Integrity Mortgage Licensing

NMLS MLO Authorized to Conduct Business with New Employer

2011-11-08T15:12:00.000-08:00

How soon can a Loan Originator start taking applications for a new employer once the LO has changed their sponsoring employer in the NMLS? I am seeing a lot of companies that will request a sponsorship in the NMLS of a new employee and allow the new employee to start taking loan applications that day. The problem is that requesting a sponsorship in the NMLS doesn’t mean the loan originator is actively sponsored under the new employer yet. The LO needs to wait until their sponsorship is approved by the state in the NMLS before they can start taking applications for their new employer. Depending on the state, this can take anywhere from a few hours to a few weeks, but usually takes a day or so in most states. However, sometimes the sponsorship is not accepted by the state for various reasons. For example, the LOs residence is too far from the company’s closest location, or the LO is a CA DRE Salesperson and also needs to have the company appointed as their employing broker in CA DRE’s eLicensing System, or the state requires additional documentation to be mailed to them before they can approve the sponsorship request, or the LO needs to update their employer on their NMLS MU4 filing. These issues can permanently delay a sponsorship request from being approved by the state. And in these situations you can have an unlicensed LO taking applications for your company for quite a while before you realize the problem. Companies will start seeing this come up in audit findings and be fined by the states, if they aren’t doing this right. Or they could even have loans that they can’t close if they are a broker, or even worse, they can have loans that they can’t sell if they are a banker. I just spoke two different companies with this exact problem last week.

NMLS Approved Pre-License Education and Continuing Education

2011-10-19T14:53:00.000-07:00

Integrity Mortgage Licensing has partnered with ProSchools, Inc. to offer our customers a 10% discount for all NMLS Approved Pre-License Education and Continuing Education that are now required for loan originator licensing due to the SAFE Act. Go to: Discounted NMLS Education

Texas Mortgage Servicer License/Registration now required

2011-06-27T10:34:00.001-07:00

On June 17, Texas Governor Rick Perry signed into law S.B. 17, the Residential Mortgage Loan Servicer Registration Act, which requires all residential mortgage loan servicers in Texas to register with the Commissioner of the Texas Department of Savings and Mortgage Lending (Commissioner). The Mortgage Servicer Registration is required for companies acting purely in a servicing capacity, such as sub-servicers, as well as mortgage bankers acting as residential mortgage loan servicers, i.e. servicing their own portfolios. As of the date of this article, the application for the Mortgage Servicer Registration has not been released by Texas yet. For a copy of S.B. 17, please see http://www.legis.state.tx.us/tlodocs/82R/billtext/pdf/SB00017F.pdf#navpanes=0.

Florida In-House Processors no longer need LO Licensing as of July 1, 2011

2011-06-23T10:19:00.000-07:00

Florida law previously required persons acting solely as loan processors to secure a loan originator license. On May 31, the Governor of Florida signed into law a bill to relieve in-house loan processors from individual licensing in Florida. Specifically, the bill excludes in-house loan processors from individual licensure, so long as the individual (i) is an exclusive employee of a single mortgage broker or a mortgage lender, (ii) under direct supervision and instruction of a licensed Florida loan originator, and (iii) engages in loan processing only (i.e., receiving, collecting, distributing, and analyzing information for processing a mortgage loan or communicating with consumers to obtain information necessary to process a mortgage loan [not including offering or negotiating or counseling consumers about mortgage loan rates or terms]). Independent Contract loan processors remain subject to loan originator licensing requirements in certain circumstances. This amendment brings Florida's law more in line with the federal Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E.) and other state jurisdictions with respect to treatment of mortgage loan processors.

The bill additionally requires mortgage lenders to submit reports of their financial condition to the NMLS registry and to authorize the NMLS registry to obtain a credit report for each of the mortgage lender's control persons in order to renew a mortgage lender license. The bill becomes effective July 1, 2011.

Montana Mortgage Servicer Licensing required effective October 1, 2011

2011-06-23T10:13:00.000-07:00

On May 5, 2011, Montana adopted House Bill No. 90, which made numerous revisions to the Montana Mortgage Broker, Mortgage Lender, and Mortgage Loan Originator Licensing Act (Act) and changed its title to the Montana Mortgage Act. The revisions included requirements for the licensing and regulation of mortgage servicers. The effective date of the changes is October 1, 2011. And as of the writing of this article, Montana has not yet released an application to apply for the new Mortgage Servicer License.

The revisions also updated application and licensing requirements for brokers, lenders and originators, made a reduction in the number of hours required for continuing education, made changes to recordkeeping, reporting, bonding and disclosure requirements, and made prohibitions against certain acts by mortgage lenders and mortgage servicers. In addition, the Act was revised to conform to federal law and expand the Department of Administration's rulemaking authority.

New Hawaii Mortgage Company and LO Licensing Requirements

2010-06-14T11:34:00.000-07:00

Hawaii has changed the SAFE Act Compliance Legislation and extended the Deadline for Mortgage Loan Originator Licensing. On May 7, the Hawaiian Governor, Linda Lingle, signed into law legislation (S.B. 2603) to amend Hawaii's Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) compliance law, which was passed last year.

This amendment delays the deadline for licensure of mortgage loan originators via the Nationwide Mortgage Licensing System (NMLS) until January 1, 2011. Also, mortgage loan originators who are licensed with Hawaii by December 31, 2010 have until November 30, 2011 to be licensed via NMLS. Additionally, The law requires certain independent contractors (including mortgage loan originators, processors and underwriters) to be licensed as "mortgage loan originators." Finally, the law replaces an existing surety bond requirement with the Mortgage Loan Recovery Fund, which assesses a fee to licensees based on the number of registered offices and mortgage loan originators. For a copy of the bill, please see http://www.capitol.hawaii.gov/session2010/bills/SB2603_CD1_.pdf.

Mortgage Company Licensing now required in Colorado

2010-06-14T11:24:00.000-07:00

Colorado is now requiring Mortgage Companies to be licensed by the state. On May 26, 2010, the Governor of Colorado, Bill Ritter, Jr., signed a bill (H.B. 10-1141) that (i) creates the Board of Mortgage Loan Originators, a new state mortgage regulatory division, and (ii) establishes registration deadlines for mortgage loan originators and mortgage companies by way of the the Nationwide Mortgage Licensing System (NMLS). Mortgage companies, as well as individual mortgage loan originators, must be licensed via NMLS by January 1, 2011.

The law establishes a new licensing category of "mortgage company," defined as entities that take residential mortgage loan applications or offer or negotiate the terms of a residential mortgage loan. The new law exempts from mortgage company licensing requirements banks, savings associations, subsidiaries owned and controlled by a bank or savings association, employees of bank or savings association or its subsidiaries, credit unions, and employees of credit unions. Mortgage companies will be overseen by the newly-created Board of Mortgage Loan Originators, which will, among other things, have the authority to impose fines and deny license applications or renewals. For a copy of the bill, please see http://www.leg.state.co.us/CLICS/CLICS2010A/csl.nsf/fsbillcont3/91997519A6EFDCBB872576A80054E840?Open&file=1141_enr.pdf

California DRE requires Mortgage Loan Originator Endorsement through NMLS

2010-05-04T13:30:00.000-07:00

By January 31, 2010, or within 30 days of commencing the activity whichever is later, all licensees must report to the Department of Real Estate if they make, arrange or service loans secured by real property. This requirement applies to both residential and commercial businesses. The report must be completed online using Form RE 866- Mortgage Loan Activity Notification. Future business activity reporting will also be required.

Penalty fees can apply for failure to submit this required notification. Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.

The following steps must be completed in order to comply with SB 36 and the SAFE Act by January 1, 2011:
Register on the Nationwide Mortgage Licensing System and Registry (NMLS&R)

The NMLS&R will contain a single license record for each mortgage loan lender, broker, branch and mortgage loan originator (MLO). A fee is not required to create this initial NMLS&R base record, however, this first registration step is needed to initiate the necessary examination process.
Satisfy the federal requirements for MLO licensure. Requirements include new qualification assessments, federal and state examinations, and background checks. There are no exceptions to or exemptions from these requirements for existing licensees.
By January 1, 2011, be issued an MLO endorsement on your real estate license. Endorsement applications for qualified MLO registrants must be submitted electronically to the NMLS&R by September 15, 2010 to be issued by January 1, 2011. Review the qualification and examination requirements before you initiate the electronic application process.

The initial MLO license endorsements will expire on December 31, 2011. MLO endorsements are issued annually and expire December 31st each year. The endorsement will carry a nationwide identification number known as a “unique identifier” which will be assigned by the NMLS&R. The term and license identification number of the “base” real estate license will not change. Real estate licensees will continue to be responsible for filing the necessary renewal and record update requirements to maintain their four year real estate license separate from the MLO endorsement.

Penalty fees can apply for failure to obtain a license endorsement. Penalties are fifty dollars ($50) per day for the first 30 days the report is not filed and one hundred dollars ($100) per day for every day thereafter not to exceed a maximum of $10,000.

Washington Servicer Licensing now Required

2010-05-04T12:52:00.000-07:00

Washington now requires Mortgage Loan Services to obtain a consumer license by July 1, 2010. The state of Washington added additional requirements for servicer licensing and reporting responsibilities under the Consumer Loan Act It also added fee assessment, disclosure/notification and escrow account requirements for servicers, as well as, advance fee restrictions and model fee agreements for loan modifications; including third-party loan modification providers. These provisions become effective July 1, 2010.

Pennsylvania Mortgage Licensing - Surety Bond Requirements

2009-11-12T15:37:00.000-08:00

SURETY BOND INFORMATION REGARDING THE MORTGAGE LICENSING ACT

On August 5, 2009, Governor Edward G. Rendell signed into law as Act 31 of 2009, House Bill 1654 (P.N. 2448), which amends Pennsylvania’s existing mortgage licensing law, 7 Pa.C.S. Chapter 61, now titled the Mortgage Licensing Act (“MLA”), in order to implement the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the “SAFE Act”), 12 U.S.C. § 5101 et seq. Act 31 became effective immediately. The amendments contained in Act 31 implement the SAFE Act by merging its requirements into the MLA.

This letter provides the mortgage industry with further details regarding the surety bond requirements for mortgage originators and mortgage companies. Licensees will have until November 30, 2009 to provide the department with proof of surety bond coverage as prescribed by the MLA.

Surety Bond Requirement:

The MLA requires mortgage company licensees and applicants (including consumer discount companies and affiliates of banks and credit unions engaged in the mortgage loan business) to maintain a surety bond in an amount that reflects the volume of mortgage loans originated by the mortgage originators employed by the business. The amount of the bond will be determined by the amount of mortgage loans originated and secured by Pennsylvania real property in a calendar year as indicated on the licensee’s annual report. For initial mortgage business applicants, the amount of the bond will be determined by the anticipated amount of mortgage loans originated and secured by Pennsylvania real property in the first calendar year of licensing.

Licensed mortgage originators will be responsible for maintaining an individual surety bond only if their employer is a business that is not required to be licensed by virtue of the MLA (i.e. agencies or instrumentalities of a federal, state or local government, or non-profit corporations) and elects not to maintain the required surety bond on behalf of its licensed mortgage originators. Should individually licensed mortgage originators require individual bonding, the amount of the surety bond required will be determined by the amount of mortgage loan originations secured by Pennsylvania real property in the most recent complete calendar year. For initial mortgage originator applicants, the amount of the bond will be determined by the anticipated amount of mortgage loans secured by Pennsylvania real property originated in the first calendar year of licensing.

The following summarizes the bond requirements:

Mortgage Lenders and Mortgage Loan Correspondents:
Bond Amount       Anticipated or Actual Amount of PA Mortgage Loan Originations
$100,000               $29,999,999.99 or less
$200,000               $30,000,000 - $99,999,999.99
$300,000               $100,000,000 - $249,999,999.99
$500,000               $250,000,000 or more

Mortgage Brokers
Bond Amount       Anticipated or Actual Amount of PA Mortgage Loan Originations
$50,000               $14,999,999.99 or less
$75,000               $15,000,000 - $29,999,999.99
$100,000              $30,000,000 - $49,999,999.99
$150,000              $50,000,000 or more

Mortgage Originators
Bond Amount       Anticipated or Actual Amount of PA Mortgage Loan Originations
$25,000               $7,499,999.99 or less
$50,000               $7,500,000 - $14,999,999.99
$75,000               $15,000,000 - $29,999,999.99
$100,000              $30,000,000 - $49,999,999.99
$150,000              $50,000,000 or more

Note: This separate volume based surety bond requirement does not replace the additional requirement for Mortgage Brokers and Mortgage Loan Correspondents who are accepting advanced fees to obtain a separate bond in the amount of $100,000.

Transition Plan:

Licensees and registrants are invited to visit the department’s website (www.banking.state.pa.us) in order to download the approved surety bond form. All licensees must use this form and obtain coverage from a surety company authorized to do business in PA in order to meet the new surety bond requirements.

Licensees and registrants must submit the original and fully executed surety bond form to the department no later than November 30, 2009.

Send original bonds to the following address:

Pennsylvania Department of Banking
Attention: Compliance Division
Marker Square Plaza
17 North Second Street
Harrisburg, PA 17101

Conclusion:

The Department’s licensing staff is committed to assisting you in this transition. Should you have any questions regarding the MLA or the transition plan, feel free to contact the licensing staff at (717) 787-3717 or email at ra-asklicensing@state.pa.us. For questions regarding NMLS and how to create a record on the system, please contact the NMLS Call Center at (240) 386-4444

Thank you,
Jamie Robenseifner
Chief, Licensing Division
Bureau of Compliance, Investigation, and Licensing

Rhode Island Mortgage Loan Originator Professional Requirements under SAFE

2009-11-12T15:35:00.000-08:00

Sent on September 11, 2009
Rhode Island Bill Numbers H 5704 A and S 0461 A were enacted into law on July 16, 2009 in order to bring the mortgage licensing laws of the State of Rhode Island into compliance with the federal Secure and Fair Enforcement for Mortgage Lending Act of 2008 (“SAFE Act”). The SAFE Act requires all states to pass mortgage licensing laws and regulations that meet or exceed certain national standards. More information about the SAFE Act can be found here:
http://www.csbs.org/AM/Template.cfm?Section=SAFE_Act.
All individuals meeting the definition in the law of a Mortgage Loan Originator (MLO) must meet new licensing requirements that are in compliance with the SAFE Act.
An individual is acting as a MLO in Rhode Island under the following circumstances:
• The individual originates loans to be secured by real property located in Rhode Island; or
• The individual originates loans to be secured by real property located in any other state and the origination activity occurs in the state of Rhode Island;
In order to comply with the new law, all individuals acting as MLOs in Rhode Island must do the following:
MU4 filing with the Rhode Island Division of Banking
All individuals acting as a MLO in Rhode Island should have filed a Form MU4 through NMLS with the Division of Banking.

