During a record-retention audit, a state compliance officer identifies an issue involving temporary authority. Which response is most compliant?
Correct Answer
A) Stop temporary authority when the application is denied or withdrawn
Why this is correct: The governing concept is that temporary authority is contingent on a pending application. The original explanation notes temporary authority has "end events." One of these definitive end events is when the application is denied or withdrawn by the applicant. At that point, the basis for the temporary authority ceases to exist, and the authority must stop immediately to avoid unlicensed activity. Why the other choices are wrong: "Resolve the Temporary Authority Requirements issue with the TRID timing exception that does not fit the facts" is wrong because TRID (TILA-RESPA Integrated Disclosure) timing rules are unrelated to the termination triggers for temporary MLO licensing authority. "Proceed first and document the compliance issue only if an examiner asks" is wrong because this is a reactive and non-compliant approach; the authority must stop as soon as the triggering event happens. "Treat the requirement as optional because the file appears low risk" is wrong because the termination of authority upon denial or withdrawal is a mandatory rule, not a risk-based option. Exam tip: Know the specific events that terminate temporary authority: denial, withdrawal, expiration of the 120-day period, or the start date of a new license.
Why This Is the Correct Answer
The correct response is "Stop temporary authority when the application is denied or withdrawn" because Temporary authority has eligibility limits, start and end events, and a 120-day outer period.
Why the Other Options Are Wrong
Option B: Resolve the Temporary Authority Requirements issue with the TRID timing exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Proceed first and document the compliance issue only if an examiner asks.
Proceed first and document the compliance issue only if an examiner asks. is not correct because it does not apply the rule tested by this file scenario.
Option D: Treat the requirement as optional because the file appears low risk.
Treat the requirement as optional because the file appears low risk. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
temporary authority: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to temporary authority; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
More UST Questions
In a pricing desk question, an audit analyst sees facts tied to Prohibited Misrepresentation. What should the file reflect?
An applicant previously had an MLO license revoked by a state regulator. Under the SAFE Act minimum standards for a new state-licensed MLO license, which statement is correct?
Which statement correctly distinguishes a license suspension from a license revocation?
A state regulator has issued an order suspending an MLO's authority effective immediately. The MLO has filed an appeal, but no stay has been granted. What should the MLO do?
An MLO license application asks whether the applicant has been the subject of a regulatory order. The applicant has a recent consent order that falls within the question. What is the proper response?
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An MLO's license status in NMLS changes to suspended, with no stay or reinstatement shown. What is the immediate operational effect?
Which fact most directly supports disciplinary action against an MLO rather than merely a request for additional application information?
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