New Hawaii Mortgage Company and LO Licensing Requirements

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


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

Mortgage Company Licensing now required in Colorado

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


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

California DRE requires Mortgage Loan Originator Endorsement through NMLS

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.

Washington Servicer Licensing now Required

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

Pennsylvania Mortgage Licensing - Surety Bond Requirements

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