Mortgage License Solutions

You Need Continuing Education Hours, Don’t You?

2011-10-10T08:27:00.000-07:00

Most mortgage loan originators will need to take eight (8) hours of continuing education before the end of the year. Actually, you should take your continuing education courses before November 1, 2011, when the ability to renew your license opens up on the NMLS. Some states have specific dates by when you must take your continuing education and other states simply will not let you submit your renewal license application unless your continuing education provider has uploaded the courses you have taken to the NMLS.

Each state has its own requirements as to whether you need to take continuing education this year and whether you need to take state-specific courses. For example, in Connecticut, unless you took your twenty (20) hours of pre-licensing education in 2011 and were approved for your license in 2011, you need to take continuing education in 2011. Exactly what is required? The SAFE Act requires the following education courses: 3 hours of Federal law and regulations, 2 hours of ethics that include instruction on fraud, consumer protection, and fair lending issues, 2 hours of training related to lending standards for the nontraditional mortgage product market, and 1 hour of undefined instruction on mortgage origination. Some states require specific courses on their state’s laws. For example, Georgia requires 1 hour of Georgia law that would count as your 1 hour of undefined instruction on mortgage origination. Georgia also has a deadline of October 31, 2011 for completing continuing education.

The NMLS has a state-by-state that details whether you need to take continuing education in 2011, what kind of courses you need to take, and when your deadline is: http://mortgage.nationwidelicensingsystem.org/courseprovider/Course%20Provider%20Resources/Education%20Hours.pdf

If you are licensed in multiple states, the requirement that you take courses in state-specific law may mean that you are taking more than eight (8) hours of continuing education.

Also be aware that if you took continuing education in 2010, you may not take the same courses again in 2011.

Even if your state does not have a deadline before December 31, 2011, please remember that if you wait until the last minute to do your continuing education and license renewal, there is a good chance that your renewal will not be completed until sometime in January, 2012. Late renewals lead to major hassles with investors who want confirmation that you have a 2012 license to originate mortgages.

You Need Continuing Education

2011-09-19T09:22:00.000-07:00

The SAFE Act created a requirement that all mortgage loan originators take at least 8hours of continuing education each year in order to get approval of your license renewal. If you were licensed in 2009 or 2010, you must comply with the continuing education requirement. If you took your pre-licensing education in 2011 and were licensed in 2011, you do not need to take any continuing education this year. If you took your pre-licensing education in 2009 or 2010 and your licensed was approved in 2011 or is still pending, you need to check with your state regulatory agency to find out if it is requiring loan originators to take continuing education.

If you are licensed in one (1) state, the requirement is that you take 3 hours of federal law and regulations, 2 hours of ethics, 2 hours of training related to lending standards for the nontraditional mortgage product market, and 1 hour of unspecified mortgage training (it's your choice of topic). If you took continuing education last year, you need to take different classes this year. Some states require a certain number of hours of state-specific education instead of the 1 hour hour of unspecified mortgage training. Therefore, if you are licensed is more than one (1) state, you may need to take more than eight (8) hours of continuing education.

The SAFE Act requirement is that you must take your continuing education hours by December 31, 2011. However, certain states require that you take continuing education before you can renew your license. Other states let you submit your renewal license applications, starting November 1, 2011, but they will not approve your renewals before you submit your continuing education hours through the NMLS. You need to check the rules for each state in which you are licensed to ensure that you are taking the correct number and types of continuing education courses so your licenses will be renewed.

What Do Mortgage Companies Need to Do About Computer Security?

2011-09-06T07:16:00.000-07:00

All mortgage companies obtain very personal information from their customers that are stored on their computer systems. Computer security is an ongoing problem for your company because of the sensitive nature of the information that you store on your computers. You need to be proactive about your systems’ shortcomings and create a plan to upgrade your security. You must also have procedures in place to deal with a potential breach of security.

First, review the level of computer security that your system has. Most smaller mortgage companies do not have an IT department so they should hire an outside firm who has expertise in security breach problems. Have a survey of what information is stored, how it is stored, who has access to the information, and how your customers can use the internet to apply for a mortgage. An expert will point out where your systems are deficient, where you need to institute new policies for your employees, and where you may need to change or upgrade your software. Are your employees using smart phones or tablets that store private customer information? How easy is it for someone who finds a lost employee smart phone, tablet, or laptop to log in and access your customers’ information?

Do your personnel policies discuss how employees are to treat computer security issues? Are these policies rigorously enforced? Does your training emphasize the need to protect customer data?

Finally, you must review your computer security periodically. Hackers are always devising new ways to get into systems. You are obligated by law to safeguard your customers’ data. You could be sued by your customers whose financial information is now on the internet for the world to see. Therefore, your job of keeping their information safe never ends.

Maintaining Your Required Minimum Net Worth

2011-08-23T09:25:00.000-07:00

Many states require your company to maintain a minimum net worth in order to get licensed and to keep your license. The amounts range from $10,000 to $1,000,000. If you are licensed or want to be licensed in a state that has minimum net worth requirements how do you obtain the capital you need?

There are a number of ways. The most obvious is to transfer money held in your personal bank account into the corporate entity’ bank account. Initially, this is how every new mortgage company gets started.

Beyond that, you could sell equity in the company and bring on a new partner. Your partner would have to buy shares in your corporation or a membership interest in your limited liability company, and the money from the sale of company stock or membership interests becomes part of the capital and net worth of the company.

Although it’s not easy, you may be able to find an investor willing to provide funding without giving up any equity in your business. Typically, this is a family member or a very good friend.

As you commence business operations, you can build net worth through retained earnings. Retained earnings are the profits your company makes that are not paid out to the owners of the company. To increase profits, increase your income (more closings or larger fees per closing) and/or decrease your expenses (go through each expense line-by-line and think of ways that each can be lowered). If the profits are kept in the company’s bank accounts or used to pay for company assets, they are counted as part of the company’s net worth.

Once you have been in business for awhile, you can explore merging with another company whose assets combined with yours will meet the minimum net worth requirements typically required of a mortgage lender. When you are looking to merge with another company, you want to find a company whose strengths complement your strengths. Together, your company and the company you merge with are greater than your two companies individually.

Eventually your plan should be to generate higher earnings by acquiring weaker companies and loan originators displaced by competitors who could not meet the net worth requirements and were forced to close. Your company may then continue to increase net worth as other competitive advantages become available as a larger company with increased production and profitability. Larger companies usually are stronger than smaller companies. They can offer more products, have offices in many locations to serve more borrowers, are licensed in more than one state, and have better management (which is how you became a bigger company).

The other key to the net worth issue is maintaining the net worth. Your company should never go below the minimum net worth required by your licenses. Hoard cash to get you through the lean times (including now) and do not make distributions to the owners if they will jeopardize your company’s net worth. Although you know that when your accountant comes in to audit your financials after each year-end so you make sure that your net worth meets the minimum requirements, you could also be subject to a random and unexpected examination of your records by your state licensing agency. You want to make sure that they find that you met every requirement, including net worth, when they conduct their examination.

Compare Your Company to Other Licensed Companies

2011-07-25T08:06:00.000-07:00

The Nationwide Mortgage Licensing System & Registry (NMLS) has compiled information regarding licensees nationwide who are licensed in the first quarter of 2011. It can be accessed at http://mortgage.nationwidelicensingsystem.org/about/Documents/Quarter-1-2011-Licensing-Data.pdf

It shows how many licensees are licensed in more than one state, how many loan originators are sponsored by licensees, how many licensees have branch offices, etc. You can use the information for marketing purposes or for strategic planning purposes.

The Mortgage Call Report – It’s Back

2011-07-20T12:13:00.000-07:00

Were you one of those mortgage company owners who were filing their Mortgage Call Reports late on Sunday, May 15, 2011? I had clients who sent me their information on 5:00 that afternoon and I was inputting information that evening. Don’t leave yourself in that position again. The Mortgage Call Reports for the 2nd quarter of 2011 are due on August 15, 2011. Don’t wait until the last minute to get your information together. As we get closer to the deadline, the NMLS computers work more slowly and it’s more difficult to get the information in. If you are having a fantastically busy summer, then hire outside help to get your Mortgage Call Report done. It’s money well spend because it lets you do what you do best - closing loans.

Mergers and Acquisitions – You Need Approval from the Regulators

2011-06-28T07:27:00.000-07:00

The mortgage industry has been changing in the past four (4) years. Many mortgage lenders and brokers have closed their doors and stopped doing business entirely. Other companies want to stay in business but don’t want the headache of licensing compliance. Some of these companies are being acquired by other, larger companies who have compliance departments and who simply want to grow.

Most state licensing laws require that before one company can acquire or merge with another company their state banking department must approve the change. The statutes usually refer to a “change of control.” Most of these statutes require that, if there is an acquisition or merger, the acquiring company or companies being merged must notify the state regulatory agency and receive agency approval before the acquisition or merger is finalized. This means that if you are buying a company, the buy-sell agreement should have a contingency clause that the acquisition will not close until after all necessary regulatory approvals are received. If the company being acquired or merged is licensed in more than one state, the company that is buying must submit notification and approval paperwork to each regulatory agency in each state in which the company being bought or merged is licensed.

The company being acquired needs to close all loans in its pipeline and stop originating new loans while the approval is pending.

Do not jump the gun and start acting as if the acquisition or merger has gone through before the regulatory agency has given approval. You could be subject to fines, penalties and other disciplinary action that can affect your license and therefore your ability to originate loans.

Are You Keeping Your State Regulators Notified About Changes in Your Company?

2011-06-21T12:48:00.000-07:00

Have you moved your offices? Has a loan originator been terminated or left your company? Do you have a new branch manager? Has a state or federal agency instituted a cease and desist order or have you entered into a consent agreement?

When any piece of information changes from what is listed in your company MU1, or a branch office MU3 or your loan originators’ MU4 records, you must notify your state banking department. Each state has slightly different requirements about the notification – some states require 30 days’ prior notice, others require 15 days prior notice, other states will allow notice after a situation changes.

Each state has different requirements about the timing but the SAFE Act requires that you update your NMLS records to reflect all changes in your company that pertain to the information that is maintained in the NMLS database. Remember, when you attest to your record (whenever that is required), you are attesting to the fact that all of the information in your company record is still current. Therefore, if you have sponsored a loan originator, and he is no longer working for you, you must change your NMLS record to terminate the sponsorship. If you have moved your office, you must change your MU1. In some cases, you will need to surrender a paper license to get a new one with your new address. Make sure your loan originators update their MU4 records when any information of theirs changes – if they change their residence address or employment address.

It is a good practice to check your NMLS records (all of the company, branch office and loan originator records) on a regular basis so that you remember to make the necessary changes and notify your state regulator. Add this to the list of proactive steps to take so you are always in compliance.

