AK MLO common mistakes
AK MLO · Understand the traps and how to avoid them.
Treating Alaska's residential mortgage lending licence as if it were issued and supervised by the federal CFPB, and answering licensing questions with federal agencies instead of the Alaska Division of Banking and Securities.
Candidates study the federal SAFE Act and Regulation Z heavily and then carry federal assumptions into state-law items, because the SAFE Act is administered federally and the state implementing statute is studied less often.
What to do instead
Build a one-page state map: Alaska licence type, the regulator (Division of Banking and Securities, Department of Commerce, Community, and Economic Development), licence term and renewal, and the Alaska statutes/regulations that implement the SAFE Act. Drill it separately from federal content.
Applying federal RESPA Section 8 limits to Alaska-specific state rules on fees, disclosures, or records without checking whether the state imposes an additional or different requirement.
Federal law is taught first and repeated most in prep materials, so candidates default to the federal rule and stop reading the state item once they recognise a familiar concept.
What to do instead
For every state-law item, ask two questions: what does federal law require, and what does Alaska add or change? Practise items that deliberately pair a federal baseline with an Alaska overlay.
Confusing the disclosure timing rules under TRID (Loan Estimate and Closing Disclosure) with the timing rules under RESPA, TILA rescission, or ECOA adverse action notices, and answering with the wrong clock.
Several federal laws use three-day, seven-day, and thirty-day windows, and candidates memorise numbers without anchoring each number to its statute and trigger event.
What to do instead
Make a timing table with columns for statute, document, trigger event, and deadline, including the LE delivery and revised-LE rules, the CD delivery and receipt rules, rescission, and adverse action. Recite it until each deadline is tied to its own trigger.
Mixing up which loans are covered by which federal law, for example applying HMDA reporting to a transaction HMDA does not cover or assuming ECOA applies only to consumer-purpose loans.
Coverage thresholds and purpose tests differ across HMDA, ECOA, TILA, RESPA, and the ATR/QM rules, and candidates learn the laws one at a time without comparing their scope side by side.
What to do instead
Build a coverage matrix: law, loan purpose, occupancy, entity size or threshold, and exclusions. Test yourself by naming covered and excluded scenarios for each law.
Computing the annual percentage rate by treating the note rate as the APR, or by omitting finance charges such as points, mortgage insurance premiums, or certain closing costs from the finance charge.
The APR calculation is a multi-step process, and under time pressure candidates shortcut to the note rate or forget that some fees are finance charges while others are not.
What to do instead
Work practice problems end to end: identify finance charges, add them to the amount financed, then apply the actuarial method. Compare your result against the note rate to see how the gap behaves when fees change.
Misidentifying which fees are tolerance-tested on the Loan Estimate and which category (zero, 10 percent, or unlimited) each fee falls into.
The tolerance categories depend on whether the fee is paid to the creditor, the provider, or a third party, and whether the consumer can shop, which is a distinction candidates blur.
What to do instead
Sort a list of common fees into zero-tolerance, 10 percent cumulative, and no-tolerance buckets, noting the shopping and provider-affiliation reasoning for each. Re-sort a shuffled list until the reasoning is automatic.
Completing a loan application without documenting the borrower's ability to repay using verifiable, third-party records, or relying on stated income for a covered transaction.
Origination scenarios are written to feel routine, and candidates answer as a helpful loan officer would rather than as a compliance officer tracking the ATR/QM documentation requirements.
What to do instead
In every scenario, list the eight underwriting factors and name the specific document that verifies each one. If a scenario lacks verification, treat that as the defect the question is testing.
Failing to recognise a trigger event for a required disclosure, such as a changed circumstance requiring a revised Loan Estimate, or a business-day definition question that changes when a disclosure must be delivered.
Candidates focus on filling out forms correctly and underweight the event-driven nature of disclosure obligations, and the general versus specific business-day definitions are easy to conflate.
What to do instead
Memorise the list of valid changed circumstances and the general versus specific business-day definitions, then practise scenario items that ask only whether a new disclosure is required and by when.
Answering ethics items by choosing the option that best serves the client's financial outcome or the transaction's speed, rather than the option that satisfies the duty of good faith, fair dealing, and full disclosure.
Ethics items are written as plausible business dilemmas, and candidates import a customer-service mindset instead of applying the duty owed to the borrower and the prohibition on steering, coercion, and undisclosed compensation.
What to do instead
For ethics scenarios, identify the duty at issue first (loyalty, disclosure, fair dealing, avoiding conflicts), then eliminate any option that hides information or ties compensation to loan terms. Practise articulating why the tempting option is a violation.
Ignoring red flags in a file, such as altered documents, income inconsistent with the stated occupation, or a borrower who is unfamiliar with the property, and proceeding as if the file were clean.
Candidates read scenarios for the loan terms they are being asked about and skim past the factual inconsistencies that the item is actually testing.
What to do instead
Read each scenario twice: once for the question, once solely to list anomalies. Treat any unexplained inconsistency as the point of the item and connect it to the applicable fraud-reporting or due-diligence obligation.