An operations lead compares the file facts with Temporary Authority Termination during a new-hire scenario. Which conclusion is accurate?

Correct Answer

D) Confirm eligibility before originating under temporary authority

Temporary authority allows a mortgage loan originator (MLO) to originate loans for a limited time while a state license application is pending, but it is not automatic. It has specific eligibility requirements (e.g., being licensed in another state, having a clean record), a defined start event (e.g., employment with a licensed company), and a strict 120-day maximum duration. The core compliance principle is that an MLO must verify they meet all conditions before acting under this authority to avoid unlicensed activity. Why this is correct: "Confirm eligibility before originating under temporary authority" is correct because it reflects the mandatory, proactive step of ensuring all legal prerequisites for temporary authority are satisfied before any loan origination activity begins. This aligns with the original explanation's emphasis on eligibility limits and the structured nature of the temporary authority period. Why the other choices are wrong: "Use prior experience as a substitute for the required rule" is wrong because prior experience does not override or substitute for specific regulatory requirements governing temporary authority. "Proceed first and document the compliance issue only if an examiner asks" is wrong because it advocates for non-compliant action (originating without confirmed eligibility) and reactive documentation, which violates the requirement to establish eligibility upfront. "Use prior secondary-market delivery approval as a substitute for the current Temporary Authority Termination requirement" is wrong because secondary-market delivery approval is a separate process related to loan saleability and cannot substitute for the specific eligibility and timing rules of temporary authority. Exam tip: Remember that temporary authority is a conditional privilege, not a right. Always think: "Eligibility first, originate second."