The Mortgage Call Report – A Problem If You Didn’t File

2011-06-15T07:58:00.001-07:00

The Nationwide Mortgage Licensing System opened up the Mortgage Call Report for the first filing in May, 2011. All mortgage broker and mortgage lender/banker licensees must file quarterly reports regarding their loan applications and their closed loans. I have clients that are licensed in multiple states and both originate and broker loans. For this type of licensee, there are about 38 questions to answer, for each state report. That was a lot of information to compile and submit. You even had to file a report if you had no loan activity. What are the consequences of not filing a Mortgage Call Report?

Starting June 16, 2011, your state regulator will place a deficiency on your license if you did not file the Mortgage Call Report. Although it has not been spelled out as to the exact issues that you will face, it is possible that you will not be able to originate loans until you clear the deficiency. If you did not file your first Mortgage Call Report because you were too busy closing loans, I would be happy to help you file your Report. Don’t forget, this is a quarterly obligation and the next Mortgage Call Report is due August 14, 2011 for data from April 1, 2011 through June 30, 2011.

The Mortgage Call Report – Are You Ready to File Your First One?

2011-05-02T14:22:00.000-07:00

The Nationwide Mortgage Licensing System has just opened up the Mortgage Call Report for the first filing. I just finished filing New Jersey Annual Reports on Friday so I know my clients are not going to be happy to be putting together the information needed for this new requirement. What is a Mortgage Call Report and what does it require?

All mortgage broker and mortgage lender/banker state licensees must file quarterly reports regarding their loan applications and their closed loans. I have clients that are licensed in multiple states and both originate and broker loans. For this type of licensee, there are about 38 questions to answer, for each state report. That’s a lot of information to compile and submit. You even have to file a report if you had no loan activity.

If you cannot submit your Mortgage Call Report because you are too busy closing loans, I will be happy to help you file your Report. Don’t forget, this is a quarterly obligation.

Maryland Loan Officers – You Need Company Sponsorship

2011-04-25T12:53:00.000-07:00

By now, most of you loan officers have the licensing requirements down pat – 20 hours of pre-licensing education, pass the state and national tests, do the criminal background check, get the credit check done – and you’re licensed. There’s always a stray requirement hanging out there that you forget about and Maryland’s newest requirement highlights that fact.

The SAFE Act requires that all loan officers work for only one mortgage company at a time. The company that you work for must “sponsor” you. That means that your employer must show on the NMLS that you work for them. Most states, when they transitioned onto the NMLS, required the company sponsorship as part of the initial licensing application. You couldn’t get your loan originator license until your company sponsored you.

Maryland was different. You transitioned your license onto the NMLS but your company sponsored you on the Department of Labor, Licensing, and Regulation website. Now, Maryland is requiring that all employers create a sponsorship relationship with each of their loan officers on the NMLS. This must be completed by May 15, 2011 or there will be a payment involved.

All Maryland loan officers must first give access to their employer to their MU4 record. This is done by the loan officer getting onto their MU4 record on the NMLS and creating an “active relationship” with their employer. Once that has been completed, your employer must create the sponsorship.

You must keep checking your NMLS record to ensure that your employer has completed his part of the sponsorship request. After May 15, 2011, any loan officer who has not had a sponsorship request submitted via the NMLS will be placed in an "approved-inactive" status. That means that you will not have the authority to originate loans.

The Rules Keep Changing – A New Opportunity For You?

2011-04-19T09:18:00.000-07:00

The SAFE Act required every state to create laws that governed the licensing of mortgage bankers, mortgage brokers and their employees. While creating the new laws that were compliant with the SAFE Act, many states changed their requirements for licensing.

Many states that had previously required that you maintain a physical office in their state eliminated that requirement (i.e., New Jersey and Pennsylvania). If you had ever thought of doing business in a state but were reluctant to spend the money on office rent and staff, re-check the new requirements in that state. You may find that the brick and mortar requirement doesn’t exist anymore and you can now get licensed there.

You should also check minimum net worth requirements. In some states they went up or were created where they had never existed, and in other states, because certain categories of licenses were changed, the minimum net worth requirements were changed.

Lastly, most states do not require audited financial statements, where they once may have been part of the licensing process. I know many mortgage brokers who did not want to spend the money to get an audited financial statement so they did not get FHA approval (FHA approval for the “mini-eagle” for loan correspondents does not exist anymore) or get licensed in a particular state.

My advice is to check the current licensing requirements for any state in which you may have in the past wished to do business. If you don’t have the time or inclination, hire outside counsel who can check it for you. You may find a new source of business in another state.

What Are Corporation and LLC Annual Reports and Why Does a Mortgage Company Need to Know?

2011-03-28T07:49:00.000-07:00

Do you remember when you incorporated or created your limited liability company (LLC)? You did a filing with your state’s Secretary of State (some states use other agencies for this filing). If you expanded your territory to include other states, you needed to file for a Certificate of Authority to Transact Business as a foreign corporation or LLC (or a similar name for this document).

Most states have a requirement that you file an annual report with the Secretary of State’s Office or maybe the Franchise Tax Board. The filing times vary by state. The annual reports are designed to let the state know that you are still in existence, that you haven’t changed your registered agent, that you haven’t moved your offices, and that your officers, directors and/or members are still the same. Usually, there is a small fee to be paid. If there are changes, you are supposed to notify the state of those changes. Franchise board filings tend to be just a requirement to send a franchise fee to that state.

The consequences of not filing the annual report can be that you may eventually lose the right to legally transact business in that state and that the fees that are owed will continue to be owed and may incur interest and penalties. This is true even if you have stopped transacting business. it can also jeopardize your ability to renew your licenses.

You must file your annual reports on a timely basis. If you are not sure when you need to file, contact the Secretary of State (or whichever agency is in charge of corporate and LLC filings) or hire an outside company to do the filings for you (either a law firm or company that provides this service). If you have stopped doing business in that state, make sure the proper withdrawal documents are filed with that agency and pay the required fee. If you fail to do this, it could get quite expensive for your company.

Getting Annual Report Correspondence to The Right Person

2011-03-22T08:01:00.000-07:00

I’ve been writing a lot recently about the annual reports that are due at the beginning of the year. A whole bunch are due at the end of March. This is in addition to or instead of the Mortgage Call Report that will start becoming required at the end of April.

Some states send letters in January or February with log-in information for their online reports. These letters typically go to one of the owners in the mortgage company. Unless the owner is the one who will be preparing the Annual Report or inputting the Annual Report, my experience is that this letter will likely get mislaid. If you are receiving a letter from a banking department about the Annual Report, and you have either appointed someone in your company to prepare and input the Report or are using an outside company or law firm for Annual Report submissions, please forward these letters immediately to that person. If you are now scrambling to find that letter, have your outside company or law firm call the banking department to get them to re-send the letter. Then, send a letter to the banking department, on company letterhead and signed by an owner of the company, requesting that the banking department send all correspondence in the future to your outside company or law firm. It will save you a lot of aggravation and time that you won’t need to spend looking for a letter that you may not understand that you need.

What Does a Mortgage Loan Originator Do If He Has a Criminal Conviction in His Past?

2011-03-15T12:29:00.000-07:00

I’ve been receiving phone calls from mortgage loan originators from different states, asking what they should do if they have a criminal conviction in their past. The federal SAFE Act, enacted in 2008, provided minimum standards for the licensing of mortgage loan originators. Included in those requirements is a blanket prohibition on applicants who have been convicted of, pled guilty, or pled nolo contendere (no contest) to a felony if the felony was a crime involving fraud, dishonesty, breach of trust, or money laundering. There is a seven-year disqualification if the felony conviction was for any other type of crime.

If you have been denied approval of your mortgage loan originator license application because of a criminal conviction in your past, you have a couple of options. The first is that you can challenge your denial. Each state agency who issues decisions on license application has a set of procedures for challenging these decisions. Usually, it involves a hearing before someone else in the same agency or perhaps a hearing in front of an administrative judge. The procedures differ for each state. If you wish to challenge the denial of your license application, you must follow the rules for that agency. If you will be hiring a lawyer to represent you, you want to hire a lawyer who practices administrative law in the state in which the licensing agency exists. If your license was denied by the Massachusetts Division of Banks, you need a Massachusetts-licensed attorney. If your license was denied by the Illinois Department of Financial and Professional Regulation, you must hire an Illinois-licensed lawyer. If there are time limits for filing a challenge, you must not delay filing the challenge. If your challenge is filed too late, it is barred forever.

Your other choice is to try to find employment with a depository institution as the SAFE Act has different rules for mortgage loan originators employed by banks. If your felony conviction is for a dishonesty crime, you may never be a loan originator again.

Do You Still Need to File an Annual Report?

2011-03-07T07:34:00.000-08:00

Once upon a time, just about every state required its own form of Annual Report. Most of them were due in the first 4 months of each year. Recently, the Nationwide Mortgage Licensing System sent out an email that functionality for a Mortgage Call Report that would be required quarterly, starting in April, 2011. Does this mean that you are not required to file an Annual Report?

The short answer is that it depends on in which state you are licensed. Most states which had required annual report filing still have the same requirements as in previous years. Some of the questions have changed but most of the reports that I have seen so far look quite similar to past years’ reports.

The Mortgage Call Report is required by the SAFE Act and will be a report that is in addition to the Annual Report that may still be required. All states will be requiring that you complete the Mortgage Call Report. But not all states require an Annual Report. You must check with your state agency that oversees your license if you are not sure that you need to file an Annual Report. Be aware that most Annual Reports also require financial statement reporting so you may need to get your accountant on top of this requirement immediately. You should also be aware that one (1) Mortgage Call Report will be sufficient for all states in which you are licensed.

There is plenty of aid out there to help you get your information organized and inputted on the Annual Report form so that your filing is timely. You really do not want to be late. The penalty may exceed the cost of hiring someone to help you.

Do You Need to Take Continuing Education Courses This Year?

2011-02-28T11:58:00.000-08:00

Are you aware that loan originators will need to take at least eight (8) hours of continuing education this year? That’s right, the SAFE Act doesn’t just require the twenty (20) hours of pre-licensing education. Now that you are licensed, you need to take continuing education every year.

The Safe Act requirements are that you take 3 hours of federal law and regulation, 2 hours of ethics, including mortgage fraud, consumer protection, and fair lending issues, 2 hours of training regarding nontraditional mortgage products, and 1 hour of unspecified mortgage origination training. In addition to these requirements, some states also require state-specific hours. This means that if you are licensed in a state that requires state-specific education hours, you will be taking more than eight (8) hours of continuing education.

