Mortgage Loan Originator (MLO) Licensing Practice Test 2026 – Your All-in-One Guide to Exam Success!

Loan originator organizations are required to retain compensation records for a duration of three years. This requirement stems from regulations that aim to ensure transparency and compliance in the lending process. Keeping records for this amount of time allows for proper audit trails and ensures that organizations can provide documentation if needed for regulatory reviews, disputes, or investigations.

Maintaining records for three years also aligns with federal regulations, such as the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA), which help protect consumers by holding lenders accountable for their practices. This retention period enables the review of loan transactions to confirm that all compensation-related practices are compliant with the law.

Shorter retention periods, such as those lasting one or two years, would not provide adequate time for review and accountability, while a longer five-year retention might create unnecessary burdens for organizations that must manage and document their records efficiently. Overall, three years strikes a balanced approach to ensure compliance while not overburdening organizations with excessive record-keeping requirements.