Mortgage SAFE Act and MLO Licensing 2 — Questions and Answers
Question 1: Under the SAFE Act, which entity maintains the Nationwide Multistate Licensing System (NMLS)?
- The Federal Reserve
- The Conference of State Bank Supervisors (CSBS) (Correct answer)
- The Consumer Financial Protection Bureau (CFPB)
- The Department of Housing and Urban Development (HUD)
Correct answer: The Conference of State Bank Supervisors (CSBS)
The NMLS is maintained by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).
Question 2: An MLO applicant has a felony conviction for financial fraud from 7 years ago. Which statement is correct under SAFE Act standards?
- The applicant is automatically eligible since it was more than 5 years ago
- The applicant is permanently barred from licensure
- The applicant may be denied because fraud-related felonies have no time limit for disqualification (Correct answer)
- The applicant must wait 10 years total before applying
Correct answer: The applicant may be denied because fraud-related felonies have no time limit for disqualification
Under the SAFE Act, felonies involving fraud, dishonesty, breach of trust, or money laundering are permanently disqualifying, with no time limit.
Question 3: What is the minimum number of hours of SAFE Act-mandated pre-licensure education that must cover federal mortgage law and regulations?
- 1 hour
- 2 hours
- 3 hours (Correct answer)
- 4 hours
Correct answer: 3 hours
The SAFE Act requires at least 3 hours of federal mortgage law and regulations as part of the 20-hour pre-licensure education requirement.
Question 4: Which of the following individuals is EXEMPT from SAFE Act MLO licensing requirements?
- A broker who originates loans for multiple lenders
- An employee of a federally chartered bank who takes loan applications (Correct answer)
- An independent contractor who negotiates loan terms
- A person who advertises mortgage services to the public
Correct answer: An employee of a federally chartered bank who takes loan applications
Employees of federally regulated depository institutions must register under the SAFE Act but are exempt from state licensing requirements.
Question 5: Under the SAFE Act, what must an MLO do if they move from one state-licensed company to another?
- File a new NMLS application from scratch
- Submit a sponsorship transfer request through NMLS (Correct answer)
- Retake the SAFE MLO test
- Obtain a temporary license waiver from HUD
Correct answer: Submit a sponsorship transfer request through NMLS
When changing employers, the MLO must submit a transfer of sponsorship through NMLS, and the new employer must approve the sponsorship.
Question 6: The SAFE Act requires state-licensed MLOs to complete how many hours of continuing education annually?
- 4 hours
- 6 hours
- 8 hours (Correct answer)
- 10 hours
Correct answer: 8 hours
State-licensed MLOs must complete at least 8 hours of continuing education annually to maintain their license.
Question 7: Which scenario would trigger a requirement for MLO licensure under the SAFE Act?
- A real estate agent who only refers clients to lenders without discussing loan terms
- A loan processor who only verifies documents submitted by borrowers
- An individual who for compensation helps a borrower negotiate the interest rate on a mortgage (Correct answer)
- A title company employee who coordinates loan closings
Correct answer: An individual who for compensation helps a borrower negotiate the interest rate on a mortgage
Negotiating loan terms for compensation or gain is a core activity that triggers MLO licensing requirements under the SAFE Act.
Mortgage SAFE Act and MLO Licensing 2
Under the SAFE Act, which entity maintains the Nationwide Multistate Licensing System (NMLS)?