A Tennessee company plans to act as a mortgage lender, broker, or servicer. What must be true first?
Correct Answer
C) The person must obtain the required Tennessee license before acting as a lender, broker, or servicer.
Tennessee law provides that no person may act as a mortgage lender, mortgage loan broker, or mortgage loan servicer in Tennessee without first obtaining a license under the Tennessee Residential Lending, Brokerage and Servicing Act.
Why This Is the Correct Answer
The correct response is "The person must obtain the required Tennessee license before acting as a lender, broker, or servicer." because Tennessee law provides that no person may act as a mortgage lender, mortgage loan broker, or mortgage loan servicer in Tennessee without first obtaining a license under the Tennessee Residential Lending, Brokerage and Servicing Act.
Why the Other Options Are Wrong
Option A: The person may operate first and apply for the license at annual renewal.
The person may operate first and apply for the license at annual renewal. is not correct because it does not match the state-specific rule tested by the question.
Option B: Licensing is required only if the company advertises directly to consumers.
Licensing is required only if the company advertises directly to consumers. is not correct because it does not match the state-specific rule tested by the question.
Option D: A federal registration alone substitutes for the Tennessee company license.
A federal registration alone substitutes for the Tennessee company license. is not correct because it does not match the state-specific rule tested by the question.
Memory Technique
State rule questions: identify the state, isolate the condition, then eliminate answers that overgeneralize the rule.
Exam Tip
On state-law items, look for the answer that applies the state-specific condition instead of a broad licensing shortcut.
Common Mistakes to Avoid
- -Choosing an answer that sounds generally compliant but omits the state-specific condition
- -Treating experience, company licensing, or borrower consent as a substitute for the state rule
- -Missing limiting words such as only, generally, eligible, or statutory
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