Thursday, June 25, 2009

Loan Originator Testing Starting Soon

The federal SAFE Act, which requires loan originator pre-licensing education and then passing a test, has been implemented in part by many states. The law requires that the Nationwide Mortgage License System (NMLS) create that test. The test consists of questions on relevant national laws (National Component) and questions which test your knowledge of the state law for the state license for which you are applying (State Component). The earliest states to implement their version of the SAFE Act have now announced that they will start testing loan originators on July 30, 2009. Arizona, Idaho, Iowa, Louisiana, Massachusetts, Michigan, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Vermont, Washington State are the first states to offer their State Component of the required testing. The National Component will become available on July 30, 2009, as well. You must pass the National Component and State Component once. If you wish to become licensed in more than one state, once you have passed the National Component, you only need to sign up and pass the test for the State Component in each state in which you have applied for a license. Certain states may permit you to be exempt from their State Component if you have already passed their state exam.

In order to schedule tests with Pearson Vue, the test delivery vendor, you must register and pay for that test through the NMLS. Starting June 29, 2009, you can enroll for the National Component and the State Component for the 12 states listed above. Testing centers are located throughout the country and you can register for the one closest to you, no matter which State Component you have signed up for. All State Components exams are given at all testing sites. This eliminates the travel requirement to each state that multi-state licensed loan officers had under the current system.

You are not required to take any prep courses before you take the exam. Nor are you required to take the 20 hours of pre-licensing education that the SAFE Act requires before you take the exam. However, even if you pass the both the National and State Component of the exam, you will need to complete the 20 hours of pre-licensing education.

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Friday, June 19, 2009

Out-of-Date Information

I have been helping mortgage lenders and brokers get their licenses for over 10 years. I’ve been blogging about licensing and compliance for about 2 years. Much of the information that I needed to know when I first starting working with mortgage companies is useless. Even some of the information that I published in my blog back in 2007 is now wrong.

The laws in the mortgage licensing area keep changing to keep up with events that are happening in our country to the financial industry. When I first started working in this area of law, there were a handful of states that did not require licensing at all. I’ve watched as all of the states passed laws to require the licensing of mortgage companies and then loan originators. Although there are some states now that do not require the licensing of loan originators, that will be a memory in about a year, when the federal SAFE Act becomes fully implemented.

If you are going to try to get yourself licensed without any help, you need to know that the information that you are relying upon is the most up-to-date out there. As I become aware of new legislation, new regulations and new compliance requirements, I write a blog entry about the changes so you can stay current. There are companies that you can subscribe to that will send updates to you when there are changes to the law in any state that yo uare interested in. Unfortunately, most of my clients don’t have time to read those updates or don’t understand them. Another way to get information is to read what is on the website of the regulatory agency that is in charge of mortgage lender, broker or loan originator licensing. The agencies go by different names in different states – they may be the Banking Department or the Department of Financial Institutions or the Commissioner of Banks. In California, it is the Department of Corporations (who would have guessed?). And sometimes, even after reading what’s on the website, I still call the agency and ask to speak to the reviewers in the licensing department. They can’t give legal advice (not that I’m asking for any advice) but they can tell me if the information on their website is current and answer questions about what is on their website or about an announcement about a change in their laws that I’ve received in the mail. You should do the same.

Always make sure that the information that you are working with is as up-to-date as it can be. If you are following a law that has been changed, you are not following the correct law and you could be subject to penalties and fines.

Monday, June 1, 2009

Arizona Transitions to the NMLS

You have until June 30, 2009 to transition your company or sole proprietor mortgage broker license to the NMLS if you are currently licensed in Arizona. Mortgage bankers needed to transition to the NMLS by March 31, 2009.

Remember that transitioning your licenses does not mean amending your license information. If there are any changes to your information (e.g., you’ve moved your office or changed branch managers), you can submit the changes only after your current filings are approved.

The most basic filing is an MU1 for the company and the MU2 for each control person and the Responsible Individual. If you have branch licenses already approved, then you need to complete an MU3 for each branch and the branch managers must complete their own MU2 filings.

New applications for a company or branch license must be submitted through the NMLS. There are no more paper applications.

All loan originators must be licensed by December 31, 2009. The Arizona Department of Financial Institutions (the “DFI”) is still working on the conditions it will require for licensing loan originators since they are still deciding how to fully comply with the federal SAFE Act. However, loan originators can currently input an MU4 on the NMLS to get licensed under the existing Arizona licensing law. Loan originators must wait to input their MU4s until their employer has completed their NMLS filings. The DFI is intending to propose legislation that would postpone the deadline for licensing loan originators until July 1, 2010. But, such legislation has not become law yet so the deadline stays at December 31, 2009.