You must take these hours from an NMLS-approved provider and you cannot take the same courses year after year. Moreover, the courses that you take must be approved for continuing education as opposed to pre-licensing education. Since continuing education is required each year before your license can be renewed, you may want to think about scheduling your continuing education hours. You do not have to take all of your courses at once so think about scheduling courses when your office is traditionally less busy. You do not want to be taking your continuing education at the last minute when you need to renew your license.

What Are You Doing Differently To Stay In Business?

2011-02-22T07:23:00.000-08:00

The number of licensed mortgage brokers, lenders, and loan officers is a fraction of what it was five (5) years ago. If you are still working in the mortgage industry, you are serious about your business. But, the industry has changed and is still changing. What worked in the past is not a viable business model anymore. You are (hopefully) doing things differently to stay in business. Do you have a strategic plan for surviving and then growing your business? Can you afford not to?

There is a lot more regulation about licensing. Every state requires that mortgage brokers, lenders and loan officers be licensed. The exceptions to licensing that used to exist if you did only a few loans in a state are largely gone. So, what are you doing to ensure that your new loan officers get licensed?

Fraud played a large enough part in the mortgage meltdown to push states to enact new laws and regulations that require licensees to create fraud prevention programs. What have you done to ensure that your employees are complying with your procedures?

The number of new loan applications is down sharply from even the start of the housing bubble. Do you have a plan that you are following to get a steady stream of real estate agent referrals, other referral partners, past and present customers, and internet leads? Do you track from where you are getting your leads so you can do more of those actions? Do you know which marketing strategies are not working enough to justify spending much time on them?

Are you training your staff so that they know what your vision of your business is and how you want them to implement that vision? In addition to the required continuing education, do you offer in-house education on new laws, new products, the best ways to get iffy borrowers approved for their loans? Those loan officers who are still in the business want to work for the best companies.

Borrowers want their loans approved faster and want to close their loans more conveniently. Is your technology able to provide your customers with the best loan application experience? Do your employees also add to the loan application process or are your borrowers ready to complain to their friends, family, and state regulators how much of a hassle working with your company was? Do you even survey your customers to know what they liked about working with you and what they hated about their loan application process?

What the industry will look like in the next five (5) years is only everyone’s guess. To stay in business, you need to adapt your procedures, work with the current regulatory environment, and use it to your advantage, wherever possible. Make a plan to use the best ideas out there and then keep testing to see what works.

What To Do When You Don’t Want to Originate From a State Anymore

2011-02-17T13:53:00.000-08:00

Are you one of the many mortgage brokers or lenders who applied for numerous state licenses during the housing boom and now you wonder why you are still paying for the licenses and the additional costs associates with those licenses? I’ve counseled all of my clients that at least once a year, they should compare how much they earn from each state against how much each state’s license costs them. Included in the calculations are the costs of the licenses, the filing fee for the annual report to the state’s Secretary of State Corporations Division, the cost of the surety bond, and the payment to the company who acts as your registered agent. If there hasn’t been much origination activity lately, you may decide that it’s not worth the expense of the license and the hassle of keeping the license. What do you do when you decide you want to give up a license?

You can decide to do nothing until renewal season. At that point, you can simply not renew your license. If you choose this course of action, you must comply with all license requirements, even if you do not originate any loans for the entire year.

If you don’t want to wait until the license expires on December 31st, you need to find out the requirements for each state where you want to surrender your license. Some states require prior notice of your surrender of a license. Other states require notice within a certain number of days after you decide to surrender the license. What is the notice that is required? You go to your MU1 record on the NMLS and indicate that you wish to surrender your license in a particular state.

After you change your MU1 record, you may need to take additional action. Some states require a final Annual Report to be filed within a specified number of days after surrender. Other states may have additional forms that you need to submit. If you have branch offices licensed in the state whose license you are surrendering, you must surrender the branch license as well as the company license.

After the state has accepted the surrender of your license, then you can cancel your surety bond and registered agent. Don’t forget to file a Certificate of Withdrawal of your Certificate of Authority to Transact Business as a Foreign Corporation/LLC. Some states charge annual fees if you haven’t withdrawn, regardless of whether you are conducting business in that state or not.

Is There a Specific Order For Completing the Licensing Requirements for a Loan Originator?

2011-02-07T06:35:00.000-08:00

I’ve been receiving phone calls and emails from people who want to get licensed as mortgage loan originators (usually known as loan officers). One of their questions is whether there is a required order in which to complete the various requirements that must be satisfied in order to get your loan officer license. There is no required order but certain requirements should be completed before other requirements. You should familiarize yourself with all of the requirements before you even start of the process of licensing.

The licensing laws of each state contain certain disqualifiers to licensing. If you have one of the disqualifiers, you should not even start the licensing process. If you have a dishonesty criminal conviction in your past, no matter how good a citizen you have been since you have been convicted, you will not be approved for a license. A dishonesty crime is theft, embezzlement, fraud, perjury, passing bad checks, among others. These types of crimes are total disqualifiers. If you have a criminal conviction within the past seven (7) years, you are disqualified from licensing. A very bad credit report is not an automatic disqualifier, depending upon the reasons for the bad credit. Were you unemployed for several months and had no income to pay your bills? Or did you declare bankruptcy because you had so much consumer debt due to purchases of lots of “stuff” that you were overwhelmed with bills? Depending upon the circumstances of your bad credit items, you may still get approved for your license.

Assuming you have no automatic disqualifiers, you need to create an MU4 record in the Nationwide Mortgage Licensing System (NMLS) database. The creation of your record gives you an NMLS number that you will keep throughout your life. In the mortgage broker/lender world, your NMLS number is your identifier the same way your social security number is your identifier elsewhere.

After you get your NMLS number, you start to complete the licensing requirements: taking pre-licensing education, passing the state and national tests, sending your authorization so that your state regulators can pull your credit report, and getting your background check done. There is no required sequence in which to complete these requirements. The stumbling block for many applicants is passing the tests so make sure you prepare for them.

Filing Reports with the State Regulators and the NMLS

2011-01-31T06:50:00.000-08:00

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.

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

2011-01-24T07:26:00.000-08:00

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.

What Should You Expect From the Loan Originator Licensing Process?

2011-01-17T12:27:00.000-08:00

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.

FHA Requires Your NMLS Number

2011-01-10T07:40:00.000-08:00

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.

Why Don't You Have a Lawyer on Retainer

2011-01-07T07:19:00.000-08:00

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.

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

2011-01-03T06:31:00.000-08:00

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.

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

2010-12-20T06:34:00.000-08:00

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.

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

2010-12-13T08:19:00.000-08:00

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?

Don’t Forget to Renew Your Branch Licenses

2010-12-06T07:10:00.000-08:00

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.

Why Your License Renewal Fees May Be So Cheap

2010-11-29T07:02:00.000-08:00

I just renewed the licenses for one of my mortgage broker clients and its 6 loan originators. I used the company’s credit card for payment of the renewal fees and sent the payment confirmations (I print out every payment confirmation for every client) to my client with an explanation of what each confirmation was for. I also sent my client a quick memo explaining that this year’s renewal fees were much cheaper than next year’s renewal fees would be.

Why are this year’s renewal fees cheaper? My client has multiple licenses and some of its state licenses were transitioned to the Nationwide Mortgage Licensing System (NMLS) in 2008, some in 2009, and some in 2010. The states which transitioned onto the NMLS in 2008 and 2009 charged full renewal fees for the company, its branches, and its loan originators. The state that transitioned to the NMLS in 2010 did not charge a renewal fee because it essentially charged the renewal fee when the transition to the NMLS took place. For that state, my client paid only an NMLS administrative fee which is $30. For a company with one branch and 6 loan originators, it meant that my mortgage broker client was not paying hundreds of dollars in renewal fees at this time.

Next year, at this time, all of the company’s state banking departments will charge full renewal fees. This means that that this client (and all licensees) must have a stash of cash to pay for its renewals at one time. There is no more spreading out your renewal fees. And all states now renew annually (my client had a state license that renewed every two years) plus all the loan originators need to take continuing education next year.

If you are a mortgage lender or broker or a loan originator, and you transitioned to the NMLS in 2010, you spread out some of your fees over the course of this year. It may seem fairly inexpensive to now renew your licenses under the new statute. But, next year, you will be paying the full amount due in November or December. And you will need to take continuing education. Make sure you have enough in reserves to pay these necessary expenses.

Are You Planning on Buying a Mortgage Company in Another State? What Do You Need to Know About Getting Its License?

2010-11-22T07:47:00.000-08:00

There are some mortgage companies that are prospering and growing. They are expanding into new states by buying mortgage companies rather than obtaining their own licenses and establishing new branches.

These expanding mortgage companies must be aware that, by buying an existing license, they do not have an instant entry into a new state. Each state has its own requirements for a “change in ownership” or “change of control.” Each state even has its own definition of “change of control.” If you are contemplating buying an existing mortgage lender or broker, you should be aware that the company that you are buying cannot assign its existing license to you. You must check with each state in which the company that you are buying is licensed to learn what their requirements are and you must comply with each state’s different procedures. Some states require notification before the change and other states require notification immediately after the change.

The state agency has the power to deny the application for a change of ownership or change of control. Accordingly, the new owners or new company cannot go forward with their transaction until they have the approval of the state regulatory agency. In just about every state that I work with, the state imposes a moratorium on new originations until the regulatory agency has approved the new owners. Therefore, if you are planning to buy an existing mortgage company, you must factor in weeks or months (depending on the state) for the state to approve the change in ownership or change of control in your expansion plans. Any loans that are already in the pipeline of the company that is being acquired are allowed to be closed, so as to not inconvenience consumers.

The approval process usually includes submitting information about the new owners, including their background in the mortgage industry, financial stability, criminal background checks, and credit status. If the new owners could not qualify for a license on their own in any particular state, they will not be in a better position by buying an existing licensee.

The mortgage company who buys an existing company does not do so to get an instant license. It usually buys the company to get its existing assets (loan originators, customers, and lease). If you are planning on buying an existing company, you must prepare for the licensing process or all of your plans could be for nothing.

Are Loan Originators Allowed to Originate Loans When They Are Conditionally Licensed?

2010-11-15T07:29:00.000-08:00

Your state is still transitioning to the Nationwide Mortgage Licensing System. Some of your loan originators have transitioned their licenses but they have not been approved yet by the state licensing agency. Are they allowed to originate loans? Can you pay them for the loans they originate?