The SAFE Mortgage Loan Originator Test
All MLOs must pass the SAFE Mortgage Loan Originator Test, which is comprised of two components: a National Component and a State Component. MLOs must pass each Component with a score of 75% or higher. This also applies to any MLO who had passed a test given by a course provider approved by the Division of Banking.

National Component
All Rhode Island licensed MLOs must pass the National Component prior to renewing their license for 2010. (Do I need to do this?)
New entrants to the industry must pass the National Component before filing Form MU4 through NMLS and before filing the Rhode Island State Specific Requirements with the Division of Banking.
If you have already passed the National Component of the SAFE Mortgage Loan Originator Test and your passing score is part of your MLO record in NMLS, you do not need to take it again.
State Component
All Rhode Island licensed MLOs must also pass the State Component prior to renewing their license for 2010.
New entrants to the industry must pass the State Component before filing Form MU4 through NMLS and before filing the Rhode Island State Specific Requirements with the Division of Banking.
Pre-Licensure Education Requirements
As of July 31, 2009 MLOs must complete twenty (20) hours of pre-licensure education under   R. I. Gen. Laws § 19-14.10-7.
Rhode Island licensed MLOs who have completed 20 or more hours of Rhode Island Division of Banking approved education (pre-licensure and/or continuing education) may be certified by the Division of Banking as having fulfilled the pre-licensure education requirements. Rhode Island licensed MLOs who were subject to the lesser 12 hours requirement will need to take an additional 8 hours of Rhode Island Division of Banking approved courses to have their hours eligible for certification.
In order to participate in the Certification process, a MLO must have an individual account in NMLS with a unique ID number and have completed the required 20 hours or more of pre-licensure education requirements under an education program approved by the Division of Banking. Evidence of completion of 20 hours or more of pre-licensure education must be received by the Division in order for a MLO to renew a license for 2010. The Division encourages MLOs to complete the education requirement by no later than October 31, 2009. Certification details will be sent in a separate correspondence at a later date.
Individuals not eligible for Certification are required to complete twenty (20) hours of NMLS approved pre-licensure education, including three (3) hours of Rhode Island State content in order to act as a Rhode Island MLO.
If you have already satisfied 20 hours of NMLS Approved Education in any state or have had your education certified by another state, you are required only to meet the three (3) Rhode Island State content hours prior to renewing a license for 2010
As of December 1, 2009 the Division of Banking will accept only NMLS approved courses to meet MLO education requirements. The Division of Banking will, however, for Rhode Island licensed MLOs who have earned less than 20 hours of education credit hours through Rhode Island approved courses, accept through November 30, 2009 the additional credit hours to be earned for the number of hours needed to obtain the required 20 hours. All new applicants who have never taken Rhode Island approved education courses must take NMLS approved courses starting November 1, 2009. The Division of Banking will no longer approve courses or education providers and MLOs will be required to take NMLS approved courses to satisfy either pre-licensure and/or continuing education requirements.
Criminal Background Check
All individuals acting as MLOs must authorize a fingerprint background check through NMLS for the purpose of conducting a national criminal history background check through the Federal Bureau of Investigation once functionality within the NMLS system is available. This requirement applies to all individuals, regardless of whether you are currently licensed in the state or if you have previously submitted fingerprints for licensure.
NMLS will implement a comprehensive process which includes electronic fingerprint capture with locations throughout the state.

The details will be sent in a separate correspondence at a later date.
Credit Report
All MLOs must provide authorization to obtain a credit report through NMLS.   The Division of Banking will review the credit report provided as part of its determination of financial responsibility for each MLO.
NMLS will implement a comprehensive process to obtain the required authorization.
The details will be sent in a separate correspondence at a later date.
Continuing Education Requirements
Any MLO who has completed at least 20 hours of NMLS approved, or Rhode Island Division of Banking approved and certified pre licensing education including at least three (3) hours of RI content will be deemed to have satisfied the requirements for renewing their license for 2010.   In order to renew a license for 2011 all MLOs must complete eight (8) hours of NMLS approved Continuing Education during calendar year 2010.
CE must include:
3 hours of Federal law and regulations;
2 hours of ethics that shall include instruction on fraud, consumer protection, and fair lending issues;
2 hours of training related to lending standards for the nontraditional mortgage product market; and
1 hour of Rhode Island law and regulations.
Company Sponsorship of MLO Licenses
The license status of all MLOs will be considered “inactive” until the licensed MLO is sponsored by a licensed or registered company. Sponsorship requests are submitted by the company through NMLS.
Surety Bond/Recovery Fund
Every MLO must be covered under a surety bond that reflects the dollar amount of loans originated on an annual basis.
Satisfaction of this requirement can be met by the following:
State Licensed MLOs or the companies sponsoring state-licensed MLOs must provide evidence of surety bond meeting Rhode Island requirements as part of their company license or registration.   The Division will be drafting regulations on the amount of the bond.
The details will be sent in a separate correspondence at a later date.
NMLS Call Report For Companies
R.I. Gen. Laws §§ 19-14-22(a) and 19-14.10-18 requires that every company employing state-licensed MLOs must file a NMLS Mortgage Call Report through the NMLS. The NMLS Mortgage Call Report is a statement of condition on the company and its operations including financial statements and production activity volumes reported on a per state basis. Additional information concerning the NMLS Mortgage Call Report will be provided at a later date.
For information and instructions regarding the Professional Requirements please visit the NMLS Resource Center at the following link:
http://www.stateregulatoryregistry.org/NMLS/AM/Template.cfm?Section=Professional_Requirements.
Visit the following state link for updates to Rhode Island Professional Requirements:
http://www.dbr.ri.gov/divisions/banking/license.php

Illinois Requires Licensing of Mortgage Loan Originators

2009-11-06T11:34:00.000-08:00

Illinois passed a bill requiring the licensing of loan originators. Under the bill, mortgage loan originators and loan processors of underwriters acting as independent contractors must obtain a license under the Residential Mortgage License Act of 1987, unless exempt. The bill also establishes loan originator requirements with respect to education, exemptions, fees, renewals, bonds and notifications. In addition, the bill requires all application forms, solicitations and advertisements to contain the NMLS unique identifier of the person originating the mortgage loan. The bill became effective on July 31, 2009; however, mortgage loan originators and loan processors of underwriters acting as independent contractors have until July 31, 2010 to obtain a license.

Kansas becomes part of NMLS Mortgage Broker Licensing

2009-11-06T11:31:00.000-08:00

Kansas adopted rules amending the Mortgage Business Act. Under the rules, mortgage loan originators are required to complete 20 hours of education and pass a written test prior to licensure. The rules also amend surety bond requirements, increase licensing fees for branch offices and establish additional record retention requirements for mortgage companies.

Kansas also adopted rules amending the Uniform Consumer Credit Code. Under the rules, mortgage loan originators are required to complete 20 hours of education and pass a written test prior to licensure. The rules also require mortgage loan originators to annually complete at least 8 hours of continuing education. In addition, the rules amend surety bond requirements and establish additional record retention requirements for supervised lenders.

The rules become effective October 2, 2009; however loan originators are not required to take a written test prior to licensure until on or after July 31, 2010.

NMLS-APPROVED SAFE MORTGAGE LOAN ORIGINATOR TEST AVAILABLE FOR MARYLAND

2009-11-05T15:57:00.000-08:00

We are pleased to announce that NMLS-approved SAFE mortgage originator test components – both the national and the Maryland component – are now available for enrollment and scheduling. The first test appointments for the Maryland component will be available on October 22nd. The national component has been available since July 30, 2009. Registration is now open and we recommend that originators register now in order to be able to take the test in October.

Effective January 1, 2010, applicants for a NEW Maryland Mortgage Loan Originator License will be required to complete the test PRIOR to licensure. Prior to January 1, 2010, the Commissioner of Financial Regulation will grant conditional approval with the requirement that the test be completed on or before January 1, 2010.
Applicants who were exempt from licensure prior to July 1, 2009 and who applied for a NEW Mortgage Loan Originator License with Interim status will have until July 31, 2010 to complete the testing requirement.
Existing licensees as of July 1, 2009 will transition to NMLS in conjunction with the renewal of their license and have until December 31, 2010 to complete the testing requirement. Please note that HUD recently issued guidance (FAQs) that addresses the issue of grandfathering existing licensees in connection with the testing requirement, as follows:

Question: May a state’s SAFE legislation contain a grandfathering provision allowing mortgage brokers and others who have engaged in the business of originating loans for an extended period of time meet the SAFE Act’s testing and education requirements by some alternative means?

Answer: “No. The SAFE Act does not allow alternative methods for meeting the testing and education requirements.”

Based on this guidance, ALL existing Mortgage Loan Originator licensees as of July 1, 2009 must complete the testing requirement by December 31, 2010

California Enacts SAFE Act Legislation - NMLS Mortgage Broker Licensing

2009-11-05T15:52:00.000-08:00

On October 11, California Governor Arnold Schwarzenegger signed into law S.B. 36, a bill that requires the employees of licensees under the California Finance Lenders Law (CFLL) and the California Residential Mortgage Lending Act (RMLA) that are engaged in the business of mortgage loan origination to be licensed, beginning July 1, 2010. The bill similarly requires licensees under the California Real Estate Law (REL) to obtain an endorsement from the Commissioner of the California Department of Real Estate to engage in the business of mortgage loan origination, beginning December 1, 2010. Mortgage loan originator license and endorsement applicants are required to, among other things, (i) submit to fingerprinting for the purpose of a criminal history background check, (ii) complete at least twenty hours of pre-license education, and (iii) pass a qualified written test developed by the Nationwide Mortgage Licensing System (NMLS). The bill further provides that licensed mortgage loan originators must complete at least eight hours of continuing education annually and must disclose their NMLS identifier on all residential mortgage loan application forms, solicitations, and advertisements. The bill also enacts other related provisions, such as requiring REL licensees to submit an annual business activities report to the Commissioner of the California Department of Real Estate.

North Carolina Annual Mortgage Broker License Renewal Notice

2009-11-05T15:48:00.000-08:00

NC Commissioner of Banks Office

Mortgage Licensing Division

Location: 316 W. Edenton Street, Raleigh, NC 27603

Mailing Address: 4309 Mail Service Center, Raleigh, NC 27699-4309

Telephone: 919-733-0589 Fax: 919-733-2978 Internet: www.nccob.org

October 16, 2009

Company Annual License Renewal Notice

RENEW YOUR LICENSE ONLINE AT: www.stateregulatoryregistry.org/NMLS BEFORE DECEMBER 31, 2009

The Renewal Period will begin November 1st and end December 31st (11:59 ET). Prior to the renewal period all records must be up-to-date and any outstanding deficiencies cleared. Under the provisions of the SAFE Mortgage Licensing Act (SAFE), all licensees are required to keep all material information filed with the North Carolina Commissioner of Banks (NCCOB) up-to-date and current by notifying this office of any change. You are strongly encouraged to log into your NMLS account and review your specific deficiencies prior to November 1, 2009. Failure to clear outstanding deficiencies such as those listed below may delay or result in a denial of your company and branch (es) renewal request.

All Licensees- The NC Mortgage Annual Report Questionnaire (ARQ) was required to be filed by March 31, 2009, via the NCCOB website. This questionnaire collects only North Carolina loan data and is now based on a calendar year, January through December. (https://www.nccob.org/Online/NMLS/Default.aspx)

Mortgage Lenders- Lenders should have uploaded into the NMLS an audited statement of financial condition within 90 days of their fiscal year end that demonstrates a net worth of at least one hundred thousand dollars ($100,000) https://www.statemortgageregistry.com/Public/Default.aspx. In addition, if not shown on the audited financial statements provide evidence of a warehouse line of credit of one million dollars ($1,000,000) or other evidence of funding capacity to conduct mortgage originations. If not on the financial statement a copy of the warehouse line of credit agreement should be emailed to LJohnson@nccob.gov. (North Carolina will not prevent renewal this year for failure to show evidence of the warehouse line of credit)

Mortgage Brokers- Mortgage Brokers should have uploaded into the NMLS a certified balance sheet that demonstrates a net worth of at least twenty-five thousand dollars ($25,000). https://www.statemortgageregistry.com/Public/Default.aspx In addition, provide evidence (in the form of a copy of a bank statement or other verifiable document) that the your company owns cash or other liquid assets in a demand deposit account under the firm's name of at least ten thousand dollars ($10,000) in an FDIC-insured financial institution. This should be emailed to JKillion@nccob.gov.

A company will have the option to either renew and pay for its sponsored licensed mortgage loan originator(s)“MLO” or delegate the responsibility to the “MLO’s”. We encourage companies to submit a renewal for the company, all branches, and all sponsored mortgage loan originators together, as one filing, to expedite the renewal process.

Annual License Renewal Fee (Company) $725

Annual License Renewal Fee (Per Branch) $145

Annual License Renewal Fee (Per MLO) $97.50

All licenses will expire on December 31, 2009, if not timely renewed. To reinstate a company and/or branch license the licensee must pay the annual renewal fee and the reinstatement fee of $250. The deadline for reinstatement of a license is February 28, 2010; thereafter, a new application for licensure must be filed.

All fees are non-refundable.

Michigian Mortgage Licensing Education Requirements Clarification

2009-11-05T15:43:00.000-08:00

TO: Mortgage Industry and Interested Parties

SUBJECT: Discontinuance of Michigan Loan Officer Registration Examination, and

Clarification of Michigan Pre-registration Education Requirement

Effective today, October 22, 2009, the Michigan loan officer registration examination administered through Pearson VUE is discontinued and will no longer be available. Any individual who scheduled a new loan officer registration examination or a retake of the examination and paid the examination fee for an examination to occur on or after October 22, 2009, will not be able to take the Michigan examination, and a full refund of monies paid for such examination will be provided by Pearson VUE.

