Afternoon all, I had a MLO reach out to inform us that they were possibly going to be named in a lawsuit related to an HOA they are a part of, but based on a scenario that is mostly regular HOA stuff, nothing related to their own actions as an MLO or even connected to a covered loan. I've since found the NMLS page that somewhat discusses this, and references a CFPB Letter that identifies some examples, but the statute and reg don't define "disciplinary action." We're trying to determine what this potential lawsuit may mean for reporting this to the NMLS, and any others that may need to be notified, and wanted to see if anyone had any similar experiences to share, or other sources to look into.

So they are being personally sued by their own HOA? That has nothing to do with a disciplinary action from a NMLS standpoint. Either that you you need to give us more details.

The MLO is on the board of the HOA, and the decision the HOA made is being brought into a lawsuit, potentially naming the board of directors of the HOA individually listed in the suit.

Which bullet point at the bottom of page 1 and the top of page 2 would this fall under?

https://fedregistry.nationwidelicen...ciplinary%20Actions%20-%202012-10-18.pdf

None that I can see.

Thanks Randy, I thought the same thing when I read the CFPB letter, though when I asked this question of an industry banking association they indicated there wasn't a definition of "disciplinary action," but that it sounds like this person could (possibly) still be found criminally liable.

Since the details of the HOA dispute overall have nothing to do with any MLO activities, it would make sense to be excluded, but common sense doesn't always prevail in these cases. I was curious if others had had any experiences of similar situations and other guidance I may have missed?

Criminally liable? How did we get to that point? Sounds like a civil suit to me unless there is law enforcement and a prosecuting attorney involved. No different than a neighbor suing me because one of my trees fell on their house.

I'm not sure, but they work with attorneys on staff so I'm hoping there's more information to come.

Bank staff attorneys? There must be more to this story then.

No, I'm just not explaining my pronouns very well. The industry banking association that said if this person is found criminally liable as a part of the HOA board it could meet the definition of "disciplinary action." That industry association has attorneys on staff.

That is fine but they are nuts. Personal lawsuits that are not related to their MLO duties or other financial services activities are not disciplinary actions. Now, if there is a criminal conviction, that would be identified in the background check. You might want to review 1007.13(d):

https://www.bankersonline.com/regulations/12-1007-103