Check your state’s licensing statute and find out whether the licensing agency has issued any bulletins or memos to its licensees outlining its interpretation of the licensing statute. In many cases, the state agency has taken the position that, so long as your loan originators have license applications pending with the state or have extended licenses or registrations, then they may receive compensation for originations. A different position may be taken by your licensing agency for new originators who are awaiting approval of their licensing applications during the transition period. You may find that your state takes the position that a new loan originator may not originate loans until the license application has been approved. Each state has a different licensing statute subject only to the requirements of the SAFE Act. Each licensing agency will interpret its own laws and regulations so you must check each state's laws and regulations for every state in which you and your loan originators are licensed or wish to be licensed. You may find that one state will allow originators to originate (and get paid) while the application is pending but another state may require the loan originator to wait to originate until the application is fully approved.

Do You Know Whether You Need A Certified Financial Statement?

2010-11-08T07:46:00.000-08:00

A certified financial statement is one that has been reviewed by a certified public accountant (CPA) to ensure that the numbers reported in the statement are accurate and are not subject to material errors or omissions. Because the accountant is attaching a certification to the financial statement that he has reviewed the figures and found them to be accurate, he may incur liability if the figures in the financial statement turn out to be wrong. Because of the possible liability, many CPAs do not certify financial statements anymore. Those that do charge a large fee. For this reason, mortgage brokers and mortgage lenders are looking for reasons not to need a certified financial statement. There are two grounds for needing one: the state in which you are licensed requires them (for proving your net worth) or you want to originate FHA loans.

Although the SAFE Act changed many requirements for licensing, there are still a number of states (i.e., New Jersey for mortgage lenders, Illinois Residential Mortgage Licensees, California Residential Mortgage Lender Licensees) that require certified financial statements. You must provide such a statement as of the end of the most recent fiscal year. Some states do require a minimum net worth, other states do not. No matter in how many states you are licensed, you only need one certified financial statement. The statement must be in .pdf format and must be uploaded through the NMLS.

The ability to broker or originate FHA loans also comes with the requirement that you get a certified financial statement. If you are an FHA Loan Correspondent (also known as a “mini-eagle”), you should be aware that 2010 is the last year that FHA is approving your Loan Correspondent status. Starting in 2011, the investors to whom you will broker your loans will be responsible for the approval and oversight of you. Therefore, it is possible that each lender will have its own set of requirements. It is likely that many lenders will insist on certified financials so that they are more assured that you are not under-capitalized.

It is still required by the FHA that mortgage lenders who are originating FHA loans have a required minimum net worth that must be corroborated by the submission of a certified financial statement.

Since government loans are a large percentage of the loans that are being originated these days, it is likely that the need for (and expense of) a certified financial statement is not going away any time soon.

How Do You Renew Your Individual Loan Originator License Through the NMLS?

2010-11-01T07:11:00.001-07:00

Starting today, all mortgage loan originator licensees (usually called loan officers) must renew the licenses that expire on December 31, 2010. For those of you who are licensed in states that transitioned onto the Nationwide Mortgage Licensing System (NMLS) in 2008 or 2009, this transaction is old hat. For those of you who are renewing for the first time, you may be wondering about what the procedure is like. I have been helping clients with their NMLS renewals since 2008 so I’ve been down this road before.

The renewal process for most states starts with your using the NMLS to indicate which licenses you are renewing. If you have licenses that you are not renewing, you must actively indicate through the NMLS that you are not renewing those licenses. You can change your mind even if you click on “Do Not Renew.” You should also review your record to make sure that all of the information is up-to-date. Did you change your residence, did your company move its offices? All of your record should be accurate. You then attest to your individual record and pay the renewal and NMLS fees. If you took your pre-licensing education in 2008 or 2009, you must have taken 8 hours of continuing education in 2010 in order to get approval for your renewal license application.

Once you have renewed your licenses through the NMLS, you need to review the jurisdictional checklist for each state in which you are licensed. Print out the Renewals Checklist for each state and complete the Checklist. Although many of the states do not require additional documentation, you need to check the uniform checklist at http://mortgage.nationwidelicensingsystem.org/slr/common/renewals/NMLSDocumentLibrary/UniformIndividualRenewalChecklist.pdf
Send in each Checklist together with all additional documentation that is required to each state regulatory agency.

The state may take a few weeks to process your renewal application and additional documentation. If you have not sent in the additional documentation and checklist, the reviewer will post the items still needed on the Task List associated with your MU4 record. You need to keep checking to see if the Task List is changed. You can also view your license status by clicking on the Composite tab and looking at the View license/Registration List or by calling your state regulatory agency and speak to the reviewer.

If you wait until the end of December to renew your licenses, it is likely that your renewal approval will not come through until some time in January. This creates problems for you when your investors will not let you close without a 2011 license. Don’t wait until the last minute to renew.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing renewals.

What Happens After You Renew Your Company License Through the NMLS?

2010-10-25T05:11:00.000-07:00

Starting next week, all company mortgage licensees (mortgage bankers, mortgage lenders, and mortgage brokers) must renew the licenses that expire on December 31, 2010. For those of you who are licensed in states that transitioned onto the Nationwide Mortgage Licensing System (NMLS) in 2008 or 2009, this transaction is old hat. For those of you who are renewing for the first time, you may be wondering about what the procedure is like. I have been helping clients with their NMLS renewals since 2008 so I’ve been down this road before.

The renewal process for most states starts with your using the NMLS to indicate which licenses you are renewing. You attest to your company record and pay the renewal and NMLS fees. You should be aware that there are still several states that are not renewing company licenses through the NMLS (although they may be renewing loan originator licenses through the NMLS). These states are CA-DRE, Hawaii, Maine, Florida, Utah-DFI, Nevada, Minnesota, and Delaware. If you are licensed in one of those states that are not renewing through the NMLS, you should have received your renewal license application and instructions already. If you have not, you should call your state licensing agency and request the renewal materials. You want to start the renewal process as early as you can.

Once your company has renewed its licenses through the NMLS, you need to review the jurisdictional checklist for each state in which your company is licensed. Print out the Renewals Checklist for each state and complete the Checklist. Send in each Checklist together with all additional documentation that is required to each state regulatory agency.

The state may take a few weeks to process your renewal application and additional documentation. If you have not sent in the additional documentation and checklist, the reviewer will post the items still needed on the Task List associated with your company’s MU1 record. You need to keep checking to see if the Task List is changed. You can also view the company’s license status by clicking on the Composite tab and looking at the View license/Registration List.

If you wait until the end of December to renew your licenses, it is likely that your renewal approval will not come through until some time in January. This creates problems for mortgage brokers whose investors will not let them close without a 2011 license. Don’t wait until the last minute to renew.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing (company or MLO) renewals.

Will Your Credit Report Prevent You From Getting Your Loan Originator License?

2010-10-18T13:51:00.000-07:00

Starting November 1, 2010, the Nationwide Mortgage Licensing System (NMLS) will open up the credit report authorization process. This means that every loan originator must go to their NMLS record and allow the agency that approves your loan originator license to pull your credit report. Remember that approval for your license up until now has been conditional, pending review of a satisfactory credit report.

A regulator in each state in which you are licensed will independently review your credit information. There is no automated standard or minimum score that will be enforced inside NMLS. The SAFE Act leaves it to the discretion of each state regulator to develop its own processes and standards for reviewing credit information and determining the financial responsibility of its licensees. This means that if you are licensed in multiple states, it is possible that one state may approve your license and another state may deny your license, based on the same credit report.

Have you looked at your credit report lately? Is all the information accurate? Do you have any outstanding judgments or collection items? The state regulators are trying to determine how financially responsible you are. I know that some loan originators had money troubles when the real estate bubble burst and income went sharply down. And I’ve had some inquiries as to what the regulators are looking for. Most states have not posted minimum FICO scores and probably will not. The SAFE Act does not require minimum FICO scores so there is some flexibility (unlike the issue of criminal convictions which are hard and fast limitations). If you have any items on your credit report that may require an explanation, start planning on how you will explain any credit issues to the regulators. They are looking for fiscal responsibility so make sure that you look as though you are responsible when handling money.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing (company or MLO).

Do You Publicize Why Mortgage Brokers are Better Than Banks?

2010-10-11T07:42:00.000-07:00

Mortgage brokers took the brunt of the criticism for the subprime mess and the collapse of the housing market that followed. In the eyes of the average consumer, mortgage brokers seemed to be the ones pushing homebuyers into products that were unsuitable for them. Because the housing market collapsed, many mortgage brokers could no longer make a living and thousands left the industry. As one of the survivors, you need to educate the public on how you can better help them with their mortgage needs and how you can get them a better deal than they would get by going to a bank.

Although mortgage brokers held about 70% of the mortgage origination business at one time, that percentage has dropped significantly. Your customer base has shrunk for a variety of reasons. Fewer people are buying homes. Even when buyers fill out a 1003, it may be questionable whether they qualify for a loan. Or the property may not appraise high enough to get a loan commitment. With the lowest interest rates in years, refinancing is not as big a part of your business as it should be because so many homeowners are underwater or there is not enough equity in the property or their credit history is not clean enough. So you have to fight for every customer you can find. You need to give them a reason to come to you rather than the big banks that everyone has heard of. Can you make a list of those reasons that a customer should come to you rather than where they keep their checking account?

It is a smart exercise to make that list even if you never give out that list to your customers. It helps you focus on why your business is better than your competitors. Thinking through your competitive advantages will help you get new customers. Can you help borrowers with less than clean credit history? Do you have investors for borrowers who are self-employed? Are your fees better than a bank’s? Can you offer a better rate than the banks? Did you spend time answering their questions when a bank loan originator didn’t have the time or inclination? Did the bank loan officer know about different types of loan products? If a customer is shopping for a new loan, why specifically should they choose you? If you are stuck on the answers, survey your current customers and your past customers. Find out what they liked about working with you.

Once you have figured out why you are the better choice for a consumer, you need to educate the public. Most consumers don’t know enough about your world to even ask the right questions. You need to ask the questions that they should be asking and then answer them in a way that shows your advantages over the banks (and your mortgage broker competitors).

Whenever you are creating materials that may be categorized as advertising, don’t forget to include all required disclosures that your state law requires for advertising materials (and that kind of disclosure may be a competitive advantage itself).

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with licensing (company or MLO) or compliance issues. 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.

Why Mortgage Companies Should Hire an Outside NMLS Administrator

2010-10-04T07:16:00.000-07:00

Right about the beginning of October, you should have received an email or two from the Nationwide Mortgage Licensing System (NMLS) reminding you that you will need to renew your license fairly soon (the starting date for renewals is November 1 of each year). In addition to your company licenses, all of your loan officers (including you) must renew all of their licenses. This can add up to a lot of time – time that you and your loan officers could better spend finding new business. If you hire an outside administrator, that person could be the one spending all the time it takes to get through the renewal process. It could save you a great deal of money that your business would lose if your loan officers are spending hours trying to remember how to use the NMLS.

