Florida In-House Processors no longer need LO Licensing as of July 1, 2011

Florida law previously required persons acting solely as loan processors to secure a loan originator license.  On May 31, the Governor of Florida signed into law a bill to relieve in-house loan processors from individual licensing in Florida. Specifically, the bill excludes in-house loan processors from individual licensure, so long as the individual (i) is an exclusive employee of a single mortgage broker or a mortgage lender, (ii) under direct supervision and instruction of a licensed Florida loan originator, and (iii) engages in loan processing only (i.e., receiving, collecting, distributing, and analyzing information for processing a mortgage loan or communicating with consumers to obtain information necessary to process a mortgage loan [not including offering or negotiating or counseling consumers about mortgage loan rates or terms]). Independent Contract loan processors remain subject to loan originator licensing requirements in certain circumstances.  This amendment brings Florida's law more in line with the federal Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E.) and other state jurisdictions with respect to treatment of mortgage loan processors. 


The bill additionally requires mortgage lenders to submit reports of their financial condition to the NMLS registry and to authorize the NMLS registry to obtain a credit report for each of the mortgage lender's control persons in order to renew a mortgage lender license. The bill becomes effective July 1, 2011. 

Montana Mortgage Servicer Licensing required effective October 1, 2011

On May 5, 2011, Montana adopted House Bill No. 90, which made numerous revisions to the Montana Mortgage Broker, Mortgage Lender, and Mortgage Loan Originator Licensing Act (Act) and changed its title to the Montana Mortgage Act. The revisions included requirements for the licensing and regulation of mortgage servicers. The effective date of the changes is October 1, 2011. And as of the writing of this article, Montana has not yet released an application to apply for the new Mortgage Servicer License.

The revisions also updated application and licensing requirements for brokers, lenders and originators, made a reduction in the number of hours required for continuing education, made changes to recordkeeping, reporting, bonding and disclosure requirements, and made prohibitions against certain acts by mortgage lenders and mortgage servicers. In addition, the Act was revised to conform to federal law and expand the Department of Administration's rulemaking authority.

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.