Question

Leslie holds a position as a mortgage loan originator with Golden Gate Mortgage Loans, a mortgage company located in Sacramento, California. Golden Gate Mortgage Loans, which is FHA-approved, is in the business of making and servicing residential mortgage loans directly to California borrowers. Recently, Golden Gate has been looking to grow its team to match its expanding business. The company already employs several individuals, who fulfill a number of responsibilities, such as loan processing, underwriting, negotiation of terms and renegotiation of existing loans. Leslie herself has many meetings with customers throughout the day, working with them to talk about their financial standing, the loan products that interest them, their borrowing needs, and the rates and terms that might work for them. She also occasionally fulfills other duties for the company, including performing some administrative tasks and hiring employees.

Thanks to a recent influx of new business, Golden Gate has several positions to fill. One day, Leslie is having lunch with an old friend, Frank, who mentions that he is thinking about changing jobs. He explains to Leslie that he currently works part time doing clerical work for the underwriting department of a bank. He mentions that he has been offered a full-time position at the bank, where his responsibilities would include meeting with clients, accepting applications for mortgage loans, and negotiating loan terms for customers. Hearing that he is interested in this kind of work and would have some background in mortgage lending, Leslie tells him d that her company is looking for new loan originators.   

Leslie explains to Frank that his responsibilities with Golden Gate would be much the same as those he would have at the bank, but he would likely have more opportunities to work closely with the public and help borrowers obtain funding to purchase homes. She adds that some of the requirements for getting set up in the business would be a little different;he would have to take some courses and an exam and have to pass background and credit checks, but he could then get started right away in his new job. Frank tells Leslie that he is very interested, and he does ultimately decide to accept the position.

In the meantime, two more people join the team at Golden Gate Mortgage Loans, and a third person is engaged on a contracted basis. By the time hiring is done, the team at Golden Gate has grown to include:

* Tracy, who collects information needed for processing mortgage loan applications.

* Ben, who contacts consumers to discuss the specific available rates and terms.

* Jenna, who meets with potential borrowers to help them complete mortgage loan applications and discuss potential products.

* Andy and Jan, who communicate with existing customers about renegotiating terms.

* Floyd, who answers phones and takes care of clerical tasks at the office’s front desk.

* Frank, who meets with borrowers, negotiates terms and accepts mortgage loan applications.

* Nancy, who performs loan processing tasks for Golden Gate but bills herself as an independent contractor.

In order to accommodate all the new employees, Golden Gate moves to a bigger location. Leslie provides a written notice to the Department of Business Oversight explaining that Golden Gate Mortgage Loans is moving and stating the new address. She provides this notice three days before the move.

As the end of the year approaches, Leslie reminds her co-workers that they must renew their licenses. Curious about renewal requirements, Frank asks for an explanation of the procedures he must follow. Leslie explains that she and several other members of the Golden Gate team will have to take eight hours of continuing education, including three hours on federal law, two hours on ethics, and two hours on lending standards for nontraditional mortgage products. They will need to file renewal applications by December 31 and pay renewal fees. Once this process is complete, she says, their licenses will be good for another year.

Several months pass, and business for Golden Gate continues to grow. With the goal of offering their services to a larger population of consumers, the company considers opening a branch office. Leslie, who has been recently promoted to a very prominent position within the company, is charged with looking into the requirements for opening a branch office. She offers Jenna the opportunity to move to Los Angeles, where the new office will be located, as one of the first employees to work there. Jenna is excited about the possibility but reluctant to move away from Sacramento. She decides to consider her options and promises to get back to Leslie very soon.

Now that you've reviewed the Case Study: Missteps in the Licensing Process, answer the following questions. Be sure to answer all questions!

1. List the employees of Golden Gate Mortgage Loans who do not need to obtain mortgage loan originator licenses. 


2. Explain what Frank’s job title would be if he had taken the full-time position at the bank. 


Answer 1

Answer 1:

According to the Federal Safe Act, all the employees working in a mortgage company are not mandated to obtain mortgage loan originator licenses. Only those employees, who take residential loan applications, negotiate terms of the loan, advertise or hold him out to take loan applications and independent contractors, who processes loans or acts as an underwriter are required to obtain licenses.

The following employees do not need to obtain mortgage loan originator licenses:

1. Tracy, as she only collects the information needed for processing applications and does not process the loan applications by herself.

2. Ben, as she doesn’t perform any work listed above as mentioned in Federal Safe Act to obtain license.

3. Floyd, as she only performs clerical task at the office’s front desk.

Jenna is required to obtain the loan originator license only because she has been given the opportunity to start the branch office of Golden Gate at Loss Angeles and she is going as one of the very first employees to work there.

Answer 2:

            Frank meets the clients, accepts applications for mortgage loans, and negotiates loan terms for customers. In other words, he performs all the tasks performed by a loan officer. Hence, his job description would be that of a loan office at a bank.