West Virginia Mortgage Law Practice Test

Which of the following is not considered a prohibited act under West Virginia's SAFE Mortgage Licensing Act?

1. Failing to maintain accurate mortgage loan files

2. Paying a licensing fee prior to licensure

3. Conducting business with an expired license

4. Defrauding a borrower

The correct answer is: Failing to maintain accurate mortgage loan files

The statement that failing to maintain accurate mortgage loan files is not considered a prohibited act under West Virginia's SAFE Mortgage Licensing Act is accurate because the act primarily focuses on the licensing requirements and standards for mortgage loan originators, rather than the specific minutiae regarding file maintenance. While maintaining accurate loan files is critical for compliance and operational integrity, the SAFE Act does not explicitly categorize this as a prohibited activity. On the other hand, conducting business with an expired license or defrauding a borrower are explicitly prohibited acts since they directly undermine the integrity of the mortgage industry and violate the legal standards set forth in the SAFE Act. Similarly, paying a licensing fee before obtaining the proper licensure would be seen as an improper action, as all licensing requirements must be fulfilled before engaging in any relevant financial activities. The distinction lies in the regulatory focus of the SAFE Act, which prioritizes active compliance with licensing and ethical standards over administrative record-keeping practices.