Please be advised that discontinuance of the Michigan examination administered by Pearson VUE does not mean an examination is not required to obtain a Michigan loan officer registration. Discontinuance of the Michigan examination is due to the availability of the Nationwide Mortgage Licensing System (NMLS) approved loan originator National test and the NMLS approved loan originator Michigan test. These two tests replace the Michigan examination. Taking the NMLS National test and the NMLS Michigan test, and passing each with a minimum score of at least 75%, will qualify an individual for the currently required Michigan loan officer registration; and it will qualify an individual for the Michigan loan originator license effective July 31, 2010.

Please be further advised that the 24-hour, live-instruction, in-Michigan loan officer pre-registration education course is required through July 30, 2010, pursuant to the Mortgage Brokers, Lenders, and Servicers Licensing Act, 1987 PA 173, et seq., as amended. Beginning July 31, 2010, only a 20-hour loan originator pre-licensing course will be required through the NMLS; however, the current NMLS approved 20-hour pre-licensing course does not, in and of itself, meet the current loan officer pre-registration education requirement.

Loan officer pre-registration education providers are encouraged to obtain approval from the NMLS to be a provider of loan officer/originator education; however, even if an education provider is approved by the NMLS, it is still required to provide a 24-hour, live-instruction, in-Michigan course to meet loan officer pre-registration education requirements.

Information about the NMLS Testing and Education is available on the NMLS website. The topics include:

Test Availability Schedule and Content Outlines.
MLO Testing Handbook.
Find a Test Center.
Quick Guide: Enrolling in a Course.
List of NMLS Approved Course Providers.
List of State Specific Education Requirements.

On the NMLS website (www.stateregulatoryregistry.com/nmls), select Professional Requirements, then select either Testing or Education. If you have questions regarding NMLS Testing and Education, please contact the NMLS Call Center at 240.386.4444.

If you have any questions concerning the contents of this correspondence, please call the Office of Financial and Insurance Regulation (OFIR) toll free at 877.999.6442. Request to speak with Melissa Brown or Olivia Addo of the Consumer Finance Licensing Unit.

CA Passes NMLS Loan Originator Licensing Requirements

2009-11-05T15:38:00.000-08:00

California recently adopted several mortgage related bills.
CA Senate Bill 36 became effective October 11, 2009 and includes the following revisions and adoptions:

Adopts new sections covering:

licensing requirements for loan processors and underwriters;
application requirements including fingerprinting, personal history, and independent credit reports;
minimum standards that must be met by mortgage loan originator licensing applicants;
pre-licensing and continuing education requirements and testing requirements;
license renewal requirements for mortgage loan originators;
requirement for mortgage loan originators to include their unique identifier on application forms, advertisements, and other required documents;
prohibited acts and practices for mortgage loan originators and potential penalties for violations;
requirements for submission of reports of condition;
notification requirements and licensing requirements for mortgage loan originators and real estate brokers;
minimum standards that must be met by mortgage loan originator licensing applicants and the minimum standards for renewal of an endorsement as a mortgage loan originator;
requirements for real estate brokers to submit annually a business activities report and detailing what must be contained in the report;
record retention requirements; and
requirement that mortgage loan originators to obtain and maintain a license and a unique identifier and prohibiting residential mortgage lenders or servicers from employing a mortgage loan originator whose license or license endorsement has lapsed.

Revises current statutes to add or amend:

requirement that a licensee's unique identifier be included on advertisements and certain disclosures;
requirement that applications for endorsement to act as a mortgage loan originator must be made electronically or in writing as directed by the Commissioner;
minimum net worth requirements for licensees employing one or more mortgage loan originators;
requirement for mortgage loan originators to obtain and maintain a license and a unique identifier and prohibiting finance lenders or brokers from employing a mortgage loan originator whose license or license endorsement has lapsed;
that it is a violation for a person to knowingly make a false statement to the NMLSR;
that mortgage loan originator licenses must be renewed annually after the payment of an annual assessment;
notification requirements; and
bond requirements.

Repeals CA BUS & PROF § 10131.8 and CA FIN § 50705.
Section 87 of CA Senate Bill 36 states the deadline for mortgage loan originators to obtain a license.

CA Assembly Bill 329 becomes effective on January 1, 2010. This bill revises the required notice that must be provided to a reverse mortgage loan application prior to the applicant receiving counseling. It also adds a requirement that a lender provide the borrower with a written checklist prior to the borrower's meeting with a counselor, details what must be included in the checklist, and states other checklist requirements.

CA Senate Bill 94 became effective on October 11, 2009. This bill adopts a new section stating what fees and compensation may not be received for loan modifications or other forms of loan forbearance. Senate Bill 94 also adopts a new section stating what acts are prohibited in relation to loan modifications or other forms of loan forbearance and stating what acts are permitted if the person who offers the loan modification or forbearance is offering it for a loan that is owned or serviced by that person. This bill also amends sections to add an exemption for certain counseling organizations approved by HUD that provide loan modification counseling services for no cost to the borrower and to add a prohibition regarding making materially false or misleading statements or representations to a borrower about the terms or conditions of that borrower's loan, when making or brokering the loan.

CA Assembly Bill 260 becomes effective on January 1, 2010. This bill adds that the commissioner may suspend, revoke, or deny issuance of a license for violations of RESPA, TILA, HOEPA, regulations promulgated under RESPA, TILA, or HOEPA, and for violating or failing to comply with Chapter 2 of Title 14 of Part 4 of Division 3 of the California Civil Code. Assembly Bill 260 also adopts new sections stating that any violations of RESPA, TILA, HOEPA, or related regulations will be violations of the California Finance Lenders Law and the California Residential Mortgage Lending Act. This bill also adopts a new section stating that mortgage brokers providing mortgage brokerage services to a borrower have a fiduciary duty to the borrower, stating what is included in the fiduciary duty, and providing definitions for licensed person, mortgage broker, mortgage brokerage services, and residential mortgage loan. In addition, this bill adopts new sections regarding higher-priced mortgage loans stating what the maximum amount is for prepayment penalties, prohibited acts, permissible fees, document requirements, and potential penalties for violations.

CA Senate Bill 237 becomes effective on January 1, 2010. This bill adds six prohibited acts related to improperly influencing or attempting to improperly influence an appraisal.

CA Senate Bill 239 becomes effective on January 1, 2010. This bill repeals CA PENAL § 532f and then adopts CA PENAL § 532f stating what acts are considered mortgage fraud, the related voluntary and mandatory disclosure requirements, and that this offense is punishable by a maximum of 1 year in the state prison or county jail.

Wyoming Enacts Mortgage Loan Originator Licensing and Registration

2009-06-24T17:05:00.001-07:00

On March 12, 2009, Wyoming Governor Dave Freudenthal signed HB 169, a bill that modifies the Wyoming Residential Mortgage Practices Act and Uniform Consumer Credit Code to provide for mortgage loan originator licensing and registration. Among other things, the bill details (i) the initial application process, (ii) pre-licensing education, (iii) testing requirements, (iv) the renewal process, and (v) continuing education requirements. While the bill goes into effect July 1, 2009, loan originators have until July 1, 2010 to register or obtain licensure.

HUD Reviews S.A.F.E. Mortgage Licensing Act Model Legislation

2009-06-11T16:54:00.000-07:00

The U.S. Department of Housing and Urban Development recently reviewed model legislation developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators regarding the Secure and Fair Enforcement Mortgage Licensing Act (Act). The Act primarily addresses the licensing and registration standards for "loan originators," as defined by the Act. The model legislation would require loan originators both to obtain a state license and to register under the Nationwide Mortgage Licensing System and Registry. Among other things, the model legislation addresses (i) license and registration requirements, (ii) application procedures, (iii) pre-licensing, renewal, and continuing education requirements, and (iv) enforcement, violation, and penalties. For a copy of the Federal Register notice, please see http://edocket.access.gpo.gov/2009/pdf/E8-31389.pdf. For a copy of the model legislation, please see http://www.hud.gov/offices/hsg/sfh/mps/modellaw.pdf.

HUD Issues Interpretive Guidance on Implementation of SAFE Mortgage Licensing Act

2009-05-19T12:03:00.000-07:00

The Department of Housing and Urban Development (HUD) has posted on its website new guidance on how it will interpret state compliance with the SAFE Mortgage Licensing Act (Act). The guidance provides that HUD has reviewed the state model bill prepared by the Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) and found that states adopting that bill will be in compliance with the SAFE Act requirements. Of note in the guidance are HUD's expansive interpretation of the Act's definition of "loan originator" as well as its deadlines for compliance. On loan originators, HUD considers the definition of loan originator to encompass any individual who, for compensation or gain, offers or negotiates loan terms pursuant to a request from and based on the information provided by the borrower. Such an individual would be included in the definition of loan originator, regardless of whether the individual takes the request from the borrower for an offer (or positive response to an offer) of residential mortgage loan terms directly or indirectly from the borrower. Individuals offering loan terms to family members, attorneys offering loan terms as part of their legal representation, if not compensated by a lender, mortgage broker, originator, or an agent of these, and sellers offering loan terms on seller-financing would not be covered, however. Regarding deadlines, the guidance provides that, with respect to individuals who do not already possess a valid loan originator license, July 31, 2010 is the date by which loan originators must be licensed in a state. For individuals who possess licenses granted under a system that was in place prior to the SAFE Act-compliant system, HUD has set December 31, 2010 as the final date for obtaining a license to comply with the SAFE Act. See the full guidance at http://www.hud.gov/offices/hsg/sfh/mps/smlicact.cfm

North Carolina Mortgage Servicer Licensing Requirements Effective January 1, 2009

2009-05-11T10:58:00.000-07:00

North Carolina House Bill 2463 becomes effective on January 1, 2009. The legislation requires mortgage servicers to be licensed by the North Carolina Commissioner of Banks before acting as a mortgage servicer.

The bill also changes the brick and mortar requirements for mortgage brokers to specify that a mortgage broker’s physical location in North Carolina may not be a home or residence.

Tennessee Amends Mortgage Licensing Requirement

2009-05-08T09:48:00.000-07:00

Tennessee Senate Bill 4160 became effective on January 1, 2009. Key points of the legislation included:

New authorization for the Commissioner of Commerce and Insurance to require fingerprints from certain license and registration applicants;
Amended initial education requirements for mortgage lender, mortgage broker, mortgage servicer, and mortgage loan originator license and registration applicants;
New disclosure requirements for stockholders owning ten percent (10%) or more of outstanding capital stock; and
Provisional authorization for mortgage loan originators to conduct business while awaiting registration approval from the Commissioner.

Michigan Extends Mortgage Loan Officer Registration Deadline

2009-05-01T12:01:00.000-07:00

On December 18, the Governor of Michigan signed into law statutes amending the Mortgage Brokers, Lenders, and Servicers Licensing Act (MBLSLA). The law: (i) amends the effective date of mortgage loan officer registration requirements from January 1, 2009 to April 1, 2009; (ii) extends the deadline from December 3, 2008 to April 1, 2009 for an individual to obtain fingerprints and have an FBI and Michigan State Police criminal history check completed, pass the required Michigan mortgage loan officer examination, and submit the required Nationwide Mortgage Licensing System (NMLS) loan officer registration application and the Michigan specific loan officer application; (iii) extends the deadline from December 31, 2008 to March 31, 2009 for a residential mortgage originator and a loan officer to receive compensation for the origination of a mortgage loan; (iv) amends the MBLSLA and SMLA specifying that beginning January 1, 2009, the Michigan State Police and FBI may complete a mortgage loan officer criminal history check; (v) amends the SMLA to require fingerprints, a Michigan State Police and FBI criminal history check, pre-registration and continuing education, testing, and a secondary mortgage loan officer application if the loan officer is not registered as a loan officer under the MBLSLA and will originate for a mortgage broker, lender, or servicer that only brokers, makes, or services secondary mortgage loans.

Delaware Adopts Mortgage Loan Originator Regulations

2009-04-29T12:01:00.001-07:00

Recently, the Delaware Office of the State Bank Commissioner issued regulations implementing a law requiring mortgage loan originators to be licensed. Among other things, the regulations provide that those mortgage loan originators employed by a licensed lender or mortgage loan broker prior to January 1, 2009 have until March 31, 2009 to submit a license application. Additionally, those individuals beginning employment as mortgage loan originators after January 1, 2009 may not conduct business as mortgage loan originators until they have submitted a license application. Once a license application has been submitted, an individual is free to operate as a mortgage loan originator on a provisional basis until the regulator has rendered a decision on the application. The regulations also set forth duties of originating entities that employ mortgage loan originators, as well as record keeping and notification requirements. Mortgage loan originators will be licensed through the Nationwide Mortgage Licensing System. The regulations became effective December 11, 2008.

What is the Best Way to Expand your Mortgage Company?

2009-04-15T16:55:00.000-07:00

If you own your own mortgage company, you should always be looking at ways to expand your business. This does not necessarily mean that you want to hire more staff or make your company larger. Continually looking for ways to expand your business is required just to keep your income stable and to maintain the volume of business that is needed to stay in business.

So what are some of the best ways to expand your business?

Expand your coverage area (State Licensing)

Expand your available products (FHA Approval and Lender Approvals)

Expand your relationships (Realtors, CPAs, and Attorneys)

Expand your marketing (Online, Networking, and Lead Sources)

Expand Your Coverage Area (State Licensing)

One of the best ways to expand your business is to expand your coverage area. Most mortgage companies just rely on business in their home state. But when the market is slow in their state, they have no where else to turn. Also, when the type of marketing they are attempting to use does not produce a good response, they are forced to take the loss and look for other marketing routes. Any lead generation company will tell you that if you have multiple states to do business in, you will be better suited to meet these challenges.

State Licensing can be very complex, however, if you do your homework and choose a few good states, it will definitely be worth your while. Your mortgage company will be able to try different marketing in different areas of the country and be able to keep the volume high when the market in some states is slow.

Expand Your Available Products (FHA Approval and Lender Approvals)

Another great way to expand your business is to open up different loan products to your borrowers. Many borrowers shop around for a mortgage broker that can provide them with the best product to meet their needs. If you don\'t have access to most loan products in the market, you will lose the deal almost every time.

FHA is one of the most important loan products right now. It allows you to provide loans to low income, low credit score, high debt, and low asset borrowers, which is a majority of borrowers these days. In order to originate FHA loans, you need to be approved with HUD (Department of Housing and Urban Development).

