With the federal government’s passage of the Housing and Economic Recovery Act on July 31, 2008, we can expect states to pass many more laws. The Housing and Recovery Act contained the SAFE Mortgage Licensing Act. That part of the bill requires states to implement a Loan Originator Licensing Program that requires loan originators to pass an education course, pass an exam, complete a civil, financial, and criminal background check, and provide a fee that goes to a state fund, or a bond, or meet a net worth requirement. Many states simply do not have such a requirement at this time. Some might wonder if the federal government is overstepping its bounds based on the constitution, but this is pretty minor compared to many of the other unconstitutional actions our federal government takes. The bottom line is that states will need to renew their loan originator license requirements or face loan originators in their states being regulated by the federal government bureaucracy, the Department of Housing and Urban Development (HUD). It will be interesting to see what states do in reaction to this with only 12 months left to enact these changes.
Here are some reactions that occurred in anticipation of the president signing this new bill.
Arizona requires a loan originator license
On July 7, the Governor of Arizona signed two bills, SB 1028 and SB 1029. These bills will require licensing of loan originators and amend renewal dates for existing mortgage banker and mortgage broker licensees. SB 1028 establishes the education and examination requirements necessary for licensing loan originators. The bill requires loan originators to obtain a license by January 1, 2010. SB 1029 establishes an annual renewal date of December 31 for mortgage banker and mortgage broker license holders.
Pennsylvania licenses
Pennsylvania has finally decided to join the national mortgage licensing system. They have already started using the new MU forms and will probably start using the NMLS next year.
New Hampshire requires a loan originator license
On July 9, the Governor of New Hampshire signed HB 1286, which requires loan originators to be licensed. Loan originators must be licensed by April 1, 2009.
Delaware authorizes participation in multi-state automated licensing system
Delaware has finally decided to join the national mortgage licensing system. They are likely to start using the NMLS next year.
New Hampshire passes Mortgage Servicing Companies Act
Mortgage Service Companies must be licensed in New Hampshire by January 1, 2009 if they service second mortgages.
National System of Mortgage Licenses – Periodic update
The Conference of State Banking Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) have launched a nationwide licensing system for the residential mortgage industry that will enhance consumer protection and streamline the mortgage granting process. licenses for regulators and industry. Below is an update on issues related to this system.
- NMLS Mid-Year Operations Update
- Twenty state agencies will use NMLS by the end of 2008
- Statement of intents – 43 state agencies signed!
- SRR Seeks Feedback on Uniform Annual Report Questions
- NMLS Webcast Training
NMLS Mid-Year Operations Update
The National Mortgage Licensing System (NMLS) has successfully completed 6 months of operations. First Quarter Highlights:
- Fourteen states are now participating in NMLS:
- Idaho Department of Finance
- Iowa Division of Banking
- Kentucky Office of Financial Institutions
- Massachusetts Division of Banks
- Nebraska Department of Banking and Finance
- New York State Banking Department
- Rhode Island Department of Business Regulation
- Connecticut Department of Banking
- Louisiana Officer of Financial Institutions
- Mississippi Department of Banking and Consumer Finance
- New Hampshire State Department of Banking
- North Carolina Bank Commissioner’s Office
- Vermont Department of Banking, Insurance, Securities and Health Care Administrations
- Washington Department of Financial Institutions
- States are finding that approximately 75-80% of existing business licenses are being transferred to NMLS.
- NMLS has processed 71,740 submissions
- 6,112 companies, 4,648 branches and 22,868 loan officers are registered with NMLS
- The NMLS call center has received over 38,000 calls with an average wait time of just 40 seconds.
- The NMLS website receives an average of 7,600 visits per week.
Twenty state agencies will use NMLS by the end of 2008
The following state agencies are scheduled to begin participating in NMLS in the fall of 2008, bringing the total to 20 state agencies in NMLS.
NOTE: THE FOLLOWING DATES ARE FOR PLANNING PURPOSES ONLY AND ARE NOT OFFICIAL. OFFICIAL NOTICE WILL BE ISSUED TO EACH LICENSED STATE AGENCY AND POSTED ON EACH AGENCY’S WEBSITE.
- Arkansas Department of Securities
- Indiana Department of Financial Institutions
- Indiana Secretary of State
- Michigan Office of Insurance and Financial Regulation
- Pennsylvania Department of Banking
- Wyoming Division of Banking
Declaration of Intent – 43 state agencies signed!
The South Carolina Department of Consumer Affairs signed the Declaration of Intent, bringing to 43 the total number of state agencies committed to entering the National Mortgage Licensing System.
SRR Seeks Feedback on Uniform Annual Report Questions
The State Regulatory Registry LLC (SRR) has issued a request for comment on the issues developed by the Residential Mortgage Regulatory Taskforce (RMRT) as part of the NMLS Uniform Annual Report. Full information on the NMLS Uniform Annual Report will be provided in the coming months. SRR specifically seeks comments on the questions that are intended to be part of this report.
Questions and instructions on how to provide feedback can be found on the NMLS website
The deadline for submitting comments is August 11, 2008.
NMLS Webinar Training Workshops
NMLS is running several audio-visual training workshops for businesses that want to learn about the system and learn how to effectively manage their NMLS registration. Participants will learn how to create an account, complete application forms, and manage workflow.