Uniform State Content practice questions

Answer: A) Fingerprints for submission to the FBI and other government agencies

The SAFE Act requires MLO applicants to submit fingerprints to the NMLSR for FBI and state criminal history checks. Applicants must also authorize an independent credit report.

• ACorrect. Applicants submit fingerprints to the NMLSR, which sends them to the FBI and other government agencies for a state and national criminal history background check.
• BIncorrect. Applicants do answer disclosure questions, but a self-certification cannot replace the fingerprint-based criminal history check.
• CIncorrect. Tax returns are not part of the SAFE Act criminal background check.
• DIncorrect. A reference letter is not part of the SAFE Act background check, which relies on fingerprints submitted to the FBI.

Answer: A) Suspend or revoke the license and impose a civil money penalty

State regulators can deny, refuse to renew, suspend or revoke MLO licenses. They can also issue cease-and-desist orders, impose civil money penalties and order consumer refunds.

• ACorrect. The state regulator must have authority to deny or refuse to renew licenses, suspend or revoke licenses, issue cease-and-desist orders, impose civil money penalties and order consumer refunds.
• BIncorrect. NMLS is a licensing and registration system, not a regulator. The state that issued the license is the one that suspends or revokes it.
• CIncorrect. Administrative actions such as suspension, revocation and civil money penalties do not depend on a criminal conviction.
• DIncorrect. The state supervisory authority has its own power to revoke the licenses it issues. It does not need the CFPB to act.

Answer: D) Character and fitness

• AIncorrect. This is not a requirement for individual MLOs.
• BIncorrect. A degree is not a SAFE Act requirement.
• CIncorrect. Experience is not a SAFE Act minimum.
• DCorrect. Applicants must show financial responsibility, character and general fitness.

Answer: A) It stays the same, because it permanently identifies that individual loan originator

An MLO license is held by an individual, and the NMLS unique identifier permanently identifies that loan originator. It stays the same when the MLO changes employers and can never be transferred to someone else.

• ACorrect. Regulation H defines the unique identifier as a number that permanently identifies a loan originator. It follows the individual from employer to employer, and NMLS uses it to track their employment history and any disciplinary actions.
• BIncorrect. A new employer does not get a new identifier for the MLO. A new number would break the permanent tracking of the MLO's employment and disciplinary history that the SAFE Act requires.
• CIncorrect. Companies have their own NMLS identifiers, but these do not replace the individual MLO's identifier. The MLO's identifier still identifies that person.
• DIncorrect. A license and its unique identifier are personal to the individual. They cannot be reassigned or transferred to another person.

Answer: C) Any mortgage other than a 30-year fixed-rate loan

• AIncorrect. It's anything other than a 30-year fixed.
• BIncorrect. It's anything other than a 30-year fixed.
• CCorrect. It includes ARMs and interest-only loans.
• DIncorrect. It's anything other than a 30-year fixed.

Answer: A) Notice of the denial and an opportunity for a hearing under the state's administrative procedures

When a state regulator denies an MLO license application, the applicant generally gets notice and an opportunity for a hearing under state administrative procedures. The applicant does not get any interim authority to originate loans.

• ACorrect. License denials are subject to due process. The applicant is notified and may request a hearing to contest the regulator's decision under the state's administrative procedures.
• BIncorrect. Contesting a denial does not grant any authority to originate. An applicant who has been denied may not act as an MLO in that state.
• CIncorrect. An MLO license belongs to the individual, and a company license does not cover individuals. A person without an individual license cannot originate under the employer's license.
• DIncorrect. State licenses are granted or denied by the state regulator. A challenge goes through the state's own hearing process, not to a federal agency that issues the state license.

Answer: C) A salaried call-center employee of a lender who takes phone applications to refinance primary homes and discusses rate and point options with callers

A loan originator takes residential mortgage loan applications and offers or negotiates their terms for compensation or gain, and a salary counts. Regulation H excludes supervised clerical staff, real estate agents not paid by a lender or loan originator, and individuals involved only in timeshare credit.

• AIncorrect. Collecting and distributing information for processing or underwriting is an administrative or clerical task. An individual who only does this work under the supervision of a licensed loan originator is excluded.
• BIncorrect. A licensed real estate agent who performs only real estate brokerage activities is excluded. That changes only if the agent is paid directly or indirectly by a lender, mortgage broker, or other loan originator.
• CCorrect. This employee habitually takes residential mortgage loan applications and offers or negotiates loan terms in a commercial context. The salary counts as compensation, so the employee meets the loan originator definition.
• DIncorrect. Regulation H excludes an individual who is involved only in extensions of credit relating to timeshare plans.

Answer: C) The originator's NMLS unique identifier

The Model State Law requires the NMLS unique identifier to be clearly shown on application forms, solicitations and advertisements, including business cards and websites.

• AIncorrect. Passing the test is a licensing prerequisite, but the Model State Law does not require the test date in advertising.
• BIncorrect. APR disclosure in ads is triggered under Regulation Z only when certain terms are stated. The Model State Law does not require it for every product.
• CCorrect. The Model State Law requires the unique identifier of anyone originating a residential mortgage loan to be clearly shown on application forms, solicitations and advertisements, including business cards and websites.
• DIncorrect. Continuing education is required to renew a license, but completed hours do not have to appear in advertising.

Answer: B) 75%

• AIncorrect. It's 75%.
• BCorrect. It's the minimum passing score.
• CIncorrect. It's 75%.
• DIncorrect. It's 75%.

Answer: B) Clerical or support duties under an MLO's direction

• AIncorrect. That requires a license.
• BCorrect. Employees doing only these tasks usually don't need a license.
• CIncorrect. That requires a license.
• DIncorrect. That's a different activity.