Under the California Residential Mortgage Lending Act, which of the following activities requires a mortgage loan originator to be licensed through the DFPI?
Correct Answer
D) Offering or negotiating terms of a residential mortgage loan for a licensed mortgage company
Under CRMLA, offering or negotiating mortgage loan terms for a licensed mortgage company requires MLO licensing. Employees of depository institutions are generally exempt from state licensing requirements.
Why This Is the Correct Answer
Under CRMLA, offering or negotiating mortgage loan terms for a licensed mortgage company requires MLO licensing. Employees of depository institutions are generally exempt from state licensing requirements.
Why the Other Options Are Wrong
Option A: Taking a residential mortgage loan application for a depository institution
Depository institutions are federally regulated, so their employees are exempt from state MLO licensing requirements. Taking applications for a bank, credit union, or thrift doesn't require state licensing.
Option B: Underwriting loans for a federally chartered bank
Federally chartered banks fall under OCC regulation. Their employees performing underwriting functions are exempt from state licensing requirements due to federal oversight and preemption principles.
Option C: Processing loan documents for a credit union
Credit unions are federally chartered depository institutions regulated by NCUA. Their employees, including loan processors, are exempt from state MLO licensing requirements under federal preemption.
Memory Technique
CA -> ca-crmla-lenders-servicers-bonds-net-worth-servicing
Exam Tip
CRMLA questions usually turn on lender versus servicer authority, branch authority, $250,000 net worth, surety bond coverage, servicing duties, DFPI oversight, and exemptions for regulated depository institutions.
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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