Monday, December 20, 2010

The December 31st Deadline is Quickly Approaching – Does It Affect You?

December 31st is the deadline for quite of number of people in the mortgage business. Many licenses expire and must be renewed. Certain states are completing their transitions to the Nationwide Mortgage Licensing System (NMLS) – Florida, Maryland, and Utah DFI. Hawaii received an extension from HUD through March 31, 2011 to complete its transition to the NMLS. This means that most of you are affected by the December 31st deadline.

Who is not affected? If you renewed your license already, and if you have completed all of your required continuing education, and you have submitted your checklist to your state regulatory agency, then December 31st doesn’t mean much to you. You may wish to contact your state regulatory agency to confirm that they have received everything from you that they need. At this time of the year, the reviewers are checking through thousands of renewal applications, so they may be delayed in approving or denying an application. But, you should check to make sure that you have sent in all required items.

The NMLS and most states are sending out generic reminders of various requirements for renewal. Read through each reminder in its entirety to make sure that it doesn’t apply to you. If it does apply, immediately schedule the work that needs to be done to bring you into compliance. Did you authorize your credit report to be pulled? Did you send in your checklist with all required documentation? Did you take all required continuing education? If you are not sure if the reminder applies to you, call your state regulatory agency and speak to someone in the licensing division. It’s better to be sure than to find out too late that you missed a requirement of your renewal. If you find that you are very busy this time of year, hire a licensing firm that can do most of the work for you and keep you apprised of what you still need to do.

If you are licensed in one of the states that is transitioning to the NMLS, you must decide whether you will transition your license in the next 10 days. I have several clients that are still making that decision and those state regulatory agencies are warning their licensees not to wait until the last minute to transition or they may not be properly licensed at the beginning of January. If you already have an NMLS record, the amount of time you need to spend to add a new state is not onerous (unless you are busy trying to close loans and make some money at this time of the year). If you have never been on the NMLS, you will be shocked at the amount of time it will take you to learn how to use the system. Plus, you must comply with all of the requirements of your license under the new statute.

I urge all mortgage company owners and all loan originators to take a few minutes to ensure that you have complied with all requirements to renew your licenses and/or to transition your licenses to the NMLS. You don’t want to be scrambling in January without a license.

Monday, December 13, 2010

Can You Make a Living as a Mortgage Broker/Lender in The New Normal?

Real estate contracts are way down, refinances are being challenged by appraisals that come in too low to meet the needed LTV ratios, and too many homeowners are frozen in their current mortgage. This is the new normal.

I just read an article in the Orlando Sentinel in which the Florida Office of Financial Regulation is concerned that many mortgage brokers will not be licensed on January 1st since only about ¼ of them have transitioned to the Nationwide Mortgage Licensing System (NMLS). Florida’s deadline for transition is December 31st.

I have not taken a formal survey but my experience has shown me that in every state that has transitioned to the NMLS, over half of the existing licensees did not make the transition. In some states, it was close to ¾ of the mortgage brokers who lost or surrendered their licenses.

In the current climate of mortgage brokering, a huge group of loan officers are leaving this line of business. There are many reasons. Some of them feel they cannot make the kind of living they used to (during the real estate bubble) so they look for a more lucrative occupation. Others do not want to jump through the many hoops that the new SAFE law requires. Others cannot meet the require4ments of the SAFE Act, either because of a prior felony conviction that did not previously affect their licensing, or because they have a bankruptcy on their credit record, or because their credit score is too low.

I don’t think this new real estate climate can support more loan officers. There is not a lot of business to go around. I met a loan originator who started in this line of work in 2008 and this is the only real estate market he’s ever known. He has heard the stories from other loan officers who talk of phones ringing off the hook, how much easier it was to work with the old Good Faith Estimate, and how quickly loans closed. But all that is gone. It isn’t coming back for years, if ever. Have you learned how to make a living in the new normal? If you haven’t, you’d better re-think your career plans. When the country climbs out of this recession, real estate sales will increase because there are thousands, maybe millions of people who need to move for their jobs. But the flippers, the speculators, the people whose foreclosures will prevent them from buying for a few years – they will all be out of the market until the next normal comes into play. For now, you need to figure out how to grow your business in ways that you didn’t need to bother with 5 years ago. Do you have any ideas for how to grow your business in the new normal?

Monday, December 6, 2010

Don’t Forget to Renew Your Branch Licenses

Once of my clients has several branches, some of which are doing great and others that are not doing so well. I’ve already been on the Nationwide Mortgage Licensing System (NMLS) to renew the company license and I’ve asked the owners whether they want to renew all of the branches or just some of the branches. At this point, I still don’t have an answer and there are only about 3 weeks left in the renewal season.

The NMLS provides for a system where you can renew all of your licenses in one fell swoop or you can renew at different times, depending on your circumstances. Maybe your cash flow doesn’t allow a big hit at the beginning of November for the renewal fees or your credit card limit is being exceeded by all of the fees. It’s not uncommon for companies to renew the license for the company first and to deal with the branch offices and loan originators later.

But with a looming expiration of December 31st on all licenses, you must take the necessary steps to renew whichever branch licenses you intend to keep. Some states have treat branch offices the same as the company in terms of licensing requirements (branch office manager industry experience, surety bond requirements) so you must ensure that all necessary documentation is submitted to the licensing agency as soon as possible.

And don’t forget that some states are not processing company and branch license renewals through the NMLS. You may need to check the website of any state that has not transitioned to the NMLS for their branch office renewal requirements.