Getting approved with other lenders is also a great way to expand your business. Not only should you be approved with 10 or more lenders, but you should know their guidelines like the back of your hand. Also, with so many lenders closing every day, you don\'t want to have all of your loans placed with one lender. That could be the end of your business very quickly.

Expand Your Relationships (Realtors, CPAs, and Attorneys)

Take the time to meet different people in other parts of the industry such as realtors, CPAs, escrow agents, title officers, and tax preparers. Often you can refer each other business. A common mistake is to think that people in these different areas of the business already refer business to other mortgage companies and don\'t need you. However, you would be surprised at how often I speak to a realtor that is having trouble with the mortgage company they refer their buyers to. They often can tell that I know the business and will ask me if I can do a loan for one of their buyers. Jump on these opportunities and actively seek other relationships. Knowing other people in the business is one of the best ways to create long lasting and profitable relationships.

Expand Your Marketing (Online, Networking, and Lead Sources)

A huge mistake that a lot of mortgage companies make is to only get leads from one source. If you market in only one way, that way is bound to dry up eventually. Make sure to have multiple lead sources in your business plan. Try marketing online or through another companies online system. Try networking through a website such as FaceBook or ActiveRain. Try getting leads from lead companies that actually do the marketing for you and send you the leads. As you try new ways of marketing, you will find what works best, but still continue to try new ways and keep a few lead sources in place.

Bottom Line

If you are not working at expanding your business, your business will shrink. And in todays market place, it will shrink fast.

How long does it take to get a mortgage license?

2008-12-04T09:14:00.000-08:00

Mortgage Licensing can be a very arduous process. Any time we deal with the government, the likelyhood of getting great customer service is very slim. The reason being that the state or federal government employees are not compensated with bonuses or commissions for processing more applications each month. Most government employees that I have worked with are just doing the minimum needed to stay employed so that they can receive their check each month and their retirement at the end of their career. There are some exceptions though. A few states have great management and helpful licensing analysts. New Mexico, Idaho, Utah, Delaware, Tennessee, and Wyoming are few examples.

With that being said, processing times for new license applications can greatly differ. If you apply for a New Mexico license on a Monday, it is possible to have it approved by Friday. However, if you apply for a New York license on January 1st, it is possible that you won't have the license by the following year. They are just very unorganized and the red tape can stop you in your tracks at times. Generally though, most states take about 2 month to process a license application, because the state regulations require them to provide you with a response within 60 days. As long as you submit everything correctly the first time, you can expect to have your license in that time frame. If items are missing, the time can easily double to 4 or more months.

Having a complete application is one of the most important steps to reducing the time for the state to process the application. For example, when you submit a loan to a processor, if the file is missing half of the documentation, the processor can easily get frustrated and confused on what is needed. The processor will likely put your file on the bottom of the stack and work on it later. It can go back and forth for a long time. The same situation occurs with licensing. If the file is missing major items, then the state analyst has to request those items, and your application is put on the bottom of the pile. Again, a process that should take a couple months turns into 4 or 5 months very easily.

Another very important aspect of how long it will take to get a mortgage license is the time to prepare the application. I have seen applications completed in a few days, and I have also seen applications take numerous months to be completed. When I prepare mortgage license applications, I will send a list of needed items to the mortgage company. If the company does not provide me the items, I cannot complete the application. Usually the needed items are simple such as resumes, credit reports, and financials on the owners or formation documents, financials, and reference letters on the company, however, if they are not provided, the application will just sit and the timeframe for the state to process the application will never start.

Usually most companies are able to provide the needed documentation within 2 to 4 weeks. And the states take 8 to 12 weeks to process the application. So the average time to obtain a mortgage license from start to finish is between 10 to 16 weeks. But remember, you need to make sure the application is complete and to provide the needed documentation right away or it could easily turn in to a 9 to 12 month process.

November 2008 Mortgage Licensing News

2008-10-24T09:55:00.000-07:00

With the S.A.F.E. Mortgage Licensing Act passing on June 30, 2008, there are a lot of changes expected to happen soon in mortgage licensing. At this time, only about one third of the states are in compliance with the federal law, and since most states are not going to want to hand over their licensing to the federal government, you can expect for many new laws to be passed in the near future. Here are some recent changes to be prepared for.

Michigan Loan Originator Licensing
As of January 1, 2009, Loan Originator must be licensed to originate mortgage loans. Prior to that date, Michigan only required Loan Originators to be w-2 employees of a licensed mortgage company. The new law requires the Loan Originator to have either 4.5 years of experience originating loans in the last 5 years or take a 24 hour live education course. Once either experience or education is met, then the Loan Originator is required to take a Michigan Loan Originator Test. The test just became available on October 21, 2008. Loan Originators must then complete fingerprint cards or live scan fingerprinting and go on to the Nationwide Mortgage Licensing System (NMLS) and submit a Loan Originator (MU4) application and then mail all of the previous documentation directly to the state. Everything is currently due to the state by 12/4/08 to guarantee that a Loan Originator License is issued by 1/1/09, however, details on the fingerprinting process has not been released yet, so I expect them to give Loan Originators an extension. Keep in mind, that it is just my opinion, so don't delay in following the state requirements and meeting the deadlines.

Delaware Loan Originator Licensing
Delaware House Bill 508 becomes effective on January 1, 2009, but mortgage loan originators will not be required to obtain a license until the State Bank Commissioner adopts regulations implementing the new licensing laws. At this time, there is nothing on the states website implementing the Delaware Loan Originator Licensing requirement, so it will probably not be requred until later in 2009. HB 508 defines a mortgage loan originator as an employee or independent contractor of a licensed Delaware Mortgage Broker or Lender. The legislation requires a mortgage loan originator to apply to the Office of the State Bank Commissioner for a mortgage loan originator license, establishes initial and continuing education requirements for licensees, and authorizes the Commissioner to adopt regulations to facilitate participation in the Nationwide Mortgage Licensing System. The bill requires that loan originator licensees have at least 18 hours of education courses within the five years prior to licensure, or within one year following licensure. Applicants may work as mortgage loan originators upon initial employment on a temporary basis until the person is either licensed or the application is denied. Applicants must submit a $250 investigation fee and a $250 annual license fee.

Rhode Island Loan Originator Licensing
Licensing requirements for Rhode Island Loan Originators are now posted on the Nationwide Mortgage Licensing System (NMLS) website. A Loan Originator license must be obtained by January 1, 2009 in order to continue originating in the state of Rhode Island. The application requires fingerprint cards, 20 hours of pre-licensure education, a personal financial statement showing a positive net worth, a copy of a valid photo ID (for example, driver's license), and the submission of a Loan Origiantor Application (MU4) on the NMLS. Applications are due by 11/1/08 in order for applications to be approved by 1/1/09. Also, starting in the 2nd quarter of 2009, Rhode Island expects to have a testing requirement.

Nationwide Mortgage Licensing System
New states transitioning onto the NMLS on November 1, 2008 are: Arkansas, Indiana, Pennsylvania, and Wyoming. Michigina began transitioning on October 1, 2008. All of these states require transitions to be completed by December 31, 2008. Also, most states already on the NMLS will be using the NMLS for renewals. There are currently 19 states on the NMLS and all states are expected to be on by 2010.

How do you obtain an FHA License?

2008-08-01T17:16:00.000-07:00

It has been about a year since FHA became a major part of the mortgage market. Many mortgage companies that do not have FHA Approval are finding it difficult to survive. So what is required to get an FHA License?

There are 4 major requirements that must be met. Everything else is just paperwork. These 4 requirements are audited financials, commercial space, 3 years origination experience, and decent credit. Let's explain these items in detail.

Audited Financials
Audited Financials are usually the largest barrier for most companies. Brokers need to show $63,000 in net worth and lenders need to show $250,000. For both brokers and lenders, 20% of the total net worth must be liquid, so basically cash in the bank. Many people confuse this to mean that the owners of the company need to have this net worth. It's actually the company not the individual owners. So, often owners will invest cash, cars, investment properties into the company to show as net worth on the financial statement. The even more difficult part about this requirement is that the financial statement must be audited. If you have ever had your taxes done, you know that can be a lot of work, but for your taxes, the account does not verify every assett and liability or every income or expense. For an auidted financial statement, the CPA has to verify every number on it. Most CPAs will charge $7,000 to $10,000 for this type of financial statement. Some CPAs that specialize in these types of audits have made the process very efficient and charge as little as $2,500 to $3,500, but that is still a lot of money, especially with the way the market is.

Commercial Space
Most companies work out of a commercial space, but with the market the way it is and often for convenience some companies have chosen to start working out of their homes. HUD will not allow that. There are a few exceptions if the home is commercially zoned, or if it is near a commercialy zoned area and has easy access to the public, but in most cases, a residence will not work. Another issue with the commercial space is that it has to be separate from all other companies, except for possibly a shared receptionist. A good way to determine if your office is separate is to walk from your car to your office. If you have to pass by employees in cubicles for other companies then you are not separate.

Three Years Origination Experience
One of the senior officers must have 3 years of origination experience. This requirement is usually no problem, but is worth mentioning. If your company does not have anyone working for it that has been in the mortgage origination field for over 3 years, then you can not get approved. You will either need to hire someone or check with all of your employees to see if you can make one of them a senior officer if they have the 3 years of experience.

Decent Credit
All senior officers and all owners of 25% or more of the company will need to provide their credit reports. If any of these credit reports show major derogatory items in the last two to three years, then you will have a problem getting approved. HUD uses FHA Underwriting guidelines to determie if the owners and officers of the mortgage company are financially fit. If any of these individuals have had a recent foreclosure, bankruptcy, tax liens, or numerous lates, they will need to be removed as senior officers and have their ownership reduced to below 25% before you can apply.

If you meet all of these requirements, then you should have no problem getting approved. The paperwork is difficult and I recommend getting some assistance putting it together. You will also need to find a CPA that is not too expensive, but like I said, everything else is just paperwork if you meet these 4 major requirements.

June 2008 Mortgage Licensing Update

2008-06-02T11:41:00.000-07:00

The activity in the states continues to rise. Numerous states are considering legislation to curb the foreclosure crisis. Nothing of course can stop it at this point, but the states seem to feel that increased regulation of mortgage companies will at least help the situation. Mortgage Licensing is one of the hotly debated topics in the states. Consumer groups feel that there should be increased licensing, education, and bonding requirements for the mortgage companies and their employees. Many people think that too many requirements may increase the difficulty of a borrower to find the right loan for the right price as mortgage companies have to spend more money to comply with these requirements. Let's take a look at the recent regulatory activity as it relates to mortgage licensing.

Washington Mortgage Lender Licensing

What activities can a licensed mortgage broker engage in under the Mortgage Broker Practices Act (MBPA) without triggering the license requirements of the Consumer Loan Act (CLA)? As a licensed mortgage broker you may act in these capacities:

Broker – assisting borrowers, or holding yourself out as able to assist borrowers, in obtaining a residential mortgage loan. Loans close in the name of the lender.

Table Fund – "Table-funding" means a settlement at which a mortgage loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. The mortgage broker originates the loan and closes the loan in its own name with funds provided contemporaneously by a lender to whom the closed loan is assigned. WAC 208-660-006.

Non-delegated Correspondent – You close loans in your name with funds provided by a lender through a line of credit. The lender provides the underwriting criteria the borrower must meet and makes the final underwriting decision.

http://dfi.wa.gov/cs/sb_6471_faq.htm

Masachussetts Loan Originator Licensing

WHO IS REQUIRED TO HAVE A MORTGAGE LOAN ORIGINATOR LICENSE?

Any natural person who: (a) is employed by or associated with one (1) and not more than 1 mortgage lender or mortgage broker licensee regulated by the Division; and (b) negotiates, solicits, arranges, provides or accepts residential mortgage loan applications on real property located in Massachusetts, or assists consumers in completing such applications.
Sole proprietors licensed as mortgage brokers or mortgage lenders by the Division, as well as owners, officers and directors or entities licensed as mortgage lenders or mortgage brokers, are required to be licensed as mortgage loan originators in Massachusetts if they meet the definition above.

WHEN CAN AN INDIVIDUAL APPLY FOR A MORTAGE LOAN ORIGINATOR LICENSE?

LOAN ORIGINATORS WHO WERE WORKING FOR A LICENSED MORTGAGE LENDER OR MORTGAGE BROKER PRIOR TO NOVEMBER 30, 2007:

Applications must be submitted to Massachusetts through NMLS before May 28, 2008. The requirement for applicants to have completed a residential mortgage lending course does not apply to any individual who was working for a licensed Mortgage Lender or Mortgage Broker prior to November 30, 2007. Individuals who have changed employers since November 30th are also not required to complete a course prior to becoming licensed. Please note that any individual who meets these dates of employment standards and who does not file a license application with the Division of Banks prior to May 28th must complete a residential mortgage lending course prior to becoming licensed.

LOAN ORIGINATORS WHO FIRST BEGAN WORKING FOR A LICENSED MORTGAGE LENDER OR MORTGAGE BROKER AFTER NOVEMBER 29, 2007:

Applications must be submitted to Massachusetts through NMLS before July 1, 2008. Prior to becoming licensed, all applicants must complete a residential mortgage lending course that has been approved by the Division of Banks. However, applicants may submit their application filings to Massachusetts through NMLS prior to completing a course. Individuals who are presently working as loan originators may continue to operate after June 30th only if they have submitted a mortgage loan originator license application to Massachusetts through NMLS. Beginning July 1st, any individual who does not have a license application pending with the Division of Banks may not continue to originate loans in Massachusetts. Any individual who submits an application before July 1st will have until August 31, 2008 to complete a residential mortgage lending course. If such an applicant fails to complete a course prior to September 1, 2008, his/her mortgage loan originator license application will be terminated.

For information regarding the educational requirements for Mortgage Loan Originator license applicants, please see Regulatory Bulletin 5.1-105. The Division of Banks currently accepting applications for the approval of Mortgage Loan Originator educational courses.

Oklahoma Amends the Education Requirements for Mortgage Brokers and Mortgage Loan Originators

Effective November 1, 2008, new applicants for a mortgage broker license in Oklahoma will be required to have completed 20 hours of approved education during the three years immediately preceding the date of application, and new applicants for a mortgage loan originator license will be required to have completed 16 hours of approved education during the three years immediately preceding the date of application.

