Tuesday, July 28, 2009

Virginia transitioning to NMLS for Mortgage Loan Originators

Virginia will start using the Nationwide Mortgage Licensing System (NMLS) on August 3, 2009 to start implementing its version of the SAFE Act. It will not be using the NMLS for licensing mortgage bankers or brokers yet. What do you need to know if you are a mortgage loan originator whose employer originates or brokers Virginia loans?

By July 1, 2010, all loan originators will need to be licensed. In order to start the ball rolling, loan officers can start submitting applications through the Nationwide Mortgage Licensing System (NMLS) on August 3, 2009.

If you have never registered on the NMLS, you need to create your own record by completing an MU4 form which serves as the application. Then, you submit the Virginia checklist and accompanying documentation.

If you are already on the NMLS because you are licensed in another state, you do not need to submit a new application. You merely add a jurisdiction (Virginia) to your record (the MU4) and then submit the Virginia checklist with required accompanying documentation.

All applicants for a Virginia mortgage loan originator license need to take 20 hours of pre-licensing education, pass an exam, submit a surety bond, submit fingerprints for a criminal background check, and pass a financial background check, including a review of your credit report.

The fee for the license is $180, which includes a Virginia application fee of $150 and NMLS processing fee of $30. (This fee does not include the cost of fingerprinting and credit report fees that will be required.) All fees are collected through the NMLS and are NONREFUNDABLE.

As of July 22, 2009, the NMLS has not approved any course providers to teach the 20 hours of pre-licensing education. The licensing statute does not require the pre-licensing courses to be taken before the exam. As updated information about the exam and the pre-licensing courses become available, I will post more information on this blog.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Monday, July 20, 2009

Washington D.C. Licenses – New Law That You Need to Follow!

Washington D.C. will start using the Nationwide Mortgage Licensing System (NMLS) on August 1, 2009. What do you need to know if you have a Washington D.C. Mortgage Broker/Lender/Dual Authority License? What are the requirements if you want to get a new Washington D.C. license?

If you currently have a Washington D.C. license that expires between July 1, 2009 and December 31, 2009, you will be renewing your license the same way you have always renewed it – a lengthy paper renewal application with a great deal of supporting documentation. Payments of your renewal fee must be by check and sent to the post office lockbox. Your new license will expire on December 31, 2010, when it will need to be renewed. Your renewal fees will be prorated; the assessment fee will not.

Between August 1, 2009 and October 31, 2009, you must create your company record on the NMLS (and pay the NMLS registration fee which is separate and apart from any fees that you pay for your renewal license to the DC Department of Insurance, Securities and Banking). If you have never applied for a license through the NMLS, you must access the NMLS website at www.stateregulatoryregistry.org/NMLS and complete a Company Account Request Form and identify a Primary Account Administrator and a Secondary Account Administrator. Within a few days, the NMLS sends you via email your log-in information. If you already have an NMLS account, you simply go into your company account and add Washington D.C. as an additional jurisdiction.

The Department of Insurance, Securities, and Banking is not accepting new license applications through July 31, 2009. Starting August 1, 2009, if you wish to apply for a new Washington D.C. license, you will apply for it through the NMLS.

The Department of Securities, Insurance and Banking is still creating regulations for the new licensing procedures and the licensing of loan originators. As I hear of them, I will pass them on in this blog.

Please feel free to forward this blog post to your colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Friday, July 10, 2009

Can You Lose Your Ability to Earn a Living If You Have a Criminal Conviction?

When I started doing mortgage broker/lender licensing over 10 years ago, very few states licensed their loan officers. Now, as a result of the federal SAFE Act, every state will be licensing loan officers by July 31, 2010. Some of the states which licensed their loan officers asked about arrests and criminal convictions when you applied for a license, others did not. Even in those states that asked about criminal convictions, there was a lot of leeway for license application reviewers to use their discretion about granting the license depending upon what kind of crime was involved or how long ago your conviction took place. Now every state will ask about your criminal background and require you to submit fingerprint cards to verify that you do not have a criminal conviction.

After the subprime mortgage mess revealed many instances of mortgage fraud, it came to light that there were thousands of loan originators who had criminal records. Some of the criminal convictions were for fraud, embezzlement, writing bad checks and identity theft. The SAFE Act attempts to address this issue by prohibiting anyone who has had a felony conviction within the last seven (7) years or who was convicted of a felony involving fraud, dishonesty, breach or trust or money laundering. Some of the states, in writing their own laws to implement the SAFE Act, have been more stringent in their desire to weed out possible bad apples. Those states have simply prohibited any person from getting approved for a loan originator license if that person has a felony conviction of any type, no matter how far in the past that conviction was.

So, if you were a loan officer in a state that did not inquire about criminal convictions or your felony conviction was for drunk driving or possession of some pot when you were 20 years old, you may have been closing mortgages for 5 or 10 years with no problem. Now, once your state implements the SAFE Act, depending on how strict they want to be, you may not get past the application that needs to be submitted through the Nationwide Mortgage License System. If you indicate that you have been convicted of a felony, the application process might stop right there. And you are now out of a profession. There is no room for leniency or discretion by the state regulators.

So, if you are an employer, be aware that you may be losing some of your loan officers once the SAFE Act comes to your state. If you are a loan officer, I am sorry to say that a felony conviction is one mistake in your life that you may not be able to correct.

Please feel free to forward this blog post to friends, family, colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@Mortgagelicensesolutions.com. Thank you!

Thursday, July 2, 2009

Why You Absolutely Need to Have a Broker Fee Agreement?

What is a broker fee agreement? It is the legal document in which you and the borrowers agree on your fee. By signing a fee agreement, you and the borrowers are memorializing the agreement on the amount of the fee, the circumstances under which it is earned, and other details about the transaction that may be required by state law. Most states not only require a broker fee agreement, but they actually have recommended forms for you to use. If your state does not have a recommended form, review your state’s requirements and have your attorney draft an agreement that complies with that law.

If your state requires a written fee agreement, that is signed by the borrowers, failure to have one in each applicant’s file can expose you to penalties and fines when your files are examined, or if a borrower complains to your banking department about any aspect of the transaction. Even if the complaint has nothing to do with your fee, the banking department will ask you to submit copies a certain documents in the file, always asking for the broker fee agreement.

But even if your state does not require a written broker fee agreement, why should you have the applicant sign one anyway? Because a written agreement protects you. You do a lot of work to find the best loan for your borrowers, you have to keep up-to-date with all of your lenders’ programs, and when you do work, you want to be paid for it. When a borrower signs a broker fee agreement, you now have the basis for enforcing the agreement that you entered into. A court will give great weight to the terms of a written agreement and it is much easier to win a lawsuit or defend yourself against a complaint from a borrower if you have a writing that the borrower has agreed to.

If you are using Calyx or other software to generate your documents, you must review their form and ensure that it complies with your state’s requirements and does not contain any blanks that must be filled in. If there are blanks that must be completed, you must make sure that your loan officers complete the forms properly and keep an original in the file.

It will be very costly for you to not have each loan applicant sign a broker fee agreement. Without a signed agreement, you are not entitled to collect the fee you ask for. Make sure every file has one to protect your interests.

Please feel free to forward this blog post to friends, family, colleagues, listserv members or favorite bloggers. Or if you would like to run it (in whole or in part) in any publication or quote from it, simply include my name and URL: http://www.mortgagelicensesolutions.com. No prior permission needed. To inquire about joining my list to receive my blog posts or my availability to speak to your group or write an article for your publication, please email me at Robin@mortgagelicensesolutions.com. Thank you!