Chapter 3 — Exercises

Thirty-four problems. Items marked † have worked solutions in Appendix: Answers to Selected Exercises.

A. Recall

3.1 What does S.A.F.E. stand for, and in what year and under what statute was the Act enacted?

3.2 † List the five federal minimum requirements for a state MLO license.

3.3 Reproduce the 20-hour pre-licensing education breakdown by category.

3.4 † Reproduce the 8-hour continuing education breakdown by category. Then state which single category is the same in both, and how many hours it is.

3.5 How many questions are on the SAFE MLO test, how many are scored, how long do you have, and what score do you need?

3.6 † State both criminal-history bars precisely, including which one has a lookback period and which does not.

3.7 What is a third permanent bar, unrelated to criminal history, that most candidates have never heard of? What is the narrow exception to it?

3.8 What is the renewal window, and what is your status on January 1 if you miss it?

3.9 † Define sponsorship and state what an unsponsored license authorizes.

3.10 What is "non-traditional mortgage lending" in the licensing context? Give two examples.

B. Licensed vs. registered

3.11 † Build the comparison table from memory: for each of pre-licensing education, the SAFE MLO test, continuing education, surety bond, background check, and NMLS unique identifier, state whether a licensed and a registered originator is subject to it.

3.12 You have originated at a national bank for six years with strong production. A wholesale lender offers you a role at a mortgage brokerage starting in three weeks. Describe the problem, its approximate timeline, and what you should have done four years ago.

3.13 † A friend at a credit union says, "I don't need to worry about all that licensing stuff." Write the reply — under 100 words, not condescending — that would actually change their behavior.

3.14 Explain the policy reasoning behind exempting depository employees from testing and education. Then state the strongest objection to it.

3.15 Your employer is a mortgage subsidiary of a state-chartered bank. Are you licensed or registered? Explain how you would find out for certain rather than guessing.

C. Scope of the license

3.16 † State the functional definition of a mortgage loan originator. Then, for each of the following, say whether the person needs an MLO license and why: (a) a processor who emails a borrower asking for a bank statement; (b) a processor who tells a borrower what their payment would be at 6.5%; (c) an underwriter who declines a file; (d) a receptionist who takes a message; (e) a real estate agent, not compensated by the lender, who tells a client "you'll probably qualify for about \$400,000."

3.17 A loan officer licensed in one state takes an application from a borrower sitting in their office, for a property two states away. What is the licensing question, and what is the general rule?

3.18 † Your employer's marketing team posts a first-time homebuyer promotion to your business social media profile, tagging you. What must appear on it, and who is responsible if it does not?

D. The exam

3.19 † Given the approximate content outline weights in §3.5, allocate a 60-hour study plan across the five sections. Show your arithmetic. Then state which two sections you would study first and why.

3.20 A candidate has taken three full practice tests and scored 72, 71, and 74. Diagnose the likely problem and prescribe a two-week plan. Do not recommend "study more."

3.21 † Build the first ten rows of your own numbers sheet, using §3.6's model. At least four rows must come from Chapters 1 and 2 rather than Chapter 3.

3.22 Write five "distinction" pairs of your own — items easily confused on the test — beyond the eight given in §3.6. You may draw on Chapters 1 and 2.

3.23 † A candidate fails the test three times. When may they test again, and what has that delay cost them if they were hired conditionally on licensure within 90 days?

3.24 §3.6 argues you should "read the rationale for every question you get right." Explain the reasoning, and describe how you would tell the difference between knowing an answer and guessing it correctly.

E. Character and fitness

3.25 † A candidate has a discharged Chapter 7 bankruptcy from six years ago, two medical collections that have been paid, and a current unpaid state tax lien of \$4,200 they have not addressed. Assess their likely licensing outcome, item by item, and state what you would advise them to do first.

3.26 A candidate was convicted of felony embezzlement in 1996 and has an otherwise clean record and twenty years of banking experience. What is the outcome, and which rule governs?

3.27 A hiring manager tells a candidate with a prior regulatory action that "it's old, it won't matter." Write what the candidate should do, and explain why the manager's assurance is worth nothing.

3.28 † Explain, in terms a candidate would accept, why a regulator reviews an applicant's own credit report. Address the objection that "it has nothing to do with whether I can do the job."

F. Judgment and writing

3.29 A borrower asks, "How do I know you're legitimate?" Write your answer. You may not use the sentence "I'm licensed."

3.30 † It is December 18. You have eleven files in your pipeline, four scheduled to close in January, and you have completed zero of your eight CE hours. Write, in order, exactly what you do today — and then write the two-sentence policy you adopt for next year.

3.31 A colleague suggests you both take the same CE course you took last year because "it was easy and we already know the material." Respond.

3.32 Draft the three questions from §3.2's On the Phone callout as you would actually ask them in a job interview, plus one more of your own. For each, state what a bad answer would tell you.

G. The Loan File

3.33 † Look up any licensed loan officer on NMLS Consumer Access. Write down every category of information a borrower can see. Then write the two sentences from the chapter's checkpoint — answering "how do I know you're legitimate?" by telling the borrower how to check rather than asserting it.

3.34 In your Appendix C workbook, list every place your NMLS unique identifier would need to appear across the Linden Street file and your solicitation of it — from the social post that might have generated the lead through the closing package. Mark each as required, probably required, or verify with compliance.