In most companies, the owner inputs the NMLS information himself and requires each loan officer to also input the information himself. Since this procedure is done once a year, most loan officers and owners have forgotten even their log-in names and passwords. They don’t remember what steps they need to take to renew their licenses. The NMLS is not particularly user-friendly and it may take hours for each loan officer to get through the procedures. In addition, most loan officers have no idea what requirements they need to meet in order to get approval for their renewals. As usual, each state has its own checklist in terms of continuing education, additional documents, and fees.

An outside administrator will know what requirements are in effect for each state and should be communicating to each of their clients, in advance, what will be required for each company, branch and loan originator in order to get the renewals approved. That information, coupled with an outside administrator’s expertise in working with the NMLS system itself, will save you time and money. You don’t want to find that you don’t have your licenses renewed when January rolls around. You could lose your entire business if you can’t close loans in January.

If you do decide to hire an outside administrator, you should do some research to find someone who works well with you and knows what they are doing as far as working with the NMLS and licensing laws are concerned. Check their websites to see what kind of information they provide to the public. You should also interview each outside administrator that you are considering. You should be asking that person (or company) several questions:

1. Are you the NMLS administrator for other mortgage companies and loan officers;
2. How long have you worked with the NMLS as an outside administrator;
3. Do you only do the input onto the NMLS system or do you follow up until the state regulator makes a decision on the license application;
4. Do you provide licensing information to your clients during the year or only at renewal time;
5. What fees do you charge and when do your clients pay them.

You should be talking to each outside administrator (or the person at the company who would be doing your work) to get a sense of how comfortable you feel with them. Does each person you talk to actually answer your questions? Do they seem knowledgeable? Was it difficult to reach them, either by telephone or email? Check their websites to see what kind of information they provide to the public.

If the administrator does not seem knowledgeable or interested in working with you and your loan officers (maybe your company is too small, maybe it’s too big), move on to the next name on your list. Choose the administrator who gives you the answers that make you comfortable and whose personality meshes with your own. Selecting the right NMLS administrator will save you both time and money while decreasing your stress level.

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

2010-09-27T08:02:00.000-07:00

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 Robin@Mortgagelicensesolutions.com 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.

How To Get Ready to Renew Your Licenses Through the NMLS

2010-09-20T08:26:00.001-07:00

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:
http://mortgage.nationwidelicensingsystem.org/slr/common/renewals/Pages/default.aspx

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 Robin@Mortgagelicensesolutions.com 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.

Is Your State License Renewing Through the NMLS?

2010-09-13T05:26:00.000-07:00

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.

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

2010-09-07T07:17:00.000-07:00

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 Robin@Mortgagelicensesolutions.com 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.

What To Do If Your Florida License Expires on August 31, 2010 and You're Not Sure Whether You Want to Renew It?

2010-08-30T13:03:00.000-07:00

I’m located in Ridgewood, New Jersey and a lot of my clients are licensed in Florida, mostly as correspondent lenders. It’s a natural fit as many New Yorkers and New Jerseyans moved to Florida either for retirement or to live a lifestyle in the sun. Florida licenses have historically expired on August 31st. This year starts a big change in Florida licensing, including the transition to the Nationwide Mortgage Licensing System (NMLS). Some of my clients indicated that they may not transition their license to the NMLS and wondered what to do if their license (or branch license) expired August 31, 2010 and they had loans in the pipeline.

If you have a Florida license that expires on August 31, 2010, you should be aware that it has automatically been extended through December 31, 2010. During this period, all licensees will transition their licenses to the NMLS and the Department of Financial Regulation will not know until December 31, 2010 whether you have complied with all of the requirements to transition your license and renew your license (whether you have done your testing, criminal background check, etc). This automatic extension gives you time to decide whether you still have a reason to be licensed in Florida.

If you do not believe that it makes sense for you to maintain your Florida license, then close all of your loans that are in the pipeline now and stop originating new ones. If you decide before December that you would like to keep your Florida license, start familiarizing yourself with Florida’s licensing requirements and the NMLS. The transition period for Florida starts October 1, 2010 and do your transition as early as possible to ensure that your license will extend into 2011.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com 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.

If You Make These Advertising Mistakes, It Could Cost You Plenty

2010-08-23T07:30:00.000-07:00

Advertising plays a prominent role in many mortgage companies’ efforts to find new borrowers. As your customers get bombarded by more and more advertising messages, the urge to create an advertising piece that will stand out from the crowd becomes more urgent. This sense of desperation leads many mortgage lenders and brokers to create promotion pieces that cross the lines of permissible advertising. Make sure you don’t make these mistakes that can lead to costly penalties.

1. Don’t lead consumers to believe the government or their existing lender is sending them mail. Many mortgage brokers use direct mail to solicit new business. Companies have distributed solicitations that use names of mortgage lenders in such a way that consumers believe it was sent to them by their lender, leading consumers to also believe, based on these solicitations, that their private financial information has been shared with another entity. These actions are a violation of the regulations of HUD and of the various states that regulate mortgage brokers and lenders. In addition, they can lead to consumer complaints to the regulatory agencies. The number of complaints the agency receives about you impacts how often you will be examined.

2. Do not omit the APR when advertising an interest rate. No matter what state you are conducting mortgage activity, all lenders and brokers are subject to the application of federal Truth-in-Lending laws, specifically Regulation Z. The statute requires, among other things, that if a lender or broker advertises a particular interest rate, they must also quote the Annual Percentage Rate, or APR. The APR is correctly defined as the "cost of money borrowed, expressed as an annual rate." The APR takes into account the note rate, which is the rate a borrower’s monthly payment is based on and any and all lender fees and finance charges. Yes, most borrowers don’t understand APR but you are still required to use it in your advertising and be able to explain it to a potential customer.

3. Do not use terms that indicate unlimited access to credit. Advertisements that contain terms such as "bad credit no problem" (or similar phrases) or language that implies that an applicant will have total access to credit without clearly and conspicuously disclosing the material limitations on the availability of credit are prohibited under many state laws. In most states, lenders and brokers need to list any limitations to getting the advertised mortgage, including income requirements, limitations for consumers with bad credit (such as a higher rate), and that restrictions as to the maximum principal amount of the loan offered may apply.

4. All states require NMLS unique identification numbers in advertising. This one is easy to comply with. You have to add your company and mortgage loan originator NMLS unique identification number to all of your advertising materials, including websites and business cards. In addition, some states require company addresses and specific language that must be used on all advertising materials. You must check with each state in which you are licensed to find out the specific requirements and you must fully comply with all such requirements.

5. Be aware of the catch-all “fraudulent, deceptive or misleading” prohibitions. Both the Federal Trade Commission and different state regulatory agencies have statutes that prohibit an “unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact in an advertisement if the representation or statement is false or misleading or has the tendency or capacity to be misleading” or variations of this phraseology. Lately, the regulators are cracking down on advertisements regarding low interest rate loans that fail to mention that there may be negative amortization. If you think, but are not sure that your advertising contains inaccurate or misleading language, change the advertisement.

If you violate an advertising statute or regulation, at best, you will be asked to “cease and desist” the prohibited advertising and be subjected to increased scrutiny of all of your business activities. At worst, you could lose your licenses and pay heavy fines. This could also impact your premiums with your surety bond underwriter.

Continuing Education For Mortgage Loan Originators

2010-08-16T08:07:00.000-07:00

Most mortgage loan originators (MLOs) are now aware that they have a requirement to take 20 hours of pre-licensing education in order to get their license. Many of you are unaware that the SAFE Act requires that you also take 8 hours of continuing education each year. The continuing education must be comprised of 3 hours of federal laws and regulations, 2 hours of ethics, 2 hours of training related to lending standards for the nontraditional mortgage product market, and 1 hour of undefined instruction on mortgage origination. Each state has the obligation to refine these requirements.

If you are licensed in a state that required you to take the 20 hours of pre-licensing education in 2009, then in order to renew your license in November, 2010, you will need to complete your continuing education hours by December 31, 2010. If you are licensed in more than one state, you should check with each state’s regulatory agency to make sure that you complete that state’s continuing education requirements. If you took your 20 hours of pre-licensing education in 2010, you do not need to take continuing education until 2011.

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you want to explore expanding into new states or need help 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.

Extensions to the July 31st Deadline – Are You in One of These States?

2010-08-09T07:30:00.000-07:00

July 31st was supposed to have been the deadline for completing the licensing requirements in certain states. Some states have decided to extend these deadlines to allow their reviewers additional time to review all of the transition applications. If you are a licensee in New Jersey, Maryland, or South Carolina, you have been granted the right to originate loans until September 30, 2010 (Maryland), October 1, 2010 (New Jersey), or October 31, 2010 (South Carolina Board of Financial Institutions) even if your application is still pending. You should make sure that you have completed all of your licensing requirements as soon as possible to ensure that you are unable to close your loans when this extended deadline passes. The reviewers are finding that many applications are incomplete and rather than denying these companies and loan originators the right to originate, they have given you more time. You should be checking your task lists on the NMLS to see what requirements you still need to comply with. When your application has been approved, the designation on your MU-4 record is usually “approved – conditional.” This is because the required credit check has not been reviewed yet (and won’t be until starting October 1, 2010).

If you missed the July 31, 2010 deadline, you are not covered by an extension. You need to submit a new application (not a transition application) and you cannot originate loans until your application has been approved.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you want to explore expanding into new states or need help 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.

How Do You Differentiate Yourself When Customers Are Shopping on Price?

2010-08-02T08:13:00.000-07:00

I am hearing from the mortgage brokers that I talk to that customers seem to be interested only in how low your interest rates are. If you don’t offer the lowest interest rates, what are you saying to those price shoppers to get them to consider you instead?

Have you created a script and a marketing piece that tells your potential customer how you are different but better than the broker/lender that offers the lowest interest rate? Is it phrased in terms of benefits to the borrower? Do these “tire kickers” ask you about quality? Have you told them about your qualifications (thanks to the new licensing laws you have plenty to tell them on this subject) and the fact that you are more knowledgeable and trustworthy than the loan officers hired by the banks helps your customer?

Sometimes you can compete on price. But when you can’t, you need to able to answer the question (even when they are not asking that question yet but seem to be on the fence) “Why should I go with you and not the other guy?”

Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you want to explore expanding into new states or need help 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.

Passing the Licensing Exams

2010-07-26T07:58:00.000-07:00

Every loan officer must pass the national component of the NMLS exam if they want to originate mortgages. They must also pass at least one state component (or more than one, if they are licensed in more than one state). Yet, not every loan officer is passing the required exams. At least 25% of loan officers are not passing the national exam on their first try. Are you one of the 25%?

