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.
Showing posts with label Mortgage Licensing Nationwide. Show all posts
Showing posts with label Mortgage Licensing Nationwide. Show all posts
Thursday, May 1, 2008
Friday, February 1, 2008
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
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.
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.
Friday, December 14, 2007
Largest Barrier to Mortgage Company Licensing
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.
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.
Tuesday, November 13, 2007
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.
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.
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.
Wednesday, November 7, 2007
NMLS Update - Nationwide Mortgage Licensing System
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
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
Nationwide Mortgage Licensing System Update
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.
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