Federal and state law and regulation
Federal and state law and regulation
This domain tests the statutory framework an MLO must apply before, during, and after origination: SAFE Act licensing, TILA/RESPA disclosure timing, ECOA/HMDA, and Massachusetts-specific rules under M.G.L. c. 255F, 209 CMR 41.00, and the Home Loan Protection Act (209 CMR 56.00).
Licensing and supervision
Massachusetts MLOs are licensed through NMLS and supervised by the Division of Banks. The SAFE-compliant path includes pre-licensure education, testing, criminal background and credit review, and annual continuing education. An MLO must be employed by a licensed mortgage broker or lender and must use the NMLS unique identifier on required loan documents. License status, employment, and CE are renewed annually; operating with an expired or inactive license is a violation even if the loan closes elsewhere.
Massachusetts overlay
The HLPA applies to high-cost home mortgage loans and adds duties beyond federal law: reasonable ability to pay, net tangible benefit for refinances, and restrictions on balloon payments, negative amortization, and prepayment penalties. A loan can be federal-compliant and still violate 209 CMR 56.00.
Federal timing rules
Give a Loan Estimate within three business days after application and no later than seven business days before consummation. Give the Closing Disclosure at least three business days before consummation. For a refinance or HELOC, the borrower may rescind for three business days after consummation; a purchase-money loan has no rescission.
Worked example
A borrower submits a complete application Monday for a refinance. The MLO waits until Thursday to send the Loan Estimate. Counting business days from Tuesday, Thursday is the third business day, so delivery is timely-but only if the LE is also received no later than seven business days before consummation. If the MLO instead mails it Thursday and consummation is the following Wednesday, the seven-business-day rule may fail; the file needs a new closing date or re-disclosure.
Traps
Do not use the specific business-day definition for LE delivery; it applies to the CD and rescission. Do not assume a federal QM safe harbor satisfies Massachusetts HLPA. Do not let a loan officer originate before the license is active or after employment ends.