If you are, or if you haven’t taken the test yet, here is a piece of advice. Study for the exam. Don’t just wing it. The feedback that I am getting from my clients is that some of the questions on the exam are about information that you may rarely use as you originate loans. Ideally, the pre-licensing education that you took covered everything that you will be tested on. The reality is that the instructors who are teaching the pre-licensing education may be good or they may be bad and you may be not be taught everything that you need to know. Or you may be taking online education and just breezing through it to get the required hours in. You may think that you already know all of this because you’ve been doing it for 3 or 5 years. Or you are using the certification process to avoid taking the pre-licensing education.

Most of the material tested should be information that you do know off the top of your head and you should get really close to the passing grade without doing much homework. But, if you get too many of those random obscure questions wrong, you will fail the test.

Many employers are taking a hard line about getting your licensing requirements completed. After all, what good are you to them if you cannot originate loans? What good are you to your family if you cannot earn your livelihood? Take the licensing requirements seriously. Do the work that will get you past the hurdle of passing the state and national exams. Study the information that you didn’t know before. Review any books or notes that you took during your pre-licensing education. If you didn’t take pre-licensing education, find a cram course that is specifically geared towards passing these exams. Your job may depend on it.

Contact Robin Gronsky at Rgronsky@Gronskylaw.com if you want to explore expanding into new states or need help 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.

Don’t Miss Your Deadline of July 31st

2010-07-19T06:49:00.000-07:00

A large number of states have imposed a July 31, 2010 deadline for loan officers to complete their licensing requirements. In some states, all loan officers are subject to the same deadlines. In other states, loan officers who transitioned to the Nationwide Mortgage Licensing System at different times were deemed “licensed” on a certain date and their deadlines may be different from other loan officers (who even work in the same office) who were deemed “licensed” on a different date. You need to know which category of licensee you fall into and what your deadlines are. If you miss your deadline, you may not be able to originate loans once the deadline for licensing passes.

You should check the chart at http://mortgage.nationwidelicensingsystem.org/profreq/Documents/SAFE%20Compliant%20Requirements.pdf for the deadlines of each state in which you are or wish to be licensed to ensure that you meet your deadlines. The chart gets updated every few weeks so you may want to bookmark it and re-check periodically. Do not wait for the last week of July to try to complete your requirements. If the regulatory agency in your state is inundated with last-minute test results, criminal background checks, or other required documentation, they may not be able to process everything in a timely manner. And you will be left waiting.

Contact Robin Gronsky at Rgronsky@Gronskylaw.com if you want to explore expanding into new states or need help 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.

Credit Reports – the Next Requirement for Licensing

2010-06-28T07:13:00.000-07:00

Most mortgage professionals are familiar with the new licensing requirements – the pre-licensing education, the exams that you need to pass, and the FBI criminal background checks. Coming soon, (around October, 2010), the Nationwide Mortgage Licensing System (NMLS) will open up to begin accepting the last requirement – the credit report. Under all states laws concerning the licensing of loan originators, you must authorize your state licensing agency to obtain a copy of your credit report. Your state regulator must determine that you have shown financial responsibility before they will approve your licensing application.

Many of you are wondering whether your credit report will be the stumbling block that prevents you from getting licensed under the new laws. After all, 2008 and 2009were terrible years for the industry and many of you took big hits in income those years. Many of you ran into credit card debt and had trouble paying your bills. Will this be an issue now?

A few states have already issued guidelines. If your state has not, you should pay attention to the guidelines already announced – it is likely that your state’s requirements will be similar. The following items will probably trigger a close review of your license application: bankruptcies (timeframes of how long ago your bankruptcy will matter will differ by state), tax liens, current outstanding judgments (some states will not hold judgments for medical expenses against you), a history of collection accounts, foreclosures, outstanding child support, or no credit history. Some states may have minimum credit scores, others may not.

Most licensing regulators are not stating that any of the above criteria are automatic disqualifiers, they are saying that they will review your entire credit history and any explanations you can provide as to why you had credit issues before they make their decision.

What can you do to help your application? Obviously, you cannot change what has already happened. But, if you have current credit problems, get them resolved now. Pay your judgments, get any tax liens released, and write down your explanations of any derogatory credit issues. However, if any of your credit problems stem from issues of dishonesty, fraud, misappropriation of trust funds, or misrepresentation, you may not be able to get approval for a license.

Contact Robin Gronsky at Rgronsky@Gronskylaw.com if you want to explore expanding into new states or you need help 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.

Florida to Temporarily Stop Taking Mortgage License Applications on July 8, 2010

2010-06-22T07:06:00.000-07:00

On October 1, 2010, Florida joins the rest of the nation in transitioning to the Nationwide Mortgage Licensing System (NMLS). To prepare for the transition, the Office of Financial Regulation will stop accepting new applications for mortgage lenders, mortgage brokers, correspondent mortgage lenders, and mortgage broker businesses on July 8, 2010.

If you want to originate in Florida, you must submit your application now. If you don't submit your application by July 8, 2010, you will have to wait until Florida opens up to the NMLS on October 1, 2010. All existing licensees will be transitioning their current licenses and essentially reapplying because they will be subject to the new rules under the SAFE Act. And your new application (which will be required to be submitted through the NMLS) will get caught up in the crush of existing licensees who are transitioning. The current wait time of approximately 122 days will balloon after October 1, 2010.

Where the Rich People Are Moving and Why You Should Care

2010-06-15T11:38:00.000-07:00

A recent article in Forbes magazine analyzed IRS data to find where the rich people are moving. The analysis is by county and the number one county was Collier County, Florida, where Naples is situated. The second place county was Greene County, Georgia, between Atlanta and Augusta.

What can you do with data like this? If you are deciding where to relocate to start up your mortgage origination business, you want to pick a place where there are plenty of people who can afford to buy houses. You also want buyers who have more expensive houses, because those houses have larger mortgages. The same thought process should be used if you are not relocating but looking to expand your business. Which states are the most lucrative? Which states have the cheapest level of entry? If the state you are considering does not require a brick-and-mortar presence, that will save you a ton of money in start-up costs. Can you meet the other licensing requirements – number of years in the industry, surety bonds, passing another exam?

If you are not moving to your new states, how will you get new business? Networking, of course. Do you know anyone in those states who can introduce you to real estate agents, builders, accountants, and other referral sources? Can you use LinkedIn or Plaxo to find referral sources? How much would traditional advertising cost you? Can you form a strategic alliance with other mortgage professionals and community banks in the new states in which you want to do business?

If you have never thought about originating mortgages outside of your home state, this may be a good time to start investigating your options. The mortgage world is changing and you must change with it or it will leave you behind.

Contact Robin Gronsky at Rgronsky@Gronskylaw.com if you want to explore expanding into new states. 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.

The SAFE Act Requirements Are Only the Minimum

2010-06-07T08:22:00.000-07:00

In 2008, Congress passed the SAFE Act, which had the objectives of creating a uniform set of license application and reporting requirements for loan originators, enhancing consumer protections, creating a nationwide database, and providing tracking ability of loan originators. The SAFE Act set out minimum requirements of which most mortgage industry members are familiar:
20 hours of pre-licensing education, 8 hours of continuing education after the first year of licensing, pass a national and a state test, FBI background criminal check, and (starting in October, 2010) provide credit reports.

These are the minimum requirements but the SAFE Act gave each state the right to set additional requirements. And some states have. Many states have additional forms that must be signed by the loan originator as part of the application process. Other states require state background checks so you are getting your fingerprints taken twice (sometimes at 2 different places) so that one set of fingerprint cards can be sent to your state’s criminal database and the other set can be sent to the FBI database. Some states accept the 20 hours of pre-licensing education as full compliance with their licensing requirements and other states require the 20 hours plus some extra hours of state-specific education (for example, North Carolina and New Jersey require 4 extra hours). Some states are requiring 8 hours of continuing education but other states require additional hours (for example, Kentucky requires 12 hours).

Especially if you are licensed in multiple states, you must be aware of the licensing requirements of each state in which you wish to be licensed. Some states require more than you thought they would.

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!

New States Start Loan Originator Testing

2010-06-01T06:41:00.000-07:00

One of the requirements for getting licensed as a loan originator is passing both a national test and a state test. The national test has been available for over a year. Most of the states have had their tests go live since they first joined the Nationwide Mortgage Licensing System (NMLS). The newest states to open up their state tests are: Alabama, Delaware, Missouri, Montana, Oregon, South Carolina and West Virginia. You can register through the NMLS for these tests now and start taking the test on June 14, 2010.

You should also remember that some states are certifying prior test results if part of their licensing requirements included passing a state test. Before you sign up for a state test, find out whether you can certify that you passed that state’s test so you do not have to take a test again.

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!

Why You Should Tell Your Potential Customers About Your Licensing Requirements

2010-05-24T06:44:00.000-07:00

Many of the mortgage brokers and lenders that I have been talking to in the past few months have been complaining about the need to get licensed. Most of the griping stems from the costs involved. A few mortgage brokers have pointed why licensing is better for the industry. You should be telling your potential and past customers why the licensing of loan originators is beneficial to them and how it differentiates the mortgage loan originators from bank loan officers.

You should be pointing out in all of your marketing materials that licensing means that your loan originators are more educated about federal and state laws because of the pre-licensing requirements. You should also emphasize how the testing requirement weeds out those loan originators who don’t take the courses very seriously. And don’t forget to tell everyone how your loan originators needed to go through criminal background checks to ensure that you and the state regulators evaluate whether any criminal convictions could impact their ability to act as honest loan originators.

You should call attention to the fact that borrowers have no idea who their bank loan officer is, yet they can find out pertinent information about your loan originators on the NMLS Consumer Access database. All of your marketing channels should be stressing these reasons why they should be using you, a licensed mortgage loan originator, rather than the unknown quantity that is a bank loan officer. Start shouting it from the rooftops right now.

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!

No More FHA Approval for Mortgage Brokers?

2010-05-17T09:11:00.000-07:00

FHA mortgages have been an increasing share of all loan originations for the past few years. For mortgage brokers, this has pushed them to become an FHA-approved Loan Correspondent. However, the FHA approval process has been onerous, especially the requirement that the mortgage broker pay for an audited financial statement that confirms that the broker has a net worth of at least $63,000. Accountant fees for an audited fiancial statement have run into thousands of dollars.

FHA has announced that it will not be approving mortgage brokers to act as Loan Correspondents after May 20, 2010. If your company already has an application pending with FHA, you can still get FHA approval for 2010. But what if you didn’t apply yet?

