12 USC 5104 - State license and registration application and issuance

U.S Code last checked for updates: Apr 26, 2024

§ 5104.

State license and registration application and issuance

(a)

Background checks

In connection with an application to any State for licensing and registration as a State-licensed loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including—

(1)

fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and

(2)

personal history and experience, including authorization for the System to obtain—

(A)

an independent credit report obtained from a consumer reporting agency described in section 1681a(p) of title 15; and

(B)

information related to any administrative, civil or criminal findings by any governmental jurisdiction.

(b)

Issuance of license

The minimum standards for licensing and registration as a State-licensed loan originator shall include the following:

(1)

The applicant has never had a loan originator license revoked in any governmental jurisdiction.

(2)

The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court—

(A)

during the 7-year period preceding the date of the application for licensing and registration; or

(B)

at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering.

(3)

The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently within the purposes of this chapter.

(4)

The applicant has completed the pre-licensing education requirement described in subsection (c).

(5)

The applicant has passed a written test that meets the test requirement described in subsection (d).

(6)

The applicant has met either a net worth or surety bond requirement, or paid into a State fund, as required by the State pursuant to section 5107(d)(6) of this title.

(c)

Pre-licensing education of loan originators

(1)

Minimum educational requirements

In order to meet the pre-licensing education requirement referred to in subsection (b)(4), a person shall complete at least 20 hours of education approved in accordance with paragraph (2), which shall include at least—

(A)

3 hours of Federal law and regulations;

(B)

3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and

(C)

2 hours of training related to lending standards for the nontraditional mortgage product marketplace.

(2)

Approved educational courses

(3)

Limitation and standards

(A)

Limitation

(B)

Standards

(d)

(1)

In general

(2)

Qualified test

A written test shall not be treated as a qualified written test for purposes of paragraph (1) unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including—

(A)

ethics;

(B)

Federal law and regulation pertaining to mortgage origination;

(C)

State law and regulation pertaining to mortgage origination;

(D)

Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.

(3)

Minimum competence

(A)

Passing score

(B)

Initial retests

(C)

Subsequent retests

(D)

Retest after lapse of license

(e)

Mortgage call reports

(Pub. L. 110–289, div. A, title V, § 1505, July 30, 2008, 122 Stat. 2814.)

cite as: 12 USC 5104