Through Regulation G, the Consumer Financial Protection Bureau requires mortgage loan originators to disclose and continue updating disciplinary actions against them. This requirement applies to you if you are an individual or entity that creates home loans and helps borrowers through smooth mortgage application processes. You must provide this information by answering disclosure questions as part of the federal registration process through the SAFE Act. If you or your employer answer 'yes' to any disclosure question in the application, it helps to know how that will affect your future career, reputation, and MLO license.

You can also seek the help of a license attorney to understand your situation and possible outcome and how you can fight any negative consequence of having a discipline issue as a licensed mortgage loan originator.

An Overview of MLO Licenses

Mortgage loan originators, or MLOs, are individuals or entities that play an integral part in the real estate industry. Their primary mandate is to create home loans. They take potential clients through all the processes involved, including providing the information needed before applying for a mortgage, helping with pre-approval, standard application processes, and others until closing. Generally, MLOs help mortgage borrowers enjoy a smooth process from origination to end. This is a very sensitive matter that requires someone with high integrity who understands and adheres to all laws and regulations.

Even with the right skills, you must obtain a license to provide your MLO services legally within California. However, you must demonstrate professionalism and understand all the laws governing your work to maintain your MLO license. A licensed MLO can freely accept, review, and approve mortgage applications from interested real estate investors. They can negotiate loan terms and perform any other service within their license mandates. Here are people who can obtain an MLO license in California:

  • An independent contractor who can process and underwrite home loans.
  • Any person who can work as an MLO for a real estate broker or mortgage lender.
  • An individual who can work as an MLO for a financial service provider or residential mortgage lender.

If you meet the criteria for applying for an MLO license, you must take a pre-licensing course by SAFE and pass the exams. You must also undergo further training by the Department of Financial Protection and Innovation or the Department of Real Estate. You can apply for certification from the Multistate Licensing System and Registry with the right skills. To do that, you fill out and submit Form MU4 to the Department of Financial Protection and Innovation.

Once you obtain an MLO license, it is valid for a particular period, after which you must renew it to continue discharging quality services in the real estate industry. License renewal services are available in November and December. You will be expected to pay a license renewal service, which is usually non-refundable. The licensing body usually gives timelines for when you must renew your license. If your deadline expires, you must reinstate your license through a license reinstatement process.

Disciplinary Actions for MLO License Holders

Licensed MLOs must adhere to the terms and conditions of their professional license. If not, they face disciplinary action by the Department of Financial Protection and Innovation. You can face discipline for various reasons, including the following:

  • Misrepresenting information during the application process.
  • Failing to submit your annual fees.
  • Failing to meet the business volume according to the department’s projections.
  • Violating any laws governing your profession, including the Business and Profession Code.
  • Any unprofessional conduct with a client, colleague, or business associate.

The department investigates these violations before determining how to discipline an MLO license holder. The investigation aims to uncover the nature and details of the violation and its severity. Most disciplinary actions by the department can affect your license as an MLO or reputation. This is because any form of discipline requires you to disclose the violation in the applications for jobs and permits that you make in the future. This could taint your reputation, affecting your efforts to find clients or a job.

When filing an MU4R, a licensed MLO must disclose all the disciplinary actions they have received from the department. A MU4R is a form MLOs submit to the NMLS to register as individuals with an institution. MLOs submit these applications as individuals or as part of an employing institution. The MU4R covers disciplinary actions in the form of disclosure questions, whereby an MLO answers a ‘yes’ or ‘no’ to the questions provided regarding disciplinary actions they have received from the department. This is an integral part of the MU4R submission process, meaning that you must provide true and accurate information to avoid further issues with your licensing body.

Suppose you have been disciplined by the department before because of a single or multiple violations. In that case, you must answer ‘yes’ to one or more questions in the disciplinary action section of the application. This gives the department an idea of the licensed professional you are.

