During an examination, a state regulator finds that an MLO has been taking loan applications but immediately transferring them to another licensed MLO in a different state for processing. The first MLO claims they are not originating loans. What is the regulatory concern?
Correct Answer
C) The MLO may be taking applications without proper state licensing
Taking loan applications constitutes mortgage loan origination activity that requires proper state licensing. Even if the applications are transferred to another MLO, the initial taking of applications triggers licensing requirements in the state where the activity occurs.
Why This Is the Correct Answer
Taking loan applications constitutes mortgage loan origination activity that requires proper state licensing. Even if the applications are transferred to another MLO, the initial taking of applications triggers licensing requirements in the state where the activity occurs.
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