers

Who conducts the criminal background checks for mortgage loan originators?

Federal Bureau of Investigation (FBI) Signup and view all the answers

How long do individuals have to submit their fingerprints after paying for a criminal background check?

180 days Signup and view all the answers

What is the role of the sponsorship in the licensing of a mortgage loan originator?

To supervise the individual's licensed activities Signup and view all the answers

What percentage of the Uniform State Test is dedicated to mortgage loan origination activities?

27% Signup and view all the answers

How long must an applicant wait before retaking the UST after failing it three times?

6 months Signup and view all the answers

Which of the following is NOT a requirement for someone to obtain a Mortgage Loan Originator License under the SAFE Act?

Must have no foreclosures within the past 5 years Signup and view all the answers

What is the primary purpose of the Temporary Authority to Operate under the SAFE Act?

To allow MLOs to continue operating while their application is processed Signup and view all the answers

What action is required if an applicant does not receive a passing score on the UST?

They can take the test two more times after 30-day waiting periods Signup and view all the answers

Under what condition does Temporary Authority end within 120 days after application submission?

If the application is shown as incomplete Signup and view all the answers

Which of the following is a condition that disqualifies an individual from obtaining a Mortgage Loan Originator License?

Being the subject of a pending criminal investigation Signup and view all the answers

What are states allowed to enforce that may be more stringent than the SAFE Act requirements?

Felony disqualification criteria Signup and view all the answers

What percentage of the Uniform State Test pertains to ethics?

18% Signup and view all the answers

What must an MLO provide for verification of financial responsibility?

Surety bond or state recovery fund payment Signup and view all the answers

Study Notes

License Sponsorship

Licensed mortgage loan originators (MLOs) require sponsorship by a company holding a state license.
Company sponsorship initiates with a company relationship.
Sponsorships are created when a company requests sponsorship for an individual MLO.
Sponsorships are approved by licensing authorities, requiring employer supervision of the MLO's activities.
One company can sponsor multiple MLO licenses.
Sponsorships can be terminated by either the company or the individual.
MLOs must have a sponsor for "approved" license status.

Individual Licensing Qualifications

Each state has licensing requirements for MLOs.
Applicants must undergo criminal background checks (FBI conducted) through NMLS.
Fingerprint submissions are due within 180 days of background check payment.
Applicants must provide personal history, employment, and education details.
Applicants must complete 20 hours of pre-licensing education including federal law & regulations, ethics, nontraditional mortgage products, and electives.
Approved courses report credits to NMLS within 7 calendar days.
A 75% score on the National Test (UST) is required.
The UST covers federal mortgage laws, general mortgage knowledge, mortgage loan origination, and ethics.
Applicants have 180 minutes to complete the exam.
Applicants can take the exam a maximum of three times with 30-day breaks between failures.
A 6-month waiting period follows the third failed attempt.
Applicants must demonstrate financial responsibility (e.g., coverage/bond or recovery fund contributions).
Credit reports are required to verify no outstanding judgments, tax liens, foreclosures within the past 3 years, or a pattern of delinquent accounts.
Applicants must provide explanations for administrative, civil, or criminal issues.
No previous MLO license revocations or felony convictions (within seven years of application or ever if related to financial services).

Temporary Licensing to Originate

The SAFE Act added Temporary Authority to Operate to streamline processes for MLOs changing jobs or seeking additional licenses.
Federally-registered MLOs changing employers can continue operations during license application process.
State-licensed MLOs can operate in new or additional jurisdictions while license applications are pending.
Temporary Authority is granted automatically during license application submission on NMLS.
Applications that appear incomplete on NMLS end the temporary authority after 120 days.
Temporary authority ends when the state approves, denies, or issues a notice of intent to deny the application.
To be eligible for temporary authority, an MLO must meet specific employment, registration, and licensing requirements (within one year and 30 days of the application).
Past license denials, revocations, or suspensions, cease-and-desist orders, or crimes preventing licensing are ineligible.

License Denial

State licensing authorities deny licenses based on SAFE Act violations.
Pending criminal investigations, convictions related to financial crimes, or failure to demonstrate trustworthy financial practices are grounds for denial.

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Description

Test your knowledge on the licensing requirements for mortgage loan originators (MLOs) and their sponsorship processes. This quiz covers individual qualifications, background checks, and the importance of company sponsorship in various states.