MLO FAQs

These questions and answers constitute informal guidelines only and do not constitute legal advice or rules by DFI. Any interpretations of Chapter 454F are specific to the facts and circumstances in each particular situation. Questions and answers will be updated and supplemented as DFI develops additional guidance.

If additional guidance is required on a unique situation in your company or for yourself, you may send your inquiry via letter or email to:

Division of Financial Institutions
Department of Commerce and Consumer Affairs
P.O. Box 2054
Honolulu, HI 96805

or

dfi@dcca.hawaii.gov


MORTGAGE LOAN ORIGINATOR

 FREQUENTLY ASKED QUESTIONS

These questions and answers constitute informal guidelines only and do not constitute legal advice or rules by DFI.  Any interpretations of Chapter 454F are specific to the facts and circumstances in each particular situation.  Questions and answers will be updated and supplemented as DFI develops additional guidance.  Additional answers can be found using the NMLS Resource Center.

If additional guidance is required on a unique situation in your company or for yourself, you may send your inquiry via letter or email to:

Division of Financial Institutions
Department of Commerce and Consumer Affairs
P.O. Box 2054
Honolulu, HI 96805

OR

dfi-NMLS@dcca.hawaii.gov

 

Who is an MLO?

MLO (Mortgage Loan Originator) means an individual who for compensation or gain or in the expectation of compensation or gain:

(1) Takes a residential mortgage loan application; or

(2) Offers or negotiates terms of a residential mortgage loan.

What does “taking a residential mortgage loan application” mean?

“Taking a residential mortgage loan application” means receipt of a request or of a response to a solicitation of an offer from a borrower, either directly or indirectly, for the purpose of deciding whether or not to extend an offer of a loan to the borrower.  Taking a residential mortgage loan application does not include mere physical handling or transmission of a form.”

Do loan origination activities for manufactured homes trigger the need to be licensed as a MLO? 

Yes.  Chapter 454F requires that persons who take, offer, or negotiate terms of a residential mortgage loan be licensed.  A residential mortgage loan is defined as:

[A]ny loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling as defined in Section 103(v) of the Truth in Lending Act, 15 United States Code Section 1602 or residential real estate.

Regulation Z, which implements the Truth in Lending Act, defines “dwelling” to mean “a residential structure that contains one to four units, whether or not that structure is attached to real property.  The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence.”  The Department of Housing and Urban Development has interpreted “mobile home” to include a manufactured home, as defined in the National Manufactured Housing Construction and Safety Standards Act of 1974 (42 U.S.C. § 5402(6)).

 

SPONSORSHIP

As an individual, conducting my own mortgage broker business, what types of licenses do I need? 

An individual who plans to work as an MLO for his or her own mortgage broker business must obtain the sole proprietor license which includes (1) an individual MLO license and (2) an MLOC license for the business, whether it is a sole proprietorship or some other form of organization, such as a partnership, limited liability company, or a corporation.  This is required because under the NMLS program, every individual MLO must be linked to, or “sponsored” by a company.  This requires that an individual obtain both licenses.  For purposes of NMLS, Forms MU1, MU2, and MU4 will be required.

What happens when a sponsorship withdrawal is requested?

DFI will approve the request for removal of sponsorship.  It is the MLO’s responsibility to find another sponsor.  If another sponsor is not obtained, the alternative is for that MLO to obtain a license as a sole proprietorship MLOC, which will then sponsor his or her MLO license.

Can a MLO be sponsored by more than one MLOC?

No.  The only situation in which DFI may allow an MLO to be sponsored by more than one Mortgage Loan Originator Company (“MLOC”) is if only one of the MLOCs is a Hawaii-licensed MLOC.

Who needs to register with the Nationwide Mortgage Licensing System?

Every MLO, MLOC, and other person in this state that conducts mortgage loan origination activities for residential mortgage loans, unless specifically exempt, shall register with the NMLS.  Upon registration, a person creates a record with the NMLS and obtains a unique identifier.

Some persons are only required to register with the NMLS, and do not need to obtain a license under HRS Chapter 454F, even if they conduct mortgage loan origination activities.  These persons do not require a Chapter 454F license because they are already adequately regulated under another law and therefore do not require further regulation by means of licensure under Chapter 454F.  These persons are either “exempt registered mortgage loan originators” (“exempt registered MLO”) or “exempt registered mortgage loan originator companies” (“exempt registered MLOC”).

 

EXEMPTIONS FROM LICENSING

 Who is exempt from licensure?

(1)  An exempt registered MLO when acting for an insured depository institution, or an institution regulated by the Farm Credit Administration;

(2)  Any individual who offers or negotiates terms of a residential mortgage loan with, or on behalf of, an immediate family member of the individual;

(3)  Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence;

(4)  A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client unless the attorney is compensated by a lender, an MLOC or other MLO or by an agent of a lender, MLOC, or other MLO;

(5)  A person or entity that only performs real estate brokerage activities and is licensed or registered by the State unless the person or entity is compensated by a lender, a mortgage  loan originator company, or other MLO or by an agent of the lender, MLOC or other MLO;

(6)  A person or entity solely involved in extensions of credit relating to timeshare plans, as the term is defined in Section 101(53D) of Title 11, United States Code;

(7)  An exempt registered MLOC as defined by Chapter 454F; or

(8)  An insured depository institution.