When an MLO starts an application and leaves employment, and the lender reassigns the loan to a new MLO, what should the new MLO do?

When an MLO starts an application and leaves employment, and the lender reassigns the loan to a new MLO, what should the new MLO do?

• A. verify the information is correct by telephone
• B. verify the information via email
• C. start a new application
• D. continue with the old application

Answer: (C)

When the loan file is reassigned to a different MLO, the new MLO must take formal responsibility for the file by starting a new application. This creates a clean, auditable record under the new MLO’s license and ensures all disclosures, borrower consents, and verifications are issued and tracked correctly under the current originator. Verifying information by phone or email doesn’t establish a new, properly controlled file or transfer responsibility, and continuing with the old application would inappropriately keep the file under the previous MLO. Starting a new application guarantees the borrower’s information is re-validated, updated disclosures are issued if needed, and the new MLO can proceed with the loan under the correct regulatory and licensing framework.

When the loan file is reassigned to a different MLO, the new MLO must take formal responsibility for the file by starting a new application. This creates a clean, auditable record under the new MLO’s license and ensures all disclosures, borrower consents, and verifications are issued and tracked correctly under the current originator. Verifying information by phone or email doesn’t establish a new, properly controlled file or transfer responsibility, and continuing with the old application would inappropriately keep the file under the previous MLO. Starting a new application guarantees the borrower’s information is re-validated, updated disclosures are issued if needed, and the new MLO can proceed with the loan under the correct regulatory and licensing framework.