A state-licensed MLO meets the state-required net-worth standard with verified net worth of $85,000 but holds no surety bond. Under SAFE federal minimum standards, can that state-required net-worth alternative satisfy the financial-security requirement?
Correct Answer
A) Yes: the rule offers 3 routes, and a net worth standard is one of them
A. The state-required net-worth alternative can satisfy this requirement. The federal rule recognizes state-required net worth, bonding, or fund participation rather than requiring a bond in every case. Here the state accepts net worth and the applicant meets its standard. The absence of a separate bond therefore does not defeat this particular requirement. Scope and exceptions: Applicants cannot choose an alternative contrary to state requirements. $85,000 is hypothetical, not a federal threshold. Source: Section 1008.105(f) — https://www.consumerfinance.gov/rules-policy/regulations/1008/105/
Why This Is the Correct Answer
A. The state-required net-worth alternative can satisfy this requirement. The federal rule recognizes state-required net worth, bonding, or fund participation rather than requiring a bond in every case. Here the state accepts net worth and the applicant meets its standard. The absence of a separate bond therefore does not defeat this particular requirement. Scope and exceptions: Applicants cannot choose an alternative contrary to state requirements. $85,000 is hypothetical, not a federal threshold.
Why the Other Options Are Wrong
Option B: No: the license must be denied, since a surety bond is the only route allowed
A bond is not the only federal alternative.
Option C: Yes, but only if the branch manager also gives a personal guarantee
No manager guarantee is specified.
Option D: No, unless the licensee originates fewer than 5 loans in the calendar year
No five-loan exception applies here.
Exam Tip
Follow the state-required financial-security route.
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