Tennessee Amends Mortgage Licensing Requirements

Effective January 2009, applicants for a license as a mortgage lender, mortgage loan broker, mortgage loan servicer, or mortgage loan originator will be required to complete an educational training course. Criminal background checks will also be required for mortgage lender, mortgage loan broker, mortgage loan servicer, or mortgage loan originator applicants, and for registered mortgage loan originators seeking to continue registration.

Minnesota Adds Commercial Loans to Definition of Residential Loans

Effective August 1, 2008, the definition of "residential mortgage loan" under the Residential Mortgage Originator and Servicer Licensing Act (the "Act") will expand to include commercial loans secured by 1-4 family residential real estate. The bill also expands the definition of "residential real estate" to include non-owner-occupied property, and extends certain record-retention requirements from 26 to 60 months.

Colorado Adopts Emergency Rule Making Initial and Continuing Education Mandatory for Mortgage Brokers

Effective January 1, 2009 all mortgage broker applicants must complete the 40 hours of licensing education and pass the two-part exam prior to applying for a mortgage broker license.

All mortgage brokers who currently maintain a Colorado mortgage broker’s license must complete 40 hours of licensing education and pass the two-part licensing exam by January 1, 2009.

http://www.dora.state.co.us/real-estate/licensing/education/MB/brokereducation.htm

Illinois Anti-Predatory Lending Database Registration for Mortgage Brokers and Loan Officers

On May 15, Illinois began registration of mortgage brokers and loan officers on the Anti-Predatory Lending Database. The Anti-Predatory Lending Database Program, pursuant to Public Act 95-0691, will become operational on July 1, 2008. In order to record any mortgage against Cook County property, a Certificate of Compliance or Certificate of Exemption must be attached to the mortgage. Property located outside of Cook County is not subject to the act. A mortgage broker or loan originator that takes a loan application will be required to enter certain information into the database. The database will first determine whether the property is exempt. If it is not exempt, the database will then determine if it will be necessary for the borrower(s) to obtain counseling. If counseling is not required, the loan may proceed to closing. If counseling is required, the borrower(s) will be notified and given a list of all participating counseling agencies. The act aims to reduce predatory lending practices by assisting the borrower in understanding the terms and conditions of the loan for which he or she has applied. The act does not prohibit any type of loan. For more information regarding mortgage broker and loan originator registration, please see http://www.obre.state.il.us/RESFIN/NEWS/SB1167RegistrationBrokers.pdf.

Connecticut Eliminates Secondary Lenders and Brokers Act

Effective July 1, 2008, new legislation essentially does away with the Secondary Mortgage Lenders, Brokers and Originators Act by consolidating all regulation of mortgage lenders and brokers under one act. The bond amount for lender and broker licensees will also increase and the mortgage license application procedures and requirements will be modified.

Iowa Amends Code Chapters Administered By Division of Banking

Effective January 1, 2009, new legislation establishes initial education and examination requirements for persons subject to registration under the Mortgage Bankers and Brokers Act. Effective July 1, 2008 the required surety bond amounts will increase and the annual license and registration expiration dates will change from June 30 to December 31 for mortgage banker and broker licensees.

May 2008 Mortgage Licensing Update

2008-05-01T13:48:00.000-07:00

FHA Licensing

US Congress is continuing to lag on any FHA Modernization Bill. Hopes of FHA Licensing becoming easier are slowly fading.

Maryland Bond Increase

MD surety bond increases are effective 6/1/08. Notices will be sent out soon. Bonds will need to be increased. It depends on loan volume.

Idaho Eliminates Loan Officer Bonding Requirement

Idaho loan officers no longer need to carry the $10K bond effective July 1, 2008. Notices should be sent out around May.

Michigan Enacts Law Requiring Loan Officer Registration

On April 2nd, 2008 H.B. 5288 was approved, which will require the registration of "loan officers." Under these new laws, loan officers employed by licensees or registrants will be required to complete 24 hours of pre-licensure education (unless employed as a loan officer during 4 ½ of the previous five years) and pass an initial examination. Loan officers will also be required to complete six hours of continuing education each year. Loan officer registration will begin on January 1, 2009.

Note – Under the new rules, Michigan 1st bonds now needs to expire on 12/31 just like the MI 2nd in preparation for joining the NMLS. Many bond riders will need to be completed.

Indiana Enacts First Lien Mortgage Lending Act

On March 24, the "First Lien Mortgage Lending Act" (the "Act") was approved as part of H.B. 1359. The Act requires the licensure of first-lien mortgage lenders and places requirements on a lender's origination and servicing activities. Also, as part of new legislation, the Indiana Loan Brokers Act was amended to exclude first-lien mortgage lenders. The First Lien Mortgage Lending Act will become effective January 1, 2009.

Wisconsin Enacts Bill Removing Commercial Loans from Licensing Act

On April 7, Wisconsin Governor James Doyle signed S.B. 517. This Act amends the definition of "loan" under the Mortgage Bankers, Loan Originators and Mortgage Brokers Act (the "Act"). Currently under the Act, a "loan" is broadly defined to include loans made for commercial purposes. S.B. 517 narrows the definition of "loan" to mean "a loan for personal, family, or household purposes that is secured by a lien or mortgage, or equivalent security interest, on real property [consisting of 1 to 4 dwelling units, including individual condominium units] located in this state." S.B. 517 will go into effect on April 22, 2008.

Mississippi Requires Mortgage Licensees to Use Multistate Licensing System

On April 7, 2008 S.B. 2605 became law, amending the Mississippi Mortgage Consumer Protection Law (MMCPL), Miss. Code Ann. §§ 81-18-1 et seq., to clarify the statute and require the use of a multistate licensing system. The new law requires any entity or individual licensed under the MMCPL to use the multistate licensing system for application, renewal, surrender and any other activity required by the Commissioner of the Department of Banking and Consumer Finance. Finally, S.B. 2605 allows mortgage loan originators to work at any licensed location in Mississippi of the licensed company for which he/she works and creates a de minimis exemption from the MMCPL for persons who enter into no more than 12 residential mortgage loan transactions per calendar year. S.B. 2605 also requires individuals who own or acquire more than 10% of a licensed entity, down from 25%, to file an application for a license. S.B. 2605 became effective on April 7, 2008.

Massachusetts Loan Originator Applicants Must Complete 24 Hour Education Course

The Massachusetts Division of Banks (the Division) recently finalized and released Regulatory Bulletin 5.1-105 outlining the educational requirements that loan originator applicants must satisfy before securing licensure. Most notably, within 2 years of approval of individual licensure, Massachusetts loan originator applicants must complete an approved educational course consisting of at least 24 hours of classroom-based instruction. In addition, licensed loan originators must annually complete at least 8 hours of continuing residential mortgage lending education. Individuals are not required to fulfill the 24 hour course requirement if they (i) met the definition of mortgage loan originator prior to November 30, 2007, and (ii) apply for licensure prior to May 27, 2008. The Division instituted the new education requirements to ensure that applicants are knowledgeable about mortgage lending concepts, applicable law and regulations specific to the mortgage origination profession. We note that the Bulletin also outlines the requirements for a company seeking the Division's approval of its mortgage loan origination educational courses.

NMLS First Quarter Operations are Successful

The Nationwide Mortgage Licensing System (NMLS) has concluded its first quarter of operations successfully. Events of note in the first quarter:

· Seven states with an estimated 83,144 licenses are participating on NMLS.

· MA Division of Banks is implementing its new loan originator licensing law through NMLS.

· Two states, Nebraska and Rhode Island, had transition deadlines during the first quarter. It is estimated that 78% of Nebraska company licensees and 74% of Rhode Island company licensees transitioned onto NMLS.

· Additional functionality was added to NMLS on March 31st that included data download capabilities for regulators and the first phase of reporting. The next release of the system is schedule for June 30th.

· The NMLS call center was instrumental in assisting licensees get onto and navigate through the system, handling an average of 400 calls a day.

NY Banking Department begins Company/Branch licensing on NMLS

Companies and sole proprietors that currently hold a NY Mortgage Broker Registration or a NY Mortgage Banker License, have from April 1, 2008 to September 1, 2008 to complete and submit through NMLS all necessary Form MU1s, Form MU2s and Form MU3s. Companies that have established their company record on NMLS can begin to submit licensing applications on behalf of their loan officers, as required under the New York law that went into effect on January 1st of this year.

Washington State DFI begins Consumer Loan Company Licensing on NMLS on May 1st

Companies holding a Washington State Consumer Loan Company License have from May 1, 2008 to September 1, 2008 to complete and submit through NMLS all necessary Form MU1s, Form MU2s, Form MU3s, and Form MU4s. WA-DFI will no longer accept Consumer Loan Company License applications via paper after April 18, 2008.

The following state agencies are expected to begin participating in NMLS in 2008.

May 1st

Washington Department of Financial Institutions (Consumer Loan Company Licenses)

July 1st

Connecticut Department of Banking

Louisiana Officer of Financial Institutions

Mississippi Department of Banking & Consumer Finance

New Hampshire State Banking Department

North Carolina Office of Commissioner of Banks

Vermont Department of Banking, Insurance, Securities, and Health Care Administrations

Washington Department of Financial Institutions (Mortgage Broker Licenses)

November 1st

Arkansas Securities Department

Indiana Department of Financial Institutions

Pennsylvania Department of Banking

Wyoming Division of Banking

Note: These lists are an indication of intent. Official announcements of participation will be made by each agency in a communication to each of their licensees.

April 2008 Mortgage Licensing Update

2008-04-04T16:21:00.000-07:00

The April Mortgage Licensing Update includes the following updates:

• FHA Licensing Bond - Will it ever pass?

• Alaska Mortgage Licensing - July 1, 2008

• New York Mortgage Licensing - Transition to NMLS

• Surety Bond Issues - Massachusetts, District of Columbia, and New York

• HUD Exempt States - This is really interesting

FHA Licensing Bond

Congress has been working on reconciling the FHA Modernization Act for months now and although it appears every week that they are making progress, it is still very unclear whether a bond provision will be in the new law. If you are looking to do FHA loans and you don't meet the $63,000 net worth requirement, I recommend looking into other options. There are many companies out there that will allow you the independence you desire while operating under their HUD approval.

Alaska Mortgage Licensing

Although you won't find anything on Alaska's website, mortgage broker and lender licensing are required by July 1, 2008. The contact is Roger Prince at (907) 269-8144. My recommendation is to contact him as soon as possible if you desire to originate in Alaska after July 1, 2008.

New York Mortgage Licensing

The transition for New York Mortgage Brokers and Bankers to the NMLS has started. Beginning April 1, 2008 you can now submit your company information into the NMLS. The deadline for transition is September 1, 2008. With the complete incompetence of the New York Banking Departments Mortgage Licensing Division, there is great concern that they will be able to handle this in a professional manner. It could turn out very bad for many companies if this does not go smoothly, but it is possible that the NMLS will eventually streamline the process of getting licensed in New York, which at this time is the most difficult state for licensing in the nation. My hope is that they clean house over there and get rid of the people that are uncooperative and rude.

Surety Bond Issues

Massachusetts, District of Columbia, and New York are becoming very difficult states to place bonds in. Hartford issued a letter that they would not be renewing any Massachusetts bonds. District of Columbia has made some changes to the way they interpret the bond increasing the liability for the carrier, and New York has been making so many claims on the bonds that no surety carrier wants to write them anymore. My recommendation to you is to contact these states if you are licensed in them and complain. They need to make some changes to their surety bonds and the way they use them or the mortgage companies in these states are going to lose their licenses or be forced to pay a lot of money to get the bonds. Let your voices be heard.

HUD Exempt States

HUD approval allows you to do FHA loans, but it also has another added benefit: HUD exemptions. About 10 years ago, you could be exempt in most states if you were approved to broker FHA loans, but slowly the states have taken away these exemptions. Here is the list of states that still have some form of exemption in their laws. Keep in mind that some of these exemptions will not apply to you and some lenders do not accept exemptions.

Alabama

Hawaii under Foreign lender exemption (some banks don't take it though - most do)

Oklahoma if you have a FHA nationwide direct lending branch or a FHA approved branch with a lending area that includes OK.

Ohio if you only originate HUD loans.

Missouri

Indiana if you originate 25 FHA loans per year in IN as of 1/1/08 OR if you have a Full-Eagle.

Kentucky if you originate 12 FHA loans per year in KY.

Tennessee will allow you to register instead of license, which removes the $90,000 bond requirement, however, if you are already licensed, you will be required to keep the bond for 2 years after changing from licensee to registrant.

Texas as a full-eagle under the mortgage banker registration (Must have DE Underwriter on staff)

March 2008 Mortgage and FHA Licensing Update

2008-03-05T08:53:00.000-08:00

With the Economic Stimulus bill passed, it looks like the FHA modernization bill has been held up once again. The President asked Congress to move forward with the latter bill during the signing of the Economic Stimulus bill, and many are hoping it will pass this month.

Massachusetts finally released the new bond format. The previous format released about 6 months ago has made it virtually impossible for anyone to get a bond without posting $75,000 in a business line of credit. Hartford, one of the largest surety carriers in the world, still has declined to issue the new bond stating in a press release that "the State now intends to be able to look to the bond to recover any "past due Division costs, assessments, penalties, and other obligations...all of which were outside the obligations of the prior bond form." Most surety companies still find it too risky to issue a bond in this State, which will make it difficult for those trying to start new business and those trying to renew in the state.

FHA Licensing Update

Everyone seems to have their own opinion on the FHA modernization bill.
There are those who are very optimistic, somewhat optimistic,
and pessimistic. Some think the bill will definitely pass on March 15,
some think it will hopefully pass by August 15, and some don't think it
will ever pass this year. I am of the persuasion that we have
no idea what Congress intends on doing so we need to move forward with
hope that it passes soon but expectation that it may never pass.
With this in mind, if you are planning on getting FHA
licensing this year and you meet the net worth requirement ($63,000
company net worth), I recommend starting the process now. If
you don't meet the net worth requirement, I recommend looking for an
employment relationship with a company that will allow you to originate
FHA loans. There are numerous small companies that will give
you the flexibility of working as if you are running your own mortgage company while being an
employee of theirs. Hopefully we'll know more in two weeks,
but don't delay. Act now to start taking part in the FHA loan
market.