The new FHA rule provides that all non-FHA-approved Loan Correspondents (mortgage brokers) may participate in FHA programs provided they are sponsored by FHA-approved lenders. This puts the onus on FHA-approved lenders to create the requirements they will have before they accept loan applications for FHA loans from mortgage brokers. Have FHA-approved lenders created their requirements? If anyone has heard specifics about various lenders and their requirements, let me know.

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!

Have You Transitioned Yet? – Calling all Licensees in California (DOC), Montana, Oregon, Utah (DRE), and Texas (SML)

2010-05-10T09:24:00.000-07:00

If you are a licensee in California (under the Department of Corporations), Montana, Oregon, Utah (under the Department of Real Estate) or Texas, (under the Department of Savings and Mortgage Lending), your deadline to transition your license to the Nationwide Mortgage Licensing System (NMLS) is coming up at the end of May, 2010 (depending on your state, it’s May 28th (California) or May 31st.

What does it mean if you haven’t transitioned your licenses before the deadline? It could mean that you can’t originate any loans after July 31, 2010. Most companies and loan originators are uncertain as to whether they are affected by the new laws. Many companies and loan originators never were subject to licensing requirements under their own state statutes. But all states have changed their laws to conform to the requirements of the federal SAFE Act. So, in all 50 states and Washington D.C., loan officers who work for mortgage lenders, correspondent mortgage lenders, and mortgage brokers, will need to be licensed.

So, catch up with your licensing requirements. Create an MU4 record through the NMLS. Take the necessary tests immediately (each loan originator must pass a state test and a national test). If your loan originator fails either test, he must wait 30 days before he can re-take the test. And passing the test is not a given – a significant portion of the test-takers are failing the tests. Schedule your FBI criminal background check through the NMLS. Don’t wait until the last minute. If you have questions, call your state regulatory agency. There are licensing companies that help mortgage companies and loan officers to transition their licenses. If your company or your loan officers are already licensed in other states and you are on the NMLS, don’t forget to go back into your MU1, MU3, and MU4 records and transition your CA, MT, OR, UT, and TX licenses (and update your registered agent information, jurisdiction information, and pay the transition fees).

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!

Certification Process for Loan Officers

2010-05-03T09:12:00.000-07:00

Many states had testing or education requirements, even before the SAFE Act required them. These states are allowing loan officers to “certify” completion of these requirements rather than making them take a test again or sit through more hours of education.

The certification process just opened up on the Nationwide Mortgage Licensing System (NMLS) on May 1, 2010 and many states that are participating only allow a loan officer to certify through June 30, 2010 (but your state may be starting or ending on a later date). Currently, thirty-five (35) states are allowing certification of testing and/or education. Certification of testing pertains to the state component only; all loan officers need to pass the national component exam. You need to check this list to see if your state is permitting certification:

http://mortgage.nationwidelicensingsystem.org/profreq/Documents/Certification%20State%20List.pdf

Your state regulatory agency will decide if you are eligible to participate in the certification process. In order to use your eligibility to certify, you must have an MU4 record on the NMLS and either transitioned an existing license or applied for a new license. The NMLS will send you an email (using the email address that you have on your MU4 record), letting you know that your state has permitted you to certify and that a certification payment invoice has been posted to your MU4 record. The email will give you step-by-step instructions for paying the invoice. If you are eligible for certification for testing, the fee is $5 per test. If you are eligible for certification for education, the fee is $15. If you don’t pay the fees, you are not “certified” and must actually pass the state test and/or sit through the education hours.

There is a lot of confusion about the loan originator requirements, especially for those loan originators who are licensed in multiple states. Your state regulatory agencies have the answers. If you are my client, I will get you the answers to your questions.

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!

Complete Your NMLS New or Transition Application

2010-04-26T13:24:00.000-07:00

The Virginia Bureau of Financial Institutions recently put out a news release reminding its loan originators that they must complete their transition to the Nationwide Mortgage Licensing System (NMLS) before July 1, 2010. Evidently, many loan originators are taking the first steps to get their record onto the NMLS but they don’t complete the process. When you don’t complete the process, you cannot get an approval to work as a loan originator. This fact is true for loan originators in every state that is conducting licensing through the NMLS.

What does completing the process mean? As a company or a loan originator, you need to start by creating an MU1 (for the company) or an MU4 (for the loan originator) form. Many people think that once they have completed that step they are finished. Not even close. After paying your transition or new license fees, all mortgage lenders, brokers, and loan originators need to check to see whether they need to submit the jurisdictional checklist to the licensing agency. Who needs to submit the checklist? If you answered “yes” to any disclosure question, if your state requires additional forms or a surety bond, if your state requires a state background check, you may need to submit the checklist. The checklist may require you to submit additional documentation that you can access only through the checklist.

Many loan originators are neglecting to check back to the work list that is posted in your record on the NMLS to see if the licensing agency has posted deficiencies that must be corrected before your license is fully transitioned or approved. The deficiencies are usually items that you would have submitted if you had sent in the checklist, but can also include deficiencies because you did not take the national or state exam yet (and the deadline may be coming soon), you have not submitted your FBI criminal background check or a state background check or maybe a required surety bond.

Don’t forget to add in extra time that your state licensing agency will need to investigate your background. Just because you already are licensed does not mean that the state will not review your MU1 or MU4 record, now that the licensing standards have changed.

Remember that your licensing agency can assess fines and penalties if your license is not fully approved by the deadline. Don’t wait for the last minute. What will you do if you need to re-take one of the required tests and you have less than 30 days until the transition deadline?

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!

Managing Multiple Licenses

2010-04-20T07:10:00.000-07:00

The transition to the Nationwide Mortgage Licensing System (NMLS) has many mortgage banker and broker companies who hold licenses in more than one state frustrated over the need to keep track of many new license requirements with different deadlines. Many owners had grown used to the different licensing requirements that the different banking departments used to require but now the rules have all changed.

The SAFE Act was the catalyst to get the state legislators to look at their licensing statutes and tweaking their existing requirements on top of adding the requirements necessitated by the SAFE Act. Some of the states did change their requirements, adding new categories of licensees, eliminating categories of licensees, or changing the qualifications. Even if you had completed some of the requirements, you had to again get your fingerprints taken, provide credit reports, and obtain larger surety bonds. In addition, you now had to license all of your loan officers (not previously required in every state). Each state set its own deadline for when all licensing conditions needed to be completed.

How do you ensure that not only you, but all of your loan officers are in compliance with all licensing requirements? If you run a small company or branch office, you may be the one person who wears all the hats other than originating loans. Therefore, you may be the one who must keep track of all of the requirements, all of the loan officers, and all of the deadlines. Or perhaps you have an administrative assistant who can juggle this task along with her other job responsibilities. It is probably better if one person coordinates for your entire office. You don’t want each loan officer to wing it on his own. You should have that one person in charge of this task create a spreadsheet of loan originators, states in which they must be licensed, requirements of licensing, dates by which each requirement must be completed and dates by which each requirement is completed. The spreadsheet should be reviewed maybe once a week to ensure that action is being taken on a timely basis. None of the loan officers should be allowed to wait until the last minute to complete their requirements as this can leave you with half of your staff taking the 20 hours of pre-licensing education when you need them to help clear stipulations. This once a week review must be mandatory, otherwise you will find that you are getting to it whenever you can get around to it. And that, of course, means that it will be left to the last minute.

If you do not have time to do it yourself and there is no one in your office who can do it, outsource this job. Let an outside company do the tracking of the requirements and the deadlines. You won’t have to spend the time on this detail-oriented task so you can concentrate on the activities that make you money.

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!

Should Your Mortgage Broker Company Stick It Out or Find A Different Opportunity?

2010-04-13T07:23:00.000-07:00

I read an article in a Buffalo newspaper that quoted a spokesman from the New York Banking Department who revealed that 315 mortgage brokers gave up their licenses last year. The number of licensed mortgage broker companies and loan originators is down in every state. There are a number of reasons for this situation. I’m sure you’ve experienced many of them.

The requirements of the SAFE Act have caused many loan originators who cannot meet its qualifications. There were loan originators who had criminal pasts, bankruptcies, bad credit, or no knowledge of federal and state laws who were working as loan originators. Many of these people have left or will be leaving the business as all of the loan originator licensing requirements become effective (no later than December 31, 2010). There are many loan originators who don’t deserve to be in the mortgage business, with their backgrounds, but I have spoken to many, who may not be able to stay in the business because of stupid decisions made when they were young or bad luck with their finances.

Others in the industry have spoken to me about their frustration with the requirements that the lenders are placing on them. Many lenders only wish to take applications from the highest volume brokers. But, volume is down all over the country. Most consumers are too nervous about their job situation to go out and buy a new house. Other consumers want to buy but cannot sell their existing home. Many brokers cannot bring the kinds of volume that the lenders insist on.

The new regulations are also causing mortgage companies to close up shop. Licenses cost more, surety bond requirements have gone up so the premiums cost more and the annual assessments have gone up as the need for banking department income is spread among a smaller number of licensees.

So, do you close up your business and work for a lender? Become a net branch? Leave the business? If you became a mortgage broker to make a lot of money, then the opportunities of being a net branch or working for a branch may make sense to you. After all, loan officers working for banks don’t need to be licensed as mortgage brokers or loan originators. You make the money without the headaches. Or you affiliate with another mortgage broker or lender and you are one of their branches. They worry about surety bonds and license fees. You just bring them loan applications and they pay you for them. There are many ways to stay in the business without necessarily maintaining your own mortgage broker business. There are companies out there that are looking for good brokers. You may want to explore every possibility out there and make a change to your employment situation.

But, if you feel that you provide a valuable service to consumers and you want to retain your independence, you need to hang on and educate your past and future customers about why an independent mortgage broker is better for them than their going to a bank. Mortgage brokers have not done the job they need to do to convince consumers that they are worth the fee that they are charging. The comments that were posted after that article that I read largely charged mortgage brokers with allowing fraud (if they didn’t cause it themselves) and with putting borrowers into loans that made the most money for the broker, not the loans that made sense for the borrowers. Are you doing anything to counteract these types of opinions? Can you give a borrower any reason why they should use a mortgage broker rather than going to a lender or a bank?

Some of you will hang in there because this is what you have been doing for the last 10-15 years. You feel that you are helping people, you like being your own boss and you believe that the shakeout in the industry will leave the strongest surviving and that will include you. If that is your reason for staying in business, go out and make your customers want your services. Show them how you help them when they are dealing with one of the biggest financial transactions of their lives.

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!

