Monday, September 27, 2010

Will Your Mortgage Loan Originator's Criminal Record Prevent Him From Getting Licensed?

The SAFE Act requires all mortgage loan originators (MLOs), also known as loan officers, to create a record that will become part of the Nationwide Mortgage Licensing System (NMLS) registry. Part of the record deals with disclosures about an MLO’s criminal background. To verify the information that the MLO is providing in his NMLS record, the SAFE Act requires criminal background checks for all loan officers.

The questions asked in the NMLS MU4 record concern criminal convictions for a felony, pleading no contest to a felony, pleading guilty or no contest to a misdemeanor involving a financial-services crime, fraud, theft, perjury, forgery, or having control over an organization that pleaded guilty or no contest to these dishonesty crimes.

Questions come to me from loan officers who have been pleaded guilty to drunk driving, to issues when they were stockbrokers, to juvenile crimes that have or have not been expunged from the record. These loan officers ask me what to do and whether these past issues are now a current problem.

I cannot counsel anyone who is not my client so I will not give specific answers in this blog. My general advice is, when in doubt, disclose and explain. Many times criminal convictions that should have been expunged will somehow show up in a criminal database. If you decide not to disclose and the conviction or no contest plea shows up, you look like you are trying to hide something. I always fall on the side of honesty and disclosure.

When you disclose your conviction or no contest plea, the licensing reviewer may have some discretion to still approve your license application, depending on the type of crime and when the conviction or no contest plea happened. The SAFE Act has explicit disqualifiers for license approvals. The SAFE Act prohibits the licensing of an MLO if the applicant has ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, or convicted of any felony in the seven year period before filing an application for a license. If you are outside of the seven year period, you should be fine.

Contact Robin Gronsky at if you need help with your licensing (company or MLO). I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.

Monday, September 20, 2010

How To Get Ready to Renew Your Licenses Through the NMLS

The Nationwide Mortgage Licensing System (NMLS) has just notified company administrators that license renewals are coming soon. Actually, license renewals start on November 1, 2010. Each state that is currently on the NMLS has its own set of requirements for what the company, each branch office and each loan originator must do in order to renew its licenses. Additionally, each state has individual time frames for when the license renewals must be completed. And each state charges a different amount for the license renewal fees. However, the NMLS is charging it own fees for license renewals – each company must pay $100 to the NMLS, each branch office must pay $20 and each loan originator must pay $30. These NMLS fees are in addition to the state’s renewal license fees.

If you are licensed in multiple states, your cash outlay at the end of the year can total thousands of dollars, so start hoarding cash now.

Many states are requiring continuing education for loan originators for the first time. The SAFE Act requires 8 hours of continuing education, but some states require state-specific hours on top of the 8 that the SAFE Act requires. All continuing education must be taken from NMLS-approved providers.

Some states are requiring licensees to submit certain documentation in addition to processing the renewal through the NMLS. In some states, that documentation must be submitted before the renewal is done, and in other states, the documentation must be submitted simultaneously with the NMLS renewal.

Get familiar with the requirements that you must follow by going to this URL:

and selecting each state in which you are licensed to see exactly what requirements you will need to follow in order to get successfully renewed. Remember, there is a huge rush to renew just before licenses expire on December 31st and state regulators will not be able to process that huge backlog that quickly. If your lenders want to see a renewed license on January 3, 2011, you can’t wait for the last minute.

Contact Robin Gronsky at if you need help with your licensing renewals. I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.

Monday, September 13, 2010

Is Your State License Renewing Through the NMLS?

I have recently received communications from a few states that require license renewals soon but either all or part of the renewal process must be done directly through the regulatory agency, and not through the Nationwide Mortgage Licensing System (NMLS). For some states, you need to submit some documentation before the renewal process starts or submit an entire license renewal application and all of its supporting documentation to the agency which granted your license approval. If you are in one of these states, you should have received these communications already. To ensure that you are not in one of the states that renews licenses outside of the NMLS process, call or email your state regulatory agency to confirm that there is nothing that you need to do before renewals through the NMLS start on November 1, 2010.

Tuesday, September 7, 2010

What Should You Do If You Want to Surrender a License?

A number of mortgage brokers and lenders obtained licenses in multiple states for varying reasons. Lately, a number of clients have decided that those reasons are no longer valid (usually it has to do with not getting enough income from that state) and I get asked what they need to do to surrender the license.

Each state has its own procedures for surrendering a license and you must comply with that state’s procedure. To find out what that procedure is, check with the regulatory agency that issued your license. It may be on their website or it may involve a telephone call. If the state has already transitioned to the Nationwide Mortgage Licensing System (NMLS), the requirements will be there.

If the state is already on the NMLS, you must surrender through the NMLS. There may be additional requirements that appear on a checklist once the surrender request has been submitted through the NMLS. You may need to send in the original wall license. You may need to give prior written notice of your intention to surrender. You may need to file your final annual report within a set number of days after surrender.

Lastly, you must clear out your pipeline. Some states require you to immediately cease all activity once you surrender your license and other states may give you 30 days or so to close all loans in your pipeline. When you surrender your license, you must stop originating new loans.

Lastly, don’t forget that when you entered a new state, you had to file with the Secretary of State (or whichever agency regulates new and foreign corporations and LLCs). When you surrender your license, you need to also withdraw your authority to conduct business in that state. If you forget to do this last step, you could be liable for hundreds of dollars of annual registration fees.

Contact Robin Gronsky at if you need help with the NMLS or with your licensing applications (company or loan originator). I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.