Massachusetts
Issues FAQs on Licensing Law

The Massachusetts Division of Banks just released answers to frequently
asked questions (FAQs) in regards to recent changes to that
state's mortgage lending laws and regulations. The FAQs discuss newly
established (i) loan originator
licensing provisions, (ii) 90-day Right to Cure for residential
mortgages, and (iii) a requirement to provide counseling to subprime
borrowers. To view the FAQs in full, take a look at http://www.mass.gov/dob.

MORTGAGE LOAN ORIGINATOR LICENSE APPLICATIONS ACCEPTED
THROUGH NMLS BEGINNING FEBRUARY 19TH

Individuals who were employed by their current employer
prior to November 30, 2007 may submit a license application to the
Division through the Nationwide Mortgage Licensing System (NMLS)
between February 19, 2008
and May 27, 2008.

New Colorado Licensing Requirements

1. Pre-Licensing Education - All mortgage brokers will need to complete the pre-licensing education requirements and the requisite test. This will need to be completed by all mortgage brokers prior to January 1, 2009. Mortgage brokers who fail to complete the pre-licensing and test requirement are subject to disciplinary action regarding their license. The Director, Erin Toll, appointed a 10 member Mortgage Broker Education Task Force to help develop and determine the number of pre-licensing hours required, course content, course approval, the pre-licensing test and continuing education.

2. All mortgage brokers will need to complete a minimum of nine (9) hours of continuing education every three years.

Alaska Proposes Mortgage
Lender, Loan Originator Rules

On February 12, the Alaska Department of Commerce published a notice
proposing rules implementing the Mortgage Lending Regulation Act,
requiring licensure of mortgage lenders, brokers, and loan originators.
Fortunately the Alaska legislature gave ample time for the
state to prepare the new licensing requirements.
The act was passed last summer, but does not go into effect until July
1, 2008.
The proposed rules cover (i) lender and broker licensing obligations
and procedures, (ii) loan originator licensure and education
requirements, (iii) record retention format and requirements for
regulated entities, (iv) outlines specific deceptive advertising
practices, and (v) enforcement powers and procedures of the Department
of Commerce. It also details applicable fees for licensure,
registration, and renewals. Full text of the rules can be found at http://www.commerce.state.ak.us/occ/pub/MTG0208.pdf.

February 2008 Mortgage and FHA Licensing Update

2008-02-01T10:22:00.000-08:00

With the mortgage industry in turmoil and state legislatures in session, we can expect a lot of changes to occcur in the next 2 quarters. The Nationwide Mortgage Licensing System debuted last month and is already going strong in 7 states. FHA is expected to change dramatically with the US Congress compromising on a new bill. Many states are likely going to be proposing bills to require the lender to verify the ability of the borrower to repay their loan. This means stated income will likely be a program of the past. States will be increasing their regulations dramatically in an industry that is already over regulated. This will mean more states requiring loan officer licensing and branch licensing.

Here is an update on Mortgage Licensing items to be aware of:

• Colorado Clarifies Trigger for Licensing

• Nebraska Branch Licensing

• New York Loan Originator Licensing

• Nationwide Mortgage Licensing System (NMLS) Update

• FHA Update

Colorado Clarifies Trigger for Licensing

On January 7, the Colorado Division of Real Estate issued a position statement seeking to resolve “uncertainty… in the market place regarding who is required to be licensed.” The guidance specifies that “persons who directly supervise individuals that negotiate, originate, or offer or attempt to negotiate or originate for a borrower, and for a commission or other thing of value, a residential mortgage loan to be consummated and funded by a mortgage lender” must become individually licensed as mortgage brokers. The Division goes on clarify that persons performing only administrative tasks are not required be individually licensed as mortgage brokers. The position statement defines administrative tasks to include: (i) receipt, collection, distribution, and analysis of information common for the processing or underwriting of a mortgage; and (ii) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about rates or terms.

Nebraska Branch Licensing

Nebraska is the first state to transition to the Nationwide Mortgage Licensing System (NMLS) with a transition deadline of February 28, 2008. Included in that deadline is new branch licensing requirements for the state. Make sure to add all branch locations that you want to be able to do business in Nebraska by that deadline.

New York Loan Originator Rules

On December 19, the New York State Banking Department (NYSBD) issued rules implementing the state’s new mortgage loan originator licensing statute (NY CLS Bank Article § 599-a et seq.) which goes into effect on January 1, 2008. Under the rules, originators who have not worked previously in New York will be required to apply for approval prior to April 1, 2008, but originators employed by or affiliated with a New York banker or broker prior to 2008 are not required to file an application until July 1, 2008. The authorization process will utilize the Nationwide Mortgage Licensing System (NMLS) which becomes operational on January 2, 2008. Applicants will also be required to submit fingerprints, credit histories, and documentation of their financial and criminal history disclosures.

Nationwide Mortgage Licensing System (NMLS) Update

With the release of the new Nationwide Mortgage Licensing System on January 2nd, 2008, there has been much speculation about whether the system would stand up to it's goals to unify the licensing process, make license maintenance easier for licensees and regulators, and help regulators to track down the bad companies. Still being in the transition stage, we haven't seen whether the last goal has been met, but we have had a chance to see what the system does and how easy it is to use. So far, I have found the system to unify the process quite dramatically. Much of the time of applying in multiple states before was the process of filling out the same information over and over for each state. The system has been created fairly user friendly to allow multiple users to access company, branch, and loan originator information to update it and ammend for each state at the same time. Another thing that has worked well for the system is the call center. The people working there are very helpful, answer the phones promptly, and try their best to answer all questions as thoroughly as possible. Personally, I have had a run in with the state where they were still not very cooperative as most states are, but the system forced them to follow protocol and move forward whereas they would have let it go in the past. Altogether, I see the system bringing much needed changes to a major problem with the current way mortgage licensing is handled in many states.

FHA Update

FHA is one of the most intersting items to speak of this month. The House has passed a bill that will raise the FHA loan limits to as high as 125% of the median house price, which would be around $775,000 in California. The House bill also has a provision for a surety bond in lieu of audited financials when applying for or renewing an FHA Loan Correspondent (Mini-Eagle) Approval. The Senate bill only proposed to raise the FHA limit to the Fannie Mae Conforming Loan Limit, which is at $417,000 right now. The Senate bill also did not include the surety bond provision. At this moment, the Senate and the House are in Committee working on a compromise on these two bills. To add to the excitement, the House, Senate, and Administration signed an Economic Stimulus Agreement last week that called for the FHA bill to move forward quickly as well as a number of other major changes to specifically help the ailing housing market. This means that the House and Senate bill will be likely compromised on in a couple of weeks if not sooner. The pressure is very great right now as we may be heading into a recession. Expect to see some major changes to FHA in the very near future.

January 2008 Mortgage Licensing Update

2008-01-22T12:39:00.000-08:00

There have been a lot of changes in 2007, and we can expect even more in 2008. With the state legislators gathering together and the current market conditions influencing their legislative decision-making power, we can expect numerous new laws relating to the mortgage industry from each state. Especially if the US Congress decides to pass legislation requiring minimum levels of licensing in each state, which is likely to pass early this year.

The updates for January are as follows:

• FHA Licensing Update

• Massachusetts Bond Form Released

• Colorado E&O Requirement Postponed

• Alaska Licensing by 7/1/08

• Nationwide Mortgage Licensing System Released

FHA Licensing Update

With legislation recently passing by the US House and the US Senate, many changes are expected to happen in 2008. The Senate bill that just passed was much more conservative than the House bill and did not include items such as the surety bond in lieu of audited financials, a dramatic increase in the FHA Loan Limit, and risk-based pricing. It did, however, include some major changes to the HECM loan (Reverse Mortgage) that many people are excited about. Now the two bills have been sent to committee for the House and Senate to come to a compromise on differences in the bills. I would expect the Senate to hold their ground and the final bill to look very similar to the bill just recently passed by the Senate, but there is still a chance that some of the provisions in the House bill will be adopted. I would expect a final bill to be sent to the President by February.

Massachusetts Bond Form Released

Massachusetts made some new requirements for new licensees back in September, one of which was a new bond requirement. Unfortunately, the state failed to make the new bond form available. All mortgage companies that applied for a mortgage broker license since that date have been on hold. Massachusetts finally issued the new bond form, but to this date, it still has not been approved by the insurance companies to be issued. Numerous companies are waiting on this final item in order to get a license and hoping that the insurance companies will start issuing surety bonds on the new form soon.

Colorado E&O Requirement Postponed

Colorado recently issued a new requirement for all individual mortgage brokers (loan originators) licensed in the state to maintain an E&O policy. The insurance companies starting issuing these around the beginning of December, however, one of the questions on the application was "what percentage of loans originated in the previous 12 months were sub-prime loans?" Anyone that said more than 20% was either denied or told that they would have to pay thousands for the policy. Due to this issue, Colorado has issued an emergency ruling allowing until 1/31/08 for individuals to obtain the necessary insurance as well as increasing the maximum deductible to make the bond more cost-effective. Colorado is getting known for their emergency rulings since the state legislator is not giving enough time for the Colorado Division of Real Estate to implement new legislation.

Alaska Licensing by 7/1/08

This is just a reminder for those of you who are currently originating loans in Alaska. Many people have been able to originate their for years without a license, however, there new licensing requirements go into effect on July 1, 2008. Make sure to get your applications in soon if you plan on continuing to do business there after the first of the year.

Nationwide Mortgage Licensing System (NMLS) Released

Just a final reminder for those who are licensed in the first 7 states that will be using the system. You will want to access the system as soon as possible to update your company information. Here is a list of the first 7 states that will be using the system:

• Idaho

• Iowa

• Rhode Island

• New York

• Kentucky

• Massachusetts

• Nebraska

What Services does a Mortgage Licensing Company Offer?

2007-12-27T12:55:00.000-08:00

I have had clients tell me that licensing a mortgage company nationwide was one of the most challenging projects that they have ever taken on. So why is it so challenging, and what can you do to make the process easier?

What does a Mortgage Licensing Company do to make this process easier?

To explain what a mortgage licensing company does, I need to first explain what is involved in getting a mortgage license. Almost every state has the following requirements: Filing for certificate of authority as a foreign entity, registered agent, surety bond, fingerprints, education, experience, and exams, detailed ownership and officer information, financials, and a final application.

Time
The following items take a lot of time to complete and fill out correctly if you have never done it before. Filing a certificate of authority is different in each state and required prior to obtaining a license. Each filing requires a number of additional items such as a certificate of good standing and/or certified articles of incorporation as well as information on the registered agent. By using a mortgage licensing company, they usually include this process in the service that they offer. Completing the license applicaton also requires a number of different documents to attach and can be very time consuming to research and fill out accurately. Most states do not make the process simple and definitely do not explain what is needed in a step by step manner that would be simple to fill out.

Knowledge
The following items can take detailed understanding and intimate knowledge of each states requirements. The surety bond requirement can be difficult and often the largest barrier to obtaining licenses nationwide. Since each state requires a surety bond, once about 5 to 10 states are reached, a mortgage company will find it difficult to obtain the necessary bonding in order to go into additional states. If there is any financial or criminal background on the owners or officers of the company, you will need to delicately provide this information to the states and make sure to provide them the answers that they need to be able to determine if their regulations prohibit that type of background. It must be handled very carefully.

In whole, the process can be done on your own or with the assistance of professionals. If planning on a mortgage licensing project in to 1 or 50 states, make sure to consider the cost, not just the immediate monetary cost, but also the cost of the time involved to maneuver all of the different state requirements quickly and efficiently.

Largest Barrier to Mortgage Company Licensing

2007-12-14T11:52:00.000-08:00

I get calls all of the time from companies that are interested in getting away from a net branch company and getting their own mortgage licenses. After hundreds of these conversations, I've been able to reduce the call to a simple question. What is your mortgage company's net worth?

Now you may be thinking that net worth is not a requirement in a lot of states especially for mortgage brokers or is very minimal such as $10,000 to $20,000. You are correct. Most states don't have a very high net worth requirement for mortgage brokers, although a few do. That is actually not why I ask the question, "What is your net worth?" The reason I ask the question is because most states have a surety bond requirement. To better explain this, let me tell you what a surety bond is.

A surety bond involves three parties, the Principal (in this case mortgage companies), the Obligee (the state department), and the Surety (insurance surety carrier). It is an agreement by the surety to be responsible to the obligee for the obligation or conduct of a third party which is the Principal. It is also a way for the states to regulate the licensing of mortgage companies conducting business in their states as a broker or a banker or both. The laws and statutes vary from state to state. When the statutes or laws are broken by the Principal a claim or loss can occur on the bond. The most important thing to remember on a surety bond is that it is not an insurance policy. Whereas, in a regular insurance policy, the Insurer takes all risk and pays out claims, in a surety bond the law seeks that Surety ask for recovery or reimbursement for what surety pays out to handle the claim with the state.

With that being said, basically if you receive any claims on your surety bond, your company and then in most cases the ultimate owners of the company will be required to pay back the surety company. Since the surety may have to go after your mortgage company and owners for the losses, the surety company needs to verify that you actually have the ability to pay them back if their was ever a claim. So they verify the company's and the owners assets and ultimately net worth.

Most surety companies that you talk with will tell you that the maximum they can offer in surety bonds is the net worth of the company. With that being said, now you can see why net worth is so important when you go into multiple states. For example: Let's just say that you decide to get licensed in 5 states. Each state has between a $10,000 to $50,000 surety bond. The total of all surety bonds in the 5 states equals $175,000. If you try to get $175,000 worth of surety bonds, the surety company will ask to see your company's financials to see if your company could pay back any claims. If your company only has a net worth of $25,000, you may have a difficult time getting the bonds. There is one exception, and that is if the owners financials are very good. If the owner has a couple hundred thousand in net worth, the surety companies may look at that as enough to lower their risk of non-payment.

Now despite this being the largest barrier to mortgage licensing in multiple states, surety bonds are hardly ever claimed. Usually companies pay any fines or fees way before they get a claim on their surety bond. The reason is for this is if there is a claim on a company's surety bond, they usually will start to lose their bonds, because no surety company will insure them and they will subsequently lose all of their state licenses. It just doesn't happen very often.

Even though multiple states may not be an option at this time, I do recommend getting licensed in a few states that you do most of your business. This will greatly reduce your overhead and allow you the flexibility to work on your own.

