California MLO license disciplinary action

To fulfill the requirements of the Consumer Financial Protection Bureau’s (CFPB’s) Regulation G, the NMLS Federal Registry collects information regarding disciplinary actions covered by the disclosure questions that individual mortgage loan originators (MLOs) are required to complete, and update as necessary, as part of the SAFE Act’s federal registration process.

MLOs who have answered “Yes” to at least one disclosure question, and the institutions that employ them, should read through this information to understand what information is required and what information will be made public.

What are Disciplinary Actions?

Disciplinary Actions are those final, formally judged actions covered by the MU4R’s disclosure questions. MLOs who answer “Yes” to any disclosure question on the Form MU4R are required, as part of the MU4R submission process, to complete the Disciplinary Action section for each “Yes” response. 

Mortgage loan originators who are employed by banks, thrifts, credit unions or other institutions that federally chartered or federally insured are required to disclose information regarding certain final disciplinary actions. These actions can be issued by various authorities, such as criminal courts, civil courts, and regulatory agencies.  The information displayed in this section reflects information the individual provided and attested to in his or her most recent federal registration filing. This information has not necessarily been verified by NMLS or federal regulators.

Why must MLOs provide this information to NMLS?

Information regarding these Disciplinary Actions is required at the direction of the Consumer Financial Protection Bureau’s (CFPB’s) direction. 1

What information must be provided?

MLOs will be required to provide the following information for disciplinary actions that necessitate a “Yes” response to the MU4R disclosure questions:

  • Name of Authority that took the Action being disclosed
  • Date of Action
  • Official Documentation related to the Action (e.g., court order or letter from regulatory authority)
  • Action Types, which include:
         •  Criminal (e.g., verdict in a criminal case)
         •  Regulatory (e.g., action taken by a state or federal regulatory agency)
         •  Civil Judicial (e.g., certain civil court order)
         •  Civil (e.g. certain civil court award or settlement)

The MU4 Detail Report provides institutions with an efficient way to determine which actively registered MLOs currently have “Yes” responses to any Disclosure Question and if they have provided the required Disciplinary Action information:

  • Column AI of the MU4R Detail Report will display a “Y” for any MLO who has answered “Yes” to at least one disclosure question. These MLOs are required to also complete the Disciplinary Action information.
  • Column AJ of the MU4R Detail Report will be populated with a “Y” for any MLO who has completed the Disciplinary Action section. If an MLO has responded “Yes” to a disclosure question but has no Disciplinary Action information, he or she will need to file an updated MU4R with this information as soon as possible.2

It is crucial to give truthful and factually correct answers in response to the questions on NMLS forms or on a license application. Background questions can be vague or difficult to answer. We have the experience and expertise to make sure that required disclosures are made but unneeded information is not provided. Contact us today at (877) 280-9944.

Authority Types 3 include:
     •  Board of Governors of the Federal Reserve
     •  Consumer Financial Protection Bureau
     •  Farm Credit Administration
     •  Federal Deposit Insurance Corporation
     •  National Credit Union Administration
     •  Securities and Exchange Commission
     •  State Regulator
     •  Foreign Financial Regulator
     •  Criminal Court
     •  Civil Court

Additionally, the MLO will have the option to provide an explanation of the disciplinary action, in their own words. This MLO-provided explanation is not required. 4

Will any of this information be made public?

Yes. The following fields will be displayed in NMLS Consumer Access:

  • Action Type (Criminal, Regulatory, Civil Judicial, or Civil Regulatory)
  • Name of Authority that took the Action being disclosed Date of Action
  • Official Documentation related to the Action (e.g., court order or letter from regulatory authority)
  • MLO’s explanation of the action, if the MLO chooses to provide one

Defending Department of Financial Protection and Innovation Lending Licenses

Attorney Lucy McAllister will represent California lenders and related licensees in license applications, investigations, disclosures, denials, citations, desist and refrain orders, accusations, appeals, reinstatement, and related legal matters. The strategy is simple: prevent problems, fight for you if you have been accused, and appeal unfair results. Our focused, experienced, dedicated license and regulatory practice gives you the advantage.

Lucy has experience as a leader in the defense of licensed lenders. Her expertise also encompasses California Finance Lenders, escrow agents, and mortgage loan originator licenses. Her track record includes successful defense of lenders in the face of potential large fines, resolving problems that arise from examinations and audits, and correcting problems with annual reporting and license renewal. Give her a call at (877) 280-9944 today!

1. Please see the CFPB’s Communication on Disciplinary Actions for additional information.
2. See the “Amending MLO Information” section of the Manage MLO Registration Navigation Guide.
3. Authority Type is a description of the legal authority that took or issued the disciplinary action being disclosed.
4. The Disciplinary Action Reference Guide provides a step-by-step explanation for completing this process.