Monday, January 31, 2011

Filing Reports with the State Regulators and the NMLS

Several of my clients and the NMLS have sent an email about a new reporting requirement. Within forty-five (45) days after the end of each quarter, all mortgage companies must file a report through the NMLS, reporting their mortgage activity in each state in which they are licensed or registered. If the company does not submit the report, then each loan originator in that company must file his/her own report. Each company must also submit a financial condition report (basically, an unaudited financial statement) once a year, within ninety (90) days after the end of the company’s fiscal year.

Many states are still requiring their own form of annual report in addition to the quarterly filings that you will need to start doing. These states (e.g., Pennsylvania, Virginia, Washington D.C., California, and Massachusetts) have, in the past, required elaborate paper or electronic forms, with financial information, loan activity, names of appraisers, title companies and lenders with whom they do business, and warehouse line of credit information. For 2011, many of these states have already sent out their forms to their licensees. If you are licensed in a state in which you have, in the past, filed an annual report, you must check with that state to find out whether they have changed their annual reporting requirement. These annual reporting requirements are in addition to the new NMLS quarterly reporting requirements.

As you know, some of the state annual reports are quite lengthy and take a fair amount of time to prepare. If you are too busy to get your reports ready, hire an outside company or law firm to do them for you. It is true that the SAFE Act has increased the amount of regulation reporting with which you must comply. Don’t let ignorance of the new compliance requirements and lack of time to organize your office to carry out your compliance obligations cost you in enforcement penalties and fines.

Monday, January 24, 2011

What Do You Do If an Investor Asks For a Copy of Your License?

Many times in the past (especially just after renewal season), I have received calls from my clients asking for copies of their licenses because an investor had asked for it. Most states have stopped sending out paper licenses.

If an investor needs proof that you are licensed in a particular state, you can either send that person to the NMLS Consumer Access database, at http://www.nmlsconsumeraccess.org/ or you can go to your own company record in the NMLS, click on Composite View, click on View Company, (or Branch if a branch license is needed), click on View License/Registration list (on left side of screen) and then print out the list. You can do the same with any loan originator. For some states, this is the only record they will have for you; many states do not send out paper licenses or keep a database on their state agency website.

This is the new normal.

Monday, January 17, 2011

What Should You Expect From the Loan Originator Licensing Process?

If you want to be a mortgage loan originator, what do you need to do to get licensed? What should you expect from the licensing process?

There are several requirements that are common to each state because of the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act. These requirements are:

1. Registering with the Nationwide Mortgage Licensing System (NMLS) and applying for a license through the NMLS;
2. Taking 20 hours of pre-licensing education;
3. Passing state and national exams;
4. Submitting fingerprints for a federal background check that cannot show a conviction for a dishonesty crime;
5. A satisfactory credit report (“satisfactory” as defined by the state regulatory agency).

Once you have applied for your license, you may need to send in additional documentation to the state regulatory agency that approves loan originator licenses. Some states have extra documents and other states require an additiona set of fingerprints for a state background check.

Then, you complete the balance of the requirements in any order that you wish. The completion of each requirement must be done through the NMLS, as the regulatory agency will be checking the NMLS to see if you complete your requirements. Likewise, you must monitor your record on the NMLS to see if the state regulator has posted a request for clarification of anything you have sent in or a reminder that you still need to do something.

Once you have completed all of your requirements, you must wait for the regulators to review your license application and approve or deny it. The waiting period varies by state and by time of year. If your state has just transitioned its licenses to the NMLS, then your new application will be reviewed after all the transitioning licenses are reviewed. If you apply for a license during renewal season (November and December), then you will likewise have to wait until all the renewals have been processed. If you are applying for a New York license, they are severely backlogged and you could be waiting for a year to get a decision on your license application.

Check with your state regulator to make sure that he/she has received all of the required elements of your application. You may want to periodically check in to see how much longer you will need to wait for your application decision.

Monday, January 10, 2011

FHA Requires Your NMLS Number

Major changes were enacted by the Federal Housing Administration (FHA) in 2009 that applied to the approval, renewal, and loan submission process for FHA-approved mortgagees, starting in 2010. Those changes are still coming as FHA continues to revamp its procedures. The latest changes intersect the requirements that all mortgagees and loan originators have to be licensed under the SAFE Act and maintain a record of their licensing status on the Nationwide Mortgage Licensing System (NMLS).

The latest Mortgagee Letter (Mortgagee Letter 2011-4) requires all FHA-approved mortgagees to provide their Nationwide Mortgage Licensing System (NMLS) number in a number of places during the approval, renewal, and loan origination process. FHA also requires that mortgagees obtain and provide to FHA the NMLS numbers, names and tax identification numbers of the mortgage brokers for whom the mortgagee is acting as a sponsor. This process has been designed to allow FHA to provide performance data on the mortgagees’ third-party originators. If a particular originator is having high rates of default, the mortgagee can choose to no longer underwrite any loan applications from that mortgage broker. The FHA Connection has also been revised to capture the name and NMLS number of the loan officer involved in submitting an FHA loan. The entry of the NMLS number and name of the loan officer involved in a loan origination is optional until April 1, 2011.

Friday, January 7, 2011

Why Don't You Have a Lawyer on Retainer

This is just a quick post directed to mortgage broker/lender company owners. Do you have a lawyer on retainer for your company so that you can shoot questions about licensing, compliance, or general corporate/LLC issues as you think of them? If you do, how often do you call or email your lawyer? If you do not, why not? Please send me your responses or comments at Robin@mortgagelicensesolutions.com. Thank you.

Monday, January 3, 2011

Here’s Some Possible Help if You Missed the December 31st Renewal Period Deadline – The Reinstatement Period

December 31st was the deadline for renewing your company and loan originator licenses. A number of my clients were very busy at the end of December trying to close loans. I was calling them every week to see whether they had renewed their licenses, or to find out whether their cash flow was sufficient for me to renew their licenses and charge the renewal fees to their credit cards. If you didn’t have someone calling you to remind you to start the renewal process by December 31st, are you sure you renewed all of your licenses?

The Nationwide Mortgage Licensing System (NMLS) has been sending out emails to all company administrators informing them of any licenses that were not renewed. If you received one of these emails, you are now aware that you messed up if you had intentions of renewing a particular license (although I’m sure that many of the “failure to renew licenses” were deliberate decisions not to renew a license). Even if you did not receive that email yet, you may now be realizing that you missed a renewal or one of your loan officers may have forgotten to renew his/her license. What can you do now?

Some states allow its licensees to renew late. It is a state by state decision and the time periods for getting in a “late” renewal vary by state. You can have only 15 days up to 2 months, depending on which state’s license you need. In most cases, you will need to pay a late fee but it’s much cheaper than starting a new license application from the beginning. You can see if your state is accepting late renewals by going to http://mortgage.nationwidelicensingsystem.org/SLR/COMMON/RENEWALS/Pages/default.aspx
and clicking on the Renewals Deadline Chart in step 3 for the chart of all states.

What if your state does not accept a reinstatement of your license (since it has technically expired as of December 31, 2010)? Call your state regulatory agency and speak to the reviewers in the licensing division and find out whether you need to submit an entire new application. Make that call immediately if you need to reinstate any of your licenses or those of your loan officers.

If you do need to reinstate a license, plan now for the renewals period that starts November, 2011. Set firm deadlines on your calendar to assess which licenses you will want to renew (are you making enough money from every branch office and every loan officer?). If your company NMLS administrator is you and you are usually too busy at the end of the year to handle this job, delegate it to an employee or hire an outside company that will take care of it for you. After all, if you don't have a license, you cannot make any money at all.