An organization is hiring an individual loan originator who is neither required to be state licensed nor state licensed, and must apply section 1026.36(f)(3). He has a 2011 wire-fraud felony conviction that has not been pardoned or expunged. No applicable regulatory consent-to-employ exception exists. Does being more than seven years old remove this conviction-based disqualification?
Correct Answer
A) Barred: a fraud felony disqualifies at any time, past the 7 years
A. Age alone does not remove the disqualification for this fraud felony. The ordinary felony lookback is seven years. Fraud, dishonesty, breach-of-trust and money-laundering felonies instead have an unlimited lookback under this provision. Scope and exceptions: The regulation recognizes pardons, expungements and specified regulator consent to employ. These are expressly excluded here. This question addresses the specified Regulation Z employee standard, not every occupational license or employment restriction. Source: Section 1026.36(f)(3), (f)(3)(ii)(A) — https://www.consumerfinance.gov/rules-policy/regulations/1026/36/
Why This Is the Correct Answer
A. Age alone does not remove the disqualification for this fraud felony. The ordinary felony lookback is seven years. Fraud, dishonesty, breach-of-trust and money-laundering felonies instead have an unlimited lookback under this provision. Scope and exceptions: The regulation recognizes pardons, expungements and specified regulator consent to employ. These are expressly excluded here. This question addresses the specified Regulation Z employee standard, not every occupational license or employment restriction.
Why the Other Options Are Wrong
Option B: He is barred for 10 years from the date of the 2011 conviction
There is no ten-year period in this standard.
Option C: He may originate: the conviction sits outside the 7-year lookback
It incorrectly applies the ordinary lookback to fraud.
Option D: He may originate once the organization documents its own assessment
An internal assessment cannot override this conviction rule.
Exam Tip
Check coverage, offense category and statutory exceptions before applying a lookback.
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