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

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.