Under Delaware Regulation 2401, to whom does an MLO surety bond run and for whose benefit?
Correct Answer
D) To the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts
Delaware Regulation 2401 requires the bond to run to the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts, omissions, defaults, fraud, or misrepresentation.
Why This Is the Correct Answer
Delaware Regulation 2401 requires the bond to run to the State for the benefit of the Office of the State Bank Commissioner and consumers injured by covered wrongful acts, omissions, defaults, fraud, or misrepresentation.
Why the Other Options Are Wrong
Option A: Only to the MLO’s employer for payroll losses
The Delaware bond is not solely an employer payroll-loss bond.
Option B: Only to third-party service providers and business creditors
The regulation excludes business creditors, third-party service providers, agents, and employees from the compensation category described.
Option C: Only to the lender funding the loan
The bond does not run only to the funding lender.
Memory Technique
DE-C013 -> Delaware-surety-bond
Exam Tip
The Delaware MLO bond protects the Office and injured consumers, not ordinary business creditors.
Common Mistakes to Avoid
- -Importing another state requirement into Delaware
- -Confusing NMLS baseline requirements with Delaware-specific rules
- -Treating operational assumptions as legal authority
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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