This registration process is critical because, as an MLO, you must be affiliated with a particular institution, like a bank, credit union, thrift, or other federally chartered institutions. If you want to work for such institutions, you must fill out and submit an MU4R form and provide all the information the institution needs about you. Most of these institutions, especially those federally insured or chartered, require you to disclose details of any disciplinary action you have received, whether from your license provider, civil court, criminal court, or any other regulatory agency.

The information the Nationwide Mortgage Licensing Systems and Registry will display after your final submission will reflect the information you provide and attest to in your registration filing. However, NMLS and other federal regulators must verify this information to ensure that it accurately represents your performance record as an MLO.

Reasons to Disclose Disciplinary Actions to NMLS

An MLO must disclose all their disciplinary actions to NMLS as a legal requirement under the SAFE Act. It ensures transparency and accountability in the mortgage industry, allowing regulators to closely monitor possible risks associated with licensing MLOs. Suppose you have a history of violating the standard of operations governing your profession or professional misconduct. In that case, you can lose your license to suspension or revocation if you fail to disclose the disciplinary actions against you. Here are the main reasons why you must provide this information to NMLS:

To Comply With The Law

Compliance is key if you are a professional license holder. According to the SAFE Act, you must report all disciplinary actions regulatory agencies have taken against you as a licensed MLO to NMLS. Failure to comply with this requirement has severe consequences that can affect your license and livelihood.

For an Updated Public Record

As a licensed professional, your service is to the public. The public needs to know everything about you, including your professionalism, competence, and professionalism, to engage your service. NMLS provides information about licensed MLOs through a public database. The information consumers can find about you includes your licensing status, disciplinary actions against you, and general professional conduct. This helps your potential clients and employers with the information they need for adequate decision-making.

For Regulatory Oversight

When all MLOs comply with this requirement and disclose their disciplinary actions to NMLS, regulators in the mortgage industry can quickly identify possible issues with MLOs' conduct and take the necessary steps to protect the public.

It Maintains Your License’s Integrity

Your license is your means to earn a livelihood and something you love. You must do whatever it takes to keep it, including complying with regulatory requirements by NMLS. Remember that failing to disclose your disciplinary actions risks losing your license to revocation or suspension. This will likely affect your ability to earn a living and be part of the mortgage industry.

It Helps With Job Applications

You need a job or clients to continue offering your services in the mortgage industry as a licensed MLO. However, your ability to find work largely depends on your competence and professionalism. Adhering to all legal requirements about your profession demonstrates your professionalism. This includes disclosing your disciplinary actions to NMLS. Some employers and clients will check your background when considering your application. They will likely consider your service based on what they find.

The Information NMLS Needs During Disciplinary Actions Disclosure

It is essential to understand the information you must disclose to NMLS as part of your compliance with the SAFE Act. NMLS makes disclosure very easy by providing questions through a MU4R form, for which you give a ‘yes’ or ‘no’ response to provide the information needed regarding your disciplinary actions. The disclosure questions are designed so that your response will sufficiently offer all the information the registry needs for its public database and industry regulators. Some of the information the disclosure obtains includes the following:

  • The authority that took disciplinary action against you.
  • The reason why you faced disciplinary action.
  • The date the authority took the disciplinary action.
  • You can provide any official documents regarding the disciplinary action, including a letter from the regulatory authority or court order. The documents provide further information regarding the matter
  • The type of disciplinary action you received.

Remember that the authorities that can take disciplinary action against a licensed MLO include the following:

  • Consumer Financial Protection Bureaus.
  • State Regulators.
  • Farm Credit Administrators.
  • The Federal Deposit Insurance Corporation.
  • Securities & Exchange Commission.
  • National Credit Union Administration.
  • Board of Governors for Federal Reserve.
  • Foreign Financial Regulators.
  • Civil Court.
  • Criminal Court.

The types of disciplinary actions you can receive from the above-listed authorities include the following:

  • Criminal action, which starts with a criminal case and ends with a verdict.
  • Regulatory action that a federal or state regulatory agency can take.
  • Civil judicial action issued by a civil court in the form of a court order.
  • A civil action, whereby a civil court settles the matter or awards damages.

