A mortgage team asks an audit analyst about temporary authority during a regulator exam preparation. Which answer should guide the file?
Correct Answer
B) Confirm eligibility before originating under temporary authority
Why this is correct: Temporary authority to originate loans is granted under specific eligibility criteria (e.g., employed by a depository, having a valid application in another state). The compliant action is to verify the MLO meets all criteria before allowing them to originate under temporary authority, as originating without eligibility is a violation. Why the other choices are wrong: "Resolve the Temporary Authority Requirements issue with the changed-circumstance exception that does not fit the facts" is wrong because applying an irrelevant exception (like a TILA changed circumstance) does not satisfy the distinct eligibility rules for temporary authority. "Proceed first and document the compliance issue only if an examiner asks" is wrong because it advocates for non-compliance. "Treat the requirement as optional because the file appears low risk" is wrong because eligibility is a mandatory gate, not risk-based. Exam tip: Temporary authority is not automatic—always confirm eligibility first.
Why This Is the Correct Answer
The correct response is "Confirm eligibility before originating under temporary authority" because Temporary authority has eligibility limits, start and end events, and a 120-day outer period.
Why the Other Options Are Wrong
Option A: Resolve the Temporary Authority Requirements issue with the changed-circumstance 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?
Why does NMLS maintain licensing and enforcement information that participating regulators can access?
A regulator issues a final license suspension without giving the MLO notice of the alleged violation or any opportunity to respond, even though applicable law requires both. What issue is presented?
A regulator finds that an MLO charged consumers prohibited fees. Which set of actions is consistent with the enforcement tools contemplated by Regulation H?
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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