I have recently been notified by an MLO that they are considering bankruptcy. Will the new rules under 1026.36 prohibit them from being a MLO because they have not demonstrated financial responsibility?

I don't think the mere fact that the MLO is filing bankruptcy would disqualify them. I would look to the reason for the bankruptcy. Is it due to divorce, serious medical bills, etc, or is it due to living beyond one's means? The first 2 aren't really an indicator of irresponsible finances, but the third is.

I don't think the new requirements cover "grandfathered" MLOs, but new hires and ones changing their position within the bank to become an MLO after the effective date.

Original anon here. I thought the same until I read this:

1026.36(f)(3)(i) and for any individual regardless of when hired who, based on reliable information known to the loan originator organization, likely does not meet the standards under § 1026.36(f)(3)(ii), before the individual acts as a loan originator in a consumer credit transaction secured by a dwelling:

A question like this I would pose to the proper regulatory body...in writing...with as much specificty as possible...i'm sure by now everyone konws of the BofA 40+ year employees let go for minor infractions in their youth...too many variables with too little historical precedence to know how to address it

Any updates anyone's seen in this realm? I just noticed that we did a new loan for a sketchy MLO of ours, and the credit report indicates he filed bankruptcy in November of last year, shortly after we hired him on. Definitely a "lives beyond his means" case.

Since two VPs were involved in approving the loan, two VPs saw the credit report, and thus should have seen the recent bankruptcy. Did anyone consider this for NMLS purposes? Definitely not, until today

This guy has been caught outright lying in files, section 8 issues, and several other sheisty things. For the life of me, I can't see why we keep him employed, much less lend to him! But hey, at least his score is up in the 500s now, and not down in the 300s as he was 3-4 years ago when he was just a customer of ours. Clearly turning a new leaf (he's just a year into his employment here)

how can you go from 300s to 500s when you filed for bankruptcy?

Real question.

Really great question. In 14 months he's gone up 127 points, with the bankruptcy happening smack in the middle of that time frame. I'm sure I might find some reasons if I dug in, but I really don't want to waste too much of my life on him