Once you disclose the required information, institutions can quickly determine if you have a disciplinary action on your record. Remember that these institutions need this information for effective decision-making.

How This Information Affects Your License

If you hold a professional license, you must demonstrate competence and professionalism to serve the public safely and effectively. This explains why licensing agencies are usually strict when certifying qualified individuals and entities. The Nationwide Multistate Licensing Systems and Registry are particularly more restrictive when issuing MLO licenses to protect the public against unsafe and fraudulent practices. By requiring disclosure by MLOs with disciplinary issues, NMLS ensures that this information is in the public limelight for effective decision-making by institutions, corporations, and individuals working directly with MLOs.

The information you provide through this disclosure is usually made public through a public database maintained by NMLS. NMLS makes the following information about MLOs public:

  • The type of disciplinary action you have received in your career, whether regulatory, criminal, civil, or judicial.
  • The name of the authority that took disciplinary action against you.
  • The date the said authority disciplined you.
  • The kind of documents you have provided to support that information.
  • Your explanation regarding disciplinary action.

Remember that disciplinary action against you means violating a code of conduct or law governing your profession. This will likely affect your reputation, livelihood, and MLO license. For example, you could face challenges renewing or reinstating your license if the severe violation and the disciplinary action require a suspension or revocation. This will end a career you have worked hard to build in the mortgage industry.

Disciplinary action will affect your career and livelihood, including how easily you find clients or work. Since the information is public, anyone who ruins a background check on you will learn about the disciplinary actions you have received in your career. They can make a hiring decision based on their findings. Many MLOs have lost meaningful job opportunities due to such disclosures.

How a License Attorney Can Help You

License attorneys play a critical role in the lives of licensed professionals. After obtaining the needed skills to work as an MLO, you need the assistance of a license attorney to obtain a license. The application process for an MLO license is complex and challenging to navigate on your own. A skilled attorney who understands these processes and requirements will offer you the guidance and support you need for a successful outcome.

If you are under investigation for violating your license requirement or professional code of conduct, a skilled license attorney can help. You need help to defend your actions and protect your license. Remember that some disciplinary actions include the suspension or revocation of your license. Even a minor disciplinary action can affect your career and livelihood in the long run. Working with a skilled license attorney increases your chances of obtaining a favorable outcome.

You need an attorney for guidance when disclosing your disciplinary actions to NMLS. Failure to comply with this requirement can result in severe consequences, including revoking your license. You need an attorney’s help to provide the required information promptly and accurately. Your attorney will also ensure you understand the information NMLS needs and how best to disclose it to protect your reputation and license.

If a disciplinary action profoundly affects your career or license, an attorney can help you fight it. They can use evidence in your favor or introduce mitigating factors in your case. If this does not happen and you lose the case, a skilled attorney can file an appeal. An appeal gives you another chance to present your defense to avoid disciplinary action that can severely affect your livelihood. Your attorney will prepare even better after the appeal to ensure you receive a favorable outcome.

A license attorney also acts as a support system for you during the most challenging period in your career. An administrative process is stressful, and the complex process can cause you so much anxiety. You need the support of someone who understands what you are experiencing and has your best interests at heart.

Find a Competent License Attorney Near Me

An MLO license gives you the mandate to offer safe, professional, and efficient services to real estate investors who need financial assistance to buy homes. Obtaining such a license requires you to demonstrate exceptional skills, experience, and a willingness to abide by all the regulations and laws governing the mortgage industry. If you violate any code of conduct and a regulatory authority, civil, or criminal court takes action against you, you must disclose it in all your subsequent NMLS applications.

The guidance and support of a skilled license attorney are critical in all processes involving your MLO license. We can help you obtain a permit, reinstate or renew your license, or defend your license in case of a violation that threatens it. We can also help you understand more about your MLO license requirements and disciplinary action disclosure at The Legal Guardian. Call us at 866-448-6811 if you or your loved one is an MLO license holder in Long Beach. Let us discuss any administrative or legal issues you have in detail.