When is a broker responsible for a violation of an act by a mortgage loan originator (MLO)?

A broker is responsible for a violation of an act by a mortgage loan originator (MLO) primarily when the broker sponsors the MLO. This relationship establishes a framework where the broker has a level of oversight and responsibility regarding the MLO's actions. Sponsorship implies that the broker supports and is involved in the MLO’s activities, and therefore, any misconduct or violations that occur during the course of the MLO’s duties can reflect back on the broker.

In the context of the other options, having a surety bond that covers the MLO does not automatically place the responsibility on the broker for the actions of the MLO; rather, the bond serves as a financial safeguard against potential defaults or violations, but does not shift accountability. Working in the same office building signifies a shared physical location but does not inherently create responsibility for the actions taken by the MLO. Lastly, if the MLO is independently licensed, it indicates that the MLO can operate without a broker's sponsorship, thereby reducing the broker's liability for the MLO’s actions.