Michigian Mortgage Licensing Education Requirements Clarification

TO:                 Mortgage Industry and Interested Parties

SUBJECT:    Discontinuance of Michigan Loan Officer Registration Examination, and

Clarification of Michigan Pre-registration Education Requirement

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

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

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

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

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

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

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

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

CA Passes NMLS Loan Originator Licensing Requirements

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

• Adopts new sections covering: 
• licensing requirements for loan processors and underwriters; 
• application requirements including fingerprinting, personal history, and independent credit reports; 
• minimum standards that must be met by mortgage loan originator licensing applicants; 
• pre-licensing and continuing education requirements and testing requirements; 
• license renewal requirements for mortgage loan originators; 
• requirement for mortgage loan originators to include their unique identifier on application forms, advertisements, and other required documents; 
• prohibited acts and practices for mortgage loan originators and potential penalties for violations;
• requirements for submission of reports of condition;
• notification requirements and licensing requirements for mortgage loan originators and real estate brokers; 
• minimum standards that must be met by mortgage loan originator licensing applicants and the minimum standards for renewal of an endorsement as a mortgage loan originator; 
• requirements for real estate brokers to submit annually a business activities report and detailing what must be contained in the report; 
• record retention requirements; and 
• requirement that mortgage loan originators to obtain and maintain a license and a unique identifier and prohibiting residential mortgage lenders or servicers from employing a mortgage loan originator whose license or license endorsement has lapsed.
• Revises current statutes to add or amend: 
• requirement that a licensee's unique identifier be included on advertisements and certain disclosures; 
• requirement that applications for endorsement to act as a mortgage loan originator must be made electronically or in writing as directed by the Commissioner; 
• minimum net worth requirements for licensees employing one or more mortgage loan originators; 
• requirement for mortgage loan originators to obtain and maintain a license and a unique identifier and prohibiting finance lenders or brokers from employing a mortgage loan originator whose license or license endorsement has lapsed;
• that it is a violation for a person to knowingly make a false statement to the NMLSR;
• that mortgage loan originator licenses must be renewed annually after the payment of an annual assessment;
• notification requirements; and
• bond requirements.
• Repeals CA BUS & PROF § 10131.8 and CA FIN § 50705. 
• Section 87 of CA Senate Bill 36 states the deadline for mortgage loan originators to obtain a license.

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

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

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

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

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

Wyoming Enacts Mortgage Loan Originator Licensing and Registration

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

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

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

HUD Issues Interpretive Guidance on Implementation of SAFE Mortgage Licensing Act

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