When an MLO changes employers in California, which of the following is TRUE regarding their license?
Correct Answer
A) The new sponsoring employer must file a sponsorship request through the NMLS, and the MLO cannot originate loans until the transfer is approved
When an MLO changes employers, the new sponsoring company must file a sponsorship request through the NMLS. The MLO cannot originate loans for the new employer until the sponsorship transfer is completed and approved by the DFPI.
Why This Is the Correct Answer
When an MLO changes employers, the new sponsoring company must file a sponsorship request through the NMLS. The MLO cannot originate loans for the new employer until the sponsorship transfer is completed and approved by the DFPI.
Why the Other Options Are Wrong
Option B: The MLO's license transfers automatically to the new employer with no action required
Licenses do not transfer automatically; a new sponsorship request must be filed and approved through the NMLS process.
Option C: The MLO must obtain a completely new license and retake the licensing exam
The MLO retains their individual license when changing employers; they do not need a new license or to retake the exam.
Option D: The MLO has 90 days to notify the NMLS of the change and can continue originating during that period
There is no 90-day grace period; the MLO cannot originate loans at the new employer until the sponsorship transfer is completed and approved.
Memory Technique
CA -> ca-dfpi-dre-MLO-licensing-education-renewal
Exam Tip
California questions often require separating DFPI and DRE authority, current NMLS CA-DFPI and CA-DRE education tables, annual renewal, DRE endorsement timing, and the national SAFE test with UST.
Common Mistakes to Avoid
- -Using a national baseline answer when California has agency-specific DFPI or DRE requirements
- -Confusing CFL, CRMLA, covered-loan, usury, servicing, and DRE endorsement rules
- -Relying on legacy California state-exam or education assumptions instead of current NMLS source pages
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