Uniform State Content (SAFE Act)Question 366 of 400
Why does the SAFE Act require state-licensed MLOs or their employers to maintain a surety bond?
a.To pay the MLO's continuing education costs
b.To provide a source of recovery for consumers and the state if the MLO violates the law or acts fraudulently
c.To fund the borrower's down payment
d.To reimburse the lender for loans that go into default
Explanation
A surety bond provides financial protection: it is a source of recovery for consumers who are harmed and for the state if the MLO violates licensing laws. The required bond amount is typically scaled to loan origination volume. It is not for education costs, down payments, or ordinary loan defaults.
Law Reference: SAFE ActPractice all 400 questions free — no signup required.
Related questions on this topic
- Which of the following is a required element of the criminal background review for a state MLO license applicant?
- Maria was convicted of a felony involving fraud and money laundering six years ago. Under the SAFE Act, her eligibility for a state MLO license is:
- Under the SAFE Act, which factor may a state consider when reviewing an MLO applicant's financial responsibility?
- During what annual window must a state-licensed MLO submit a license renewal request through NMLS?
- A state-licensed MLO takes the same 8-hour CE course twice in the same year to fulfill this year's and next year's requirement. Under the SAFE Act's successive-years rule, this is:
- Under the SAFE Act's definition, a mortgage loan originator is an individual who, for compensation or gain, does which of the following?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against NMLS SAFE Mortgage Loan Originator National Test · How we review