December 2007 Mortgage Licensing Update

2007-12-04T12:28:00.000-08:00

The bills in the Senate are just sitting there, the state legislative sessions are starting up and business is slowing down. Here's the latest news for mortgage licensing

Colorado - E&O Insurance now required for Mortgage Broker Individuals

Massachusetts - Surety Bond is not available

FHA Reform - New Bills still on hold in the Senate

Colorado

Colorado began licensing mortgage brokers on 1/1/07. Mortgage brokers are defined as any individual that solicits or originates a loan. Colorado is one of the only states that only licenses individuals and not companies, i.e. corporations and LLCs. Colorado also removed the HUD exemption on 6/1/07, which then required about 1,000 more companies to get their individual loan originators licensed as Colorado Mortgage Brokers. Now, as of 1/1/08, all licensed mortgage broker individuals will also need a $25,000 E&O policy. I just spoke to my insurance company today and they said it is now available.

Massachusetts

Massachusetts issued some new requirements that became effective in September. I review all of these requirements in the following news update: Massachusetts adds New Requirements. One of the major requirements was a surety bond for mortgage brokers and lenders. Since that date, no mortage licenses have been issued in the state because the state failed to issue a form for the surety bond. Massachusetts has stated that it will be available very soon. Any mortgage companies that need assistance with obtaining this bond, please let me know.

FHA Reform

This is one of the hottest topics right now for mortgage companies. Unfortunately, the US Senate doesn't seem to think so. The Senate Banking Committee has sat on a number of bills for months and nothing seems to be moving. I have received confirmation from someone involved in the congressional hearings that the bond provision in lieu of the audited financials for HUD approval (FHA Licensing) has been removed and will not be passed in the Senate. This is very unfortunate for many companies that don't have the time and money to do audited financials every year. The other hot item is the FHA loan limit increase. This is expected to pass in one form or another. We are still waiting to see what happens on this.

Conclusion

Be ready for some state legislation as their legislative sessions are about to start very soon. I'm predicting a lot of legislation in regards to foreclosures, loan modifications, counseling, additional licensing requirements, and more. Keep your eyes open for some major changes.

What Are The Benefits Of Using A Mortgage License Service?

2007-11-13T15:36:00.000-08:00

If you're reading this article, you may be asking what the benefits are of using a mortgage license service. Acquiring a license is as simple as just sending an application to the state and waiting for the license to come in, right? Well, yes and no. Due to sensitive information handled by mortgage companies, the large amounts of money handled by mortgage companies, and the increasing amount of fraud in the industry, mortgage licensing has become a very arduous task. Mortgage licensing often involved numerous steps and can take months for the state to process the application just to find out that they need a few more items. This can often go on for months. So what can a mortgage license service do for you.?

1. Experience - Provide expertise to expedite the application process.

2. Connections - Find the best service providers for surety bonds, registered agents, and document retrieval.

3. Filing - Complete the paperwork so you can focus on building your mortgage company.

Experience

A mortgage licensing service has the experience to be able to put the licensing application together for you quickly. Without assistance it can take weeks even months just to research everything that's required. You will also have an advocate with the states. A mortgage licensing company has dealt with the same people at the states numerous times and can get you the answers you need if there are any issues that come up during the process.

Connections

Knowing the right companies to work with during this process is invaluable. You will need an insurance company that provides surety bonds. You will need a registered agent company that is nationwide that can receive service of process for you. You will also need a company that can expedite document retrieval from the different Secretary of States to expedite the process. I remember working with a surety bond company many years ago that told me the company I was working for couldn't get any more bonds. They told me that the companies financials weren't good enough. I went to about 10 different companies before I found one that would be able to provide additional bonds. Without assistance finding the right connections, you could find it difficult to complete the process.

Filing

The paperwork in some states is very simple, but most states have pages and pages to complete. Some of the questions are not very clear and require additional research and making calls. A mortgage licensing service already has gone through this and can provide the answers to these tough questions. They also complete the mortgage license applications for you so you don't have to spend hours filling out paperwork.

Mortgage Licensing Conclusion

If you have trained staff to handle all of the paperwork, make the connections, and provide the expertise, then definitely handle it in-house, but if you don't I recommend considering outsourcing the mortgage licensing process. It will actually save your company money and time.

November 2007 Mortgage Licensing Update

2007-11-13T15:35:00.000-08:00

There are a lot of interesting things happening to the mortgage industry due to the market flux. One of the main items of interest is the legislation currently in congress. Here is an overview of what may be coming soon.

FHA Reform

There have been a couple FHA Reform bills in congress. One of them got a lot of publicity because it passed the House with an overwhelming majority and proposed to more than double the loan limits in high median house price areas. This bill has been held up in the Senate Banking Committee and will possibly die. There was a surety bond provision in the bill that would have allowed smaller mortgage brokers to obtain a surety bond instead of getting audited financials. This provision has unfortunately died. Many companies were hoping this would pass since it is so costly to get an audited financial statement. The only option now is audited financial with a $63,000 net worth. There are still numerous other provisions that will likely be passed by Senate. The raising of the loan limits is very likely but will not be as high as the House proposed.

Mortgage Loan Officer Licensing

There is also a bill that has been passed by the Senate Banking Committee that proposes to make it mandatory for states to adopt a loan officer licensing scheme. This is very likely going to pass. It would then give each state that doesn't have its own licensing for loan officers about 2 years to put legislation and regulations together to make this happen. If the state doesn't meet the requirements of the bill, then HUD will be required to step in and set up loan officer licensing for that state. The larger short-term impact of the passage of a House bill is that the states will pick up on it as a template for new state law enactments in the coming state legislative season, which starts around the first of the year. Buckle your belts for the states to really get crazy soon.

Yield Spread Premium

The final interesting item being discussed in every mortgage company right now is the provision for "eliminating YSP." I put it in quotes, because the legislation doesn't really eliminate YSP, it just requires that the YSP be disclosed up front as an actual figure instead of just 0% to 3% like it is now on most Good Faith Estimates (GFE). This will change this a little bit, but it won't really affect the mortgage broker industry as much as some opponents to the bill say.

Conclusion

Be Ready for some exciting changes to happen in the mortgage industry soon. The government is looking to make a change to the current system and although many might argue that it won't help, it will definitely happen and change the industry forever.

Mortgage License Update

2007-11-08T14:38:00.000-08:00

Loan Officer Licensing may be a required very soon in all states. Loan Officer Licenses among other things have been introduced to in the Congress as a may to reduce fraud and increase responsiblity nationwide. If passed, this bill would require all states that do not currently have a loan officer licensing scheme to set one up. Over 30 states have already adopted a license scheme for loan officers in the last 5 years. This bill may force the remaining states to follow suit. With the Nationwide Mortgage Licensing System being organized at the same time, it could all come together very nicely to make it simple to obtain the loan officer licenses needed for each state.

Representatives Introduce Mortgage Reform Legislation

Representatives Brad Miller (D-NC), Mel Watt (D-NC) and Barney Frank (D-MA)introduced “The Mortgage Reform and Anti-Predatory Lending Act of 2007” on October 22, 2007.

Key provisions of the legislation include:

· Establishment of a federal “duty of care;”

· Required licensing for all mortgage originators, including brokers and bank officers;

· Minimum standards to ensure a borrower’s ability to repay;

· Expanded and enhanced consumer protections for high cost loans under the Home Ownership and Equity Protection Act (HOEPA); and

· Foreclosure protection for renters.

CRL Nationwide Lending

2007-11-07T15:46:00.000-08:00

CRL can provide you immediate access to originate loans nationwide while you work with Integrity Mortgage Licensing to obtain licenses for your mortgage company. All licensing for CRL was completed by Integrity Mortgage Licensing and we both highly recommend each others services. CRL was formed as a safehaven for people who want to originate loans nationwide. Their vision has always been to treat people the way that we would want to be treated.

Our industry is in turmoil. Many well established mortgage companies have gone under and taken tens of thousands of dollars with them, money that was owed to hard working originators like you. Other companies are currently months behind on commission payments. We have all been “stung” by situations like this.

CRL is dedicated to being a solution to this crisis. They are committed to a Same Day Payment philosophy and are determined to provide outstanding service to you, their customer.

This means that you will always:

1. receive your payments on time

2. get the service you need

3. know that you are being told the truth

Contact them today at SameDayPay@crl1.com or (800) 562-6058x0

Visit their website at www.crl1.com

FHA License Update

2007-11-07T15:45:00.000-08:00

Public comments on the FHA Reform Bill in the Senate is closed today, October 22, 2007. Already passed by the House with an overwhelming majority, it is expected to pass in the Senate by mid-November. The Expanding American Homeownership Act of 2007 will bring about many changes to FHA loan origination. The most important changes are:

1. FHA Licensing - Elimination of Audited Financial Requirement for Brokers

2. FHA Loan Limit - Increase of the Low FHA Loan Limits

FHA Licensing

Currently when a small broker shop tries to get licensed to originate FHA loans, they hid a major hurdle. HUD requests that all companies have their financials audited annually showing a minimum net worth of $63,000. Smaller broker shops that do have the minimum net worth, often find it difficult to obtain audited financials since they cost around $5,000 to $10,000. They can also take several months to complete if your corporation or LLC has never been audited before. Up until now many companies have been forced to form a new corporation or LLC in order to reduce the cost of audited financials.

The new legislation being proposed will do away with the audited financial requirement. In lieu of audited financials, you can submit a surety bond. A surety bond is simple and cheap to obtain in comparison to audited financials and is actually safer for the consumer whom it is meant to protect. The president of the largest Mortgage Insurance Company in the nation told me yesterday that he has helped push this change through in congressional hearings and that he expects it to pass very soon.

FHA Loan Limit

The new legislation also proposes to increase the FHA Loan Limit. Currently the loan limit is at 87% ($362,790) of the Fannie Mae Loan Limit ($417,000) in areas with high median house prices. It is about 50% of that in low median house prices. The only exception is Hawaii, Guam and Alaska. The proposed increase passed by the house will raise the loan limits to as high as $750,000 in certain high median house price areas. This would open up FHA to assist many people in coastal areas where average house prices are about $600,000 and higher. With only Jumbo loans as an option right now, many people are finding it very difficult to obtain a loan due to the hightened underwriting guidelines.

The President is expected to sign the bill, but not at such a high amount. He has stated in public speeches that he does not plan on raising the limit above the Fannie Mae Limit of $417,000. Many people, loan originators, brokers, and borrowers are waiting patiently to see what happens in the house in November.

For help with FHA Licensing, Contact Integrity Mortgage Licensing at (714) 721-3963 or ssheasby@integritymortgagelicensing.com

Best States for Mortgage Licensing

2007-11-07T15:44:00.001-08:00

With the housing market collapsing in the last few months, are there any places in the United States left to originate mortgage loans? If you're asking this question, you're not alone. Every mortgage company in the nation is asking the same question. Fortunately the answer is yes. Here is a list of the top areas for mortgage origination:

1. Washington (Seattle Area)

2. California (San Jose and San Francisco)

3. North Carolina (Raleigh and Charlotte)

4. Texas (Dallas and San Antonio)

5. Ohio (Columbus Area)

6. Pennsylvania (Pittsburgh Area)

This information is based on a survey from Forbes Magazine and Moody's Economy.com. There analysis took into account many factors including rise in house prices, demand for houses, job market growth, and many other factors.

Contact Integrity Mortgage Licensing today and we can share with you more areas that we currently recommend and/or help you get licensed in some of the states mentioned above.

Texas Company Mortgage License Applications Ready

2007-11-07T15:37:00.000-08:00

Are you a licensed mortgage broker in the state of Texas? Does the compensation that you make on a loan go to your corporation or LLC? If so, you now need to get your mortgage corporation or LLC licensed. The applications just posted last week at: http://www.sml.state.tx.us/mortgage.html. If you're in need of assistance to file this application, please contact us at Integrity Mortgage Licensing. We will assist you with every step required to make sure you meet the 12/31/2007 deadline. After this date, if your mortgage company is not licensed, the lenders will have to pay the individual mortgage broker.

FHA Licensing May Get Easier

2007-11-07T15:36:00.000-08:00

Expanding American Homeownership Act of 2007 has been passed by the House and will most likely be passed by the Senate and signed by the President after a few minor adjustments. This is the biggest change to FHA that has occured since it inception. If the House has it's way, this would actually change the initial purpose of FHA from being an agency formed to help low income households to an angency that helps almost all Americans to be able to own and keep their homes.

Increasing FHA Loan Limits

Why am I saying this? FHA has always been geared toward helping low income, poor areas, to be able to afford buying houses. The new bill that is now before the senate proposes to increase the loan limits from $200,000-$350,000 to as high as $700,000 in areas with high median house prices. I personally don't know any low income people that own $700k houses, except for those individuals that lied on their loan applications and "stated" that they made $10,000 per month as a janitor at Wal Mart and actually got the loan. Fortunately, Bush has stated that he will not allow this to happen. He intends to keep FHA's purpose intact. I believe the Senate will do the same. Bush plans on keeping the FHA loan limit at $417,000 or below. We should see very soon.

Elimination of Audited Financials Requirement for Brokers

This is the second largest change to FHA. If this is passed by the House, it would open the door to about 90% of the nations mortgage brokers that were previously restricted from becoming an FHA Approved Broker (Loan Correspondent) due to the cost barrier. Most people don't realize it, but audited financials can cost between $2,000 to $20,000 for the average small broker to obtain. The audited financials required by FHA must be completed by a CPA that has gone through a peer review and the minimum net worth must be $50,000 according to FHA's stringent net worth calculation guidelines. Now, the 90% of brokers that did not have the time, money, and resources to put together audited financials, can put forth a surety bond in lieu of the audited financials. A surety bond is obtained through insurance companies and covers the consumer or third parties in a transaction and is payable by the mortgage company if drawn on by the state to pay a consumer or third party. The new bill preposes a bond between $50,000 and $100,000. Most analysts would agree that something similar to this will be in the amended bill when passed by the Senate.

What will be the affect of this Bill

Whether the FHA loan limit is increased to $700,000 in some areas or $417,000, the bill will change FHA's purpose dramatically. Many people will be looking to FHA as a place to obtain a loan that conventional lenders are not able to provide. This is possible through FHA's upfront mortgage insurance that is able to reduce the risk of higher debt-to-income and loan-to-value ratios. We will also see a huge surge of advertising for FHA when the majority of mortgage brokers are given access to be approved FHA brokers. Unfortunately, the House tends to think that this will be the solution to the current market problems. This is a great start, but I think it will take much more than this to bring an adjustment to all of the lies and deception that occured in the last 5 years in the mortgage industry.

New Massachusetts Mortgage Licensing Requirements

2007-11-07T15:35:00.000-08:00

Massachusetts has now added new surety bond and financial requirements for mortgage broker and lender licensees.

NOTICE - MORTGAGE LENDER AND MORTGAGE BROKER APPLICANTS

Please note that the recent amendments to 209 CMR 42.00 et seq. have been finalized as of September 7, 2007. All mortgage lender and mortgage broker license applicants filing on or after September 7th must comply with the new net worth and surety bond requirements at the time of application. The amendments increase the minimum net worth requirement for licensed mortgage lenders and establish a minimum net worth requirement for licensed mortgage brokers. A surety bond requirement for both licensed entities was also established. Mortgage broker applicants must submit recent financial statements that have been audited or reviewed by a certified public accountant with their application. Please refer to 209 CMR 42.03 and/or 209 CMR 42.06 to review the amended licensing requirements.

NMLS Update - Nationwide Mortgage Licensing System

2007-11-07T15:34:00.000-08:00

State mortgage regulators from around the country have been working since 2004 to develop a nationwide licensing system for the residential mortgage industry that will improve supervision of the mortgage industry, streamline the licensing process for mortgage companies and professionals, and enhance consumer protection.

The Nationwide Mortgage Licensing System (NMLS) is a web-based system that will allow state licensed mortgage lenders, mortgage brokers, and loan officers to apply for, amend, update or renew a license online for all participating state agencies using a single set of uniform applications. The NMLS will bring greater uniformity and transparency to the mortgage industry while maintaining and strengthening the ability of state regulators to monitor the industry and protect their citizens.

The System is scheduled to begin operation on January 2, 2008.

http://www.csbs.org/AM/Template.cfm?Section=Mortgage_Licensing

New South Dakota Mortgage Licensing

2007-11-07T15:33:00.001-08:00

South Dakota has passed SB165, which requires loan officers to be licensed as Mortgage Brokers if brokering and licensed as loan originators if working for a direct lender The bill is effective December 1, 2007.

Mortgage Lenders

Requires current licensees to have a $25,000 surety bond by August 31, 2007 and for new licensees it is a requirement with the application.

Mortgage Lenders must employ licensed loan originators

Loan Originators

$150 initial, $44 for background check, $75 annual renewal (Dec 31st)

Licenses are not transferable between employers

Registration requires background check

Must have 2 years experience in the industry

9 hours of CE due every year – 1st period is 7/1/07 thru renewal time in 2008

Mortgage Brokers

There are no Mortgage Broker companies, just individuals (if you are a lender that brokers in addition to lending, you will need to license your Loan Originator's as Mortgage Brokers instead of Loan Originators

$500 initial, $350 annual renewal (Dec 31st)

License can be transferred to another employer

$25,000 surety bond is required

Must file a Bank Franchise Tax Return with the SD Dept of Revenue

2 years experience in the industry

9 hours of CE due every year – 1st period is 7/1/07 thru renewal time in 2008

Nationwide Mortgage Licensing System Update

2007-11-07T15:31:00.000-08:00

As of August 18, 2007 there have been 35 states that have signed the statement of intent to take part in the National Licensing Database. Currently 12 states are using the Uniform MU Forms for license applications and more are expected to come on board. Each state still however has their own addendum to the MU forms in order to satisfy their state requirements. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) are heading up the movement. They have stated that Release 1.0 of the national licensing database is over 90% complete as of 8/1/07. One of the major focuses mentioned is eliminating duplicate Continuing Education hours for loan originators by providing reciprocity between the states. This is truly an exciting time and of course, there will always be a need for experienced licensing specialists to assist you through this maze even as the states try to make it easier.

Texas Now Requires Company Mortgage Licensing

2007-11-07T15:30:00.000-08:00

Texas legislature has passed House Bill 2783 ammending the Mortgage Broker Licensing Act to require company licensing, to allow for expedited provisional loan officer licensing, to increase the loan officer license fee from $100 to $275, and to clarify the 5 or less exemption for unlicensed companies or individuals. Company licensing will be required by January of 2008.

HB 2783: Relating to the regulation of certain persons involved in mortgage lending. The specific general changes are:

The definition of “mortgage loan” in the Mortgage Broker Licensing Act (MBLAct) has been changed to “a debt against real estate secured by a security interest against one-to-four family residential real estate created by a deed of trust, security deed, or other security instrument.” Note that “first lien” has been omitted from the initial definition found in the MBLAct.

An individual may not act or attempt to act as a loan officer unless the individual is licensed under the MBLAct and sponsored by a licensed mortgage broker and acting for the mortgage broker; or is exempt under Section 156.202.

NEW EXPEDITED PROVISIONAL LICENSE AMENDMENT:

An applicant for a loan officer license may be issued a provisional loan officer license as provided by this section only if the applicant:

During the 20 months immediately preceding the application, has at least 18 months of experience as a loan officer employed by a person exempt from the MBLAct under Section 156.202; and

Meets the qualifications for a loan officer license other than fulfilling the educational and examination requirements at the time of the application submission; and

Has had NO criminal charges and has not been convicted of a criminal offense. For purposes of this section a person is considered convicted as provided by Section 156.204 (d) of the MBLAct; and

Submitted a COMPLETE and ACCURATE application the first submission (if not, the application will then be transferred to normal processing with no fee refund); and

In addition to the regular non-refundable licensing and other fees for a regular loan officer’s license, pays an additional non-refundable fee not to exceed $100 (a rule will be proposed to the Finance Commission relating to this additional fee).

If the above is strictly adhered to, the Commissioner shall use best efforts to expedite the issuance of the provisional loan officer license on or before the later of: 1). the 10th business day after the date of receipt of a completed application; or 2). the second business day after the date of receipt of the “clean” criminal background report. Provisional licenses are valid for 90 days to allow time for the applicant to complete the educational requirements and to pass the required examination. It is imperative that these requirements are met within that 90 day timeline. The Commissioner may revoke a provisional loan officer license if it is discovered that the applicant has misrepresented the applicant’s qualification for this type license, has violated this chapter, or does not meet the qualifications for a provisional loan officer license. This revocation is NOT SUBJECT TO AN APPEAL and fees are not refundable.

HB 2783 further clarifies a license exemption with additional language regarding an owner of real property who in any 12 consecutive month period makes no more than five mortgage loans to purchasers of the property for all or part of the purchase price of the real estate against which the mortgage is secured, or an individual who makes a mortgage loan from the individual’s own funds, is not an authorized lender under Chapter 342 of the Texas Finance Code, and does not regularly engage in the business of making or brokering mortgage loans.

The maximum loan officer license fee (not inclusive of any other required fees charged) has been increased by $100 to $275.

The existing requirements and amended changes for license qualification are as follows:

Mortgage Broker must:

*Be at least 18 years of age

*U.S. citizen or legally admitted alien

*Maintain a physical office in the state of Texas

*Must prove one or more of the following:

*Have a bachelors degree from a 4 year accredited college or university in a related field, AND 18 months experience as a full-time mortgage broker or licensed loan officer with a licensed, sponsoring mortgage broker or an exempt person under section 156.202,

Active, licensed real estate broker under Chapter 1101, Texas Occupations Code,

Active, licensed attorney, or

A local recording agent or insurance solicitor or agent for a legal reserve life insurance company under Chapter 21, Insurance Code, or holds the equivalent license under Chapter 21, Insurance Code,

OR

36 months of experience with full-time employment as a licensed loan officer with a licensed, sponsoring mortgage broker or an exempt person under section 156.202.

*Provide proof of passing the required examination

*Fully comply with the tangible and non-exempt “net worth”

requirement of $25,000

*Not have been convicted of a criminal offense that the Commissioner determines directly relates to the occupation of a mortgage broker as provided by Chapter 53, Occupations Code

*Satisfy the Commissioner as t the individual’s honesty,

trustworthiness, and integrity

*Not be in violation of this chapter, a rule adopted under this chapter or any other order previously issued to the individual by the Commissioner

*Provide evidence that:

If the person has not been previously licensed as a mortgage

broker or a loan officer under this subchapter, the person has

completed 90 classroom hours of educational courses approved

by the Commissioner

OR

If the person has not been previously licensed as a mortgage

broker under this subchapter but has been licensed as a loan officer under this subchapter the person has successfully completed an additional 30 classroom hours of education courses approved by the Commissioner under this section.

If the broker has a company, it is now (as of January 2008) required be licensed as well for a fee of $175.

Loan Officer must:

Be at least 18 years of age

Be a U.S. citizen or legally admitted alien

Designate the name of the sponsoring broker

Must prove one or more of the following:

The person has received a bachelor’s degree from a 4 year accredited college or university in a related field AND has 18 months of experience in the mortgage lending field with full-time employment as a licensed mortgage broker or licensed loan officer with a licensed mortgage broker or a person exempt under section 156.202

The person is licensed in Texas as:

An active real estate broker under Chapter 1101, Texas Occupations Code,

An active, licensed attorney,

A local recording agent or insurance solicitor or agent for a legal reserve life insurance company under Chapter 21, Insurance Code or holds an equivalent license under Chapter 21, Insurance Code

OR

The person has three years of experience in the mortgage lending field with full-time employment as a licensed loan officer with a license sponsoring mortgage broker or a person exempt under Section 156.202

OR

Has successfully completed 60 classroom hours of education courses approved by the Commissioner.

OR

The person has 18 months experience as a loan officer with full-time employment as a loan officer with a person exempt under Section 156.202 AND has successfully completed 30 classroom hours of education courses approved by the Commissioner

Not have been convicted of a criminal offense that the Commissioner determines directly relates to the occupation of a loan officer as provided by Chapter 53, Occupations Code

Satisfy the Commissioner as to the individual’s good moral character, including the individual’s honesty, trustworthiness, and integrity

Provide proof of passing the required examination

Not be in violation of this chapter, a rule adopted under this chapter, or any other order previously issued to the individual by the Commissioner.

The required topics for complying with the initial licensing education requirements for mortgage brokers as well as loan officers must now cover ethics, RESPA, TILA, ECOA and the MBLAct.

During the term of any outstanding license, if the Commissioner becomes aware of any fact, not previously known to the Commissioner, that would have been grounds for denial of an original license, he may deny the renewal of a license.

If a broker operates with a company name, those companies now have to licensed. No one (mortgage broker or loan officer) can be individually licensed without their companies licensed (if they have one). In order for the company entity to become licensed, the entity must designate an individual licensed as a mortgage broker as its designated representative and pay an application fee in an amount not to exceed $175. That designated representative must the sole proprietor if the company is a sole proprietorship, be an officer of the corporation if it is a corporation, a manager of the limited liability company if it is a limited liability company, or if the company is a limited partnership the designated representative must be a general partner, an officer of a general partner that is a corporation, or a manager of a general partner that is a limited liability company.

Not later than the 10th day before a mortgage broker begins doing business under an assumed name, the broker shall file with the Commissioner a copy of an assumed name certificate for each assumed name under which the mortgage broker intends to conduct business and pay a $25 registration fee for each assumed name. A loan officer may not conduct business under any assumed name that is not the registered assumed name of the sponsoring broker.

Licensees must notify the Commissioner not later than the 10th day after the date of any change of the person’s name and pay a fee of $25 for the name change and issuance of an amended license certificate.

A business entity licensed under this chapter shall notify the Commissioner of any change of its designated representative and pay $25.00 for each change.

Regarding approved education, the Finance Commission may adopt rules establishing:

Minimum standards for courses, approved course providers and approved course instructors, and

A fee charged for each course not to exceed $200 for the review and approval of each course not provided and approved by a duly organized trade association, whose primarily purpose is that of representing residential mortgage originators. This approval is valid for a maximum of up to two years but may be less.

Additional disciplinary action authority is granted to the Commissioner against a licensee when after a hearing, it has been determined that the licensee provided false information to the Commissioner during the course of an investigation or inspection.

On notice and opportunity for a hearing, the Commissioner may suspend a person’s license if an indictment or information is filed or returned alleging that the person committed a criminal offense involving fraud, theft, or dishonesty. The suspension continues until the criminal case is dismissed or the person is acquitted, after which a final determination will be made.

A mortgage broker is now not required to be licensed to originate second lien loans under the Finance Code Chapter 342.051 if and as long as, the broker and his/her company are duly licensed with the TDSML. This does not pertain to mortgage bankers now licensed by the Office of Consumer Credit Commissioner (OCCC) under Chapter 342.051. They will continue to be licensed by and under the jurisdiction and authority of the OCCC. Second liens originated by brokers licensed with the TDSML will now be reviewed during scheduled examinations/inspections by the TDSML and not the OCCC.

Effective 9/1/07 (NOTE: Company licensing requirement effective January 2008).

Nevada Rescinds Friends and Family Exemption

2007-11-07T15:28:00.000-08:00

Nevada has always allowed individuals without a Nevada mortgage broker or solicitors license to originate loans on residential property in Nevada if the loan was not solicited and the borrower was a previous client, a friend, or a family member.

Due to the passage of AB375 in the 2007 Legislative Session, effective 10/1/07 the provisions of NRS 80.015 are amended to limit the unsolicited origination of mortgage loans in Nevada by unlicensed/non-exempt companies to commercial properties only. After 10/1/07 all Nevada 1 to 4 family residence mortgage loan originations will be subject to all applicable licensing or exemption requirements prescribed by law.

NRS 80.015 contains a list of activities that do not constitute “doing business” in this state including “[c]reating or acquiring indebtedness, mortgages and security interests in real or personal property.” NRS 80.015(1)(g). However, a person is considered doing business in Nevada and is subject to applicable licensing requirements pursuant to chapter 645A, 645B or 645E of NRS or title 55 or 56 of NRS if the person:

“(a) Maintains an office in this state for the transaction of business;

(b) Solicits or accepts deposits in the State, except pursuant to the provisions of chapter 666 or 666A of NRS;

((c) & (d) added pursuant to AB 375, effective 10-1-07)

(c) Solicits business for the activities of a mortgage broker as defined by NRS 645B.0127 or the activities of a mortgage banker as defined by NRS 645E.100; or

(d) Arranges a mortgage loan secured by real property which is not commercial property as defined by NRS 645E.040"