Final answer:
A Mortgage Loan Originator (MLO) of a non-depository firm that arranges mortgages for clients must be licensed. MLOs at depository institutions like banks, savings and loans, and credit unions are subject to different regulatory standards and generally are not required to obtain an MLO license.
Step-by-step explanation:
Type of Mortgage Loan Originator (MLO) That Must Be Licensed
The answer to what type of Mortgage Loan Originator (MLO) must be licensed is D. An MLO of a non-depository firm that arranges mortgages for clients. Unlike MLOs at banks, savings and loans, and credit unions, MLOs of non-depository financial institutions, which do not accept deposits like their depository counterparts, are required to be licensed under the SAFE Mortgage Licensing Act of 2008. This legislation was implemented to enhance consumer protection and reduce fraud by ensuring MLOs at these institutions meet minimum standards for licensing and registration.
Banks, credit unions, and savings and loans (also known as thrifts or S&Ls) are financial institutions that accept deposits and make loans. Historically, savings institutions were focused heavily on housing-related loans as mandated by federal law which has since changed. However, these depository institutions are regulated in such a way that their MLOs are typically not subject to the same licensing requirements as non-depository firms. MLOs employed by these depository institutions register but do not get licensed, as they are governed by the comprehensive federal and state banking regulations that manage the institutions themselves.