California DRE requires Mortgage Loan Originator Endorsement through NMLS

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:

1. 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.
2. 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.
3. 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.

Pennsylvania Mortgage Licensing - Surety Bond Requirements

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

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

Kansas becomes part of NMLS Mortgage Broker Licensing

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.

North Carolina Annual Mortgage Broker License Renewal Notice

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.

HUD Issues Interpretive Guidance on Implementation of SAFE Mortgage Licensing Act

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

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

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

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

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?

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?

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.

May 2008 Mortgage Licensing Update

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

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

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

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

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

December 2007 Mortgage Licensing Update

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?

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

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.