Why You Need a Team of Trusted Advisors to Grow Your Business

2010-04-05T07:40:00.000-07:00

Most entrepreneurs start their new businesses with the dream of building a successful business. Many of you who started your new business opened up your business when times were good and mortgage applications were rolling in the door. You weren’t prepared with a business plan, or market research, or entrepreneurial skills. Yet, because there was so much real estate activity going on, your business was thriving. Then everything changed and the phones got very quiet. Most of the mortgage bankers and brokers who couldn’t survive closed their doors. Loan officers left in droves. If you are one of the companies still left standing, you have much less competition than you did five years ago. But, the phones are still not ringing off the hook and you need to be smart to stay alive. If you create a team of advisors, you should be able to find professionals and businesspeople who can help you build a prosperous business.

Who should be on your team? You should have a business lawyer, an accountant who can advise you on taxes and on how to grow your profits, an insurance broker, and a person who has already created a successful business.

Why do you need these advisors and how do you find them? A business lawyer has the knowledge to advise you about how to avoid lawsuits (which are always more expensive than the costs of acting proactively). You want to consult with a business lawyer to help you negotiate with the landlord to get you the best lease terms. A business lawyer will draft your contracts for you to work with vendors, and with independent contractors (so you don’t get into trouble with the IRS or the labor department). You may have a logo to trademark. You may want a non-disclosure agreement so that your loan officers do not take your client lists or creative marketing ideas when they jump ship or you terminate their employment. Your business lawyer will help you with all of these problems or can refer you to another lawyer who has more expertise with these types of law.

Your accountant will help you set up a chart of accounts, prepare your business tax returns and advise you (together with your lawyer) on issues where taxes are involved. Your accountant should also be able to advise you on how to maximize business deductions so that you pay the least amount of taxes that are required.

An accountant or profitability consultant will advise you on how to grow your revenues, help you to focus on your core business and then add new products or services, advise you on setting your pricing strategy, and help you with cash flow problems.

Many businesses carry a wide variety of insurance – or should. These range from liability insurance to business interruption insurance to errors and omissions insurance to surety bonds to auto insurance to commercial property insurance. Do you have an independent insurance broker who will shop your business to several insurance companies? Who will find you the best coverages for the right prices? Who will advise you about risk management so you can keep your premiums as low as possible? That’s why you need an insurance broker on your trusted advisor team.

You should also try to find a business mentor, someone who has created a business that is successful. This person should be available, who will listen to you, who has the knowledge and skills that you want to acquire, and should be willing to give you constructive criticism and feedback. If you can find a mentor who has a successful mortgage company, that’s even better. But all businesses can borrow ideas from each other because certain issues exist in all types of businesses.

Your team of trusted advisors lets you look at your business through fresh eyes. It gives you a group of professionals who have been what you’re going through and have shepherded clients through your challenges. They have expertise that you do not have and should have contacts in other businesses that will help your business (such as technology, marketing, or pricing strategies). They will ask you questions that you haven’t even thought of yet. But, you must be willing to take the advice of your trusted advisors because they will help you build the business of your dreams.

How do you find these trusted advisors? Start with one advisor who you trust and ask them for referrals to the other types of advisors that you want to have. Interview them about their experience and ask yourself whether you would be willing to work with these individuals over an extended period of time. You must be comfortable with your team because they will know you and your business intimately. Only by being open and honest with your advisors can they really help you.

A good team will get you to your goals faster than if you do it on your own. Go find the help and support to get to your business goals faster.

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!

Keeping Up With the Your State’s Transition to the NMLS

2010-03-29T08:05:00.000-07:00

Most of the states have fully transitioned their licensing to the Nationwide Mortgage Licensing System (NMLS). But other states have transitioned only parts of their licensing – either they use the NMLS for the mortgage loan originator (MLO) licensing and company licenses are still done through the state banking department (or whatever the state calls the agency who is responsible for mortgage industry licensing) or the company and branch licenses are done through the NMLS and the MLO licensing will transition at a later date.

You must keep up with the NMLS transition requirements for each state in which you are licensed. If you don’t and you miss the transition deadline, you are treated as a new applicant and you will undergo a full application process and pay the higher fees that a new application requires. The NMLS website (http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx) has a “State Licensing News” section which updates all state transitioning information. You can also check with the websites of each state agency that licenses mortgage bankers, mortgages brokers and loan originators. If the state which licenses you has a mailing list, sign up for it. You will get newsletters or emails that keep you up-to-date with the latest information from that state, with little effort on your part (as long as you read the newsletters and emails).

On March 31, 2010, Oregon (company and branch licenses), Illinois (company and branch licenses), and Wisconsin (all licenses) finish their transitions for the licenses listed. If you are licensed in any one of these 3 states, get your transition for these licenses completed by the end of this month. Again, you need to keep aware of when the other licenses start their transitions in Oregon and Illinois and how to deal with new applications.

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!

How Do You Find Out If Someone Has a Mortgage Broker License?

2010-03-22T12:42:00.000-07:00

I was surfing the web and I came across a website where this question was raised: how do you find out if someone has a mortgage broker license. I was curious to see what the answer would be. I should mention that the question was asked last week.

I hope none of the persons who replied is a mortgage broker because I was stunned to read the answers. One was that very few states license mortgage brokers. Another response was that some states have a database (that is correct but other states who used to have a database have stopped updating them). A third response was checking with the county courthouse. Not one of the responses mentioned the Nationwide Mortgage License System (NMLS).

Every state has passed a form of the SAFE Act which requires that all individual loan officers (called mortgage loan originators in the SAFE Act) must be licensed. If you want to be a mortgage loan originator and you do not want to go through the licensing process, your career path will now include working for a federally-insured depository bank or credit union.

For the past several years, all of the states have implemented some form of mortgage banker and mortgage broker licensing, even if they did not require that individual loan officers be licensed. After the SAFE Act was passed, each state overhauled its licensing laws to comply with the SAFE Act and many states added licensing requirements in addition to what the SAFE Act requires.

Currently, all of the states except Nevada, Maine, Florida and Minnesota have transitioned to the NMLS. All states have a regulatory agency that licenses mortgage bankers, mortgages brokers and loan originators. They are called different names in different states – department of banking, department of financial institutions, commissioner of banks, office of financial regulation. Each agency has a website which describes the licensing requirements and contact information. If you want to know if a particular mortgage banker, broker or loan originator is licensed and the state is not on the NMLS, call the state agency in charge of licensing the mortgage industry and they will tell you if that company or person is licensed.

Additionally, some states used to issue paper licenses which needed to be posted in the mortgage company’s offices. A number of these states have stopped issuing paper licenses and simply refer all questions to the NMLS database. If a mortgage banker wants to see your license, and your state doesn’t print paper licenses anymore, you can print out your record from the NMLS.

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!

What Does It Cost To Get a Mortgage Broker/Banker License?

2010-03-15T13:20:00.000-07:00

If you are thinking of starting your own mortgage broker or banker company or expanding your existing business into a new state, you need to put together your budget. One of your start-up or expansion costs is the cost of licensing. How do you calculate that? The costs vary by state but there are similar requirements in most states.

The calculation starts with whether you are creating a new corporation or limited liability corporation (LLC). There are fees to incorporate or register your LLC in your home state. If you are expanding into a new state, you must file a document that authorizes your to conduct business outside of your home state (usually called a Certificate of Authority to Transact Business). Once you are incorporated or have authority to do business, you apply for the mortgage broker or banker license. In just about every state that means starting with the Nationwide Mortgage Licensing System (NMLS). You complete an application called an MU1 about the company, an MU2 about the owners, and an MU4 for each mortgage loan originator. There is an administrative fee just to get your company onto the NMLS plus the license fee that each state charges. Each state has its own additional requirements that may require you to spend more to get your license. Those requirements may be a surety bond (so you pay an insurance premium), a financial statement prepared by an accountant (add in an accountant’s fee), credit reports for the owners and officers of the company, background checks and fingerprint cards, and required licensing of one of the owners who is responsible for day-to-day operations. There are also still some states that require a physical presence in their state so you need to rent an office.

When you add up all the fees, you could be looking at anything from $2,000 to
$4,000. That does not include the costs for getting your loan officers licensed (and you must have at least one person licensed as a loan originator, even in a one-man shop). If you are getting a new license as part of an expansion, you must do a cost benefit analysis to evaluate whether the costs of getting the license are less than the revenues that you expect to earn in that state.

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!

Should You Attend a Mortgage Banker or Mortgage Broker Trade Show?

2010-03-09T12:17:00.000-08:00

A mortgage banker or broker trade show is usually held over 3-4 days. That’s a lot of time to be away from your business. You may want to attend a show if you thought you could get something valuable for your business. What can you get from a trade show?

My office is located in New Jersey and next week is the 2010 Regional Conference of MBAs (I believe it’s sponsored by the mortgage bankers associations of New Jersey, New York, Pennsylvania, Connecticut, Washington D.C., Maryland, New Hampshire, Massachusetts, and Rhode Island). I’m debating whether to attend this show. Will it provide me with any benefits that I can translate into new business? What would I like to see at a trade show for mortgage bankers or brokers? Obviously, what I would like to get out of a trade show, as a lawyer who works a great deal with the mortgage industry, is different from what you, a mortgage banker or mortgage broker, would want to get out of such a conference.

I’d look at the programming details first to see if there were any sessions that I would want to attend. Lately, there are a lot of regulatory changes that are raising many questions for mortgage brokers and bankers and there should be sessions addressing these questions. Many of you want to know how to survive in this new business climate and there are hopefully sessions that will speak about these issues. If the speakers are listed, are they regulators that you would like to meet or other successful business owners that you’d like to network with? That would be a good reason to attend.

Check the list of exhibitors. Can you find new vendors for your business? Can you find out if they have a solution for your problem or can they save you money over your existing vendors? Can you form a strategic alliance with any of the exhibitors?

Lastly, a trade show can be a great opportunity to meet other mortgage bankers and mortgage brokers. Meeting and talking to some of these people can help you find out what your competition is doing, how they are dealing with the problems that you are facing, and how you can be better than they are. If you are not in competition with them, you can find mortgage bankers and brokers who are licensed in states that you are not, so you can take advantage of leads that you cannot use and vice versa. When you talk with mortgage bankers and brokers who are not in competition with you, they are more likely to open up with their strategies for solving the same problems you are having.

It may be useful to attend a local trade show or conference so that you can limit your costs, both in travel and hotel expenses and the number of days you are away from your business.

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!

Changing Your Address, Name, Owners, Control Person

2010-03-02T13:03:00.000-08:00

There are a thousand things to do when you move your offices, change your company’s name, add new owners or when your control person (the person who has the day-to-day operations responsibilities or have the necessary number of years in the mortgage industry for your company to keep its license) leaves. Don’t forget to notify the state agency who regulates your license.

Nowadays, before you have any type of change to your company, you must start with notifying your state regulator in advance of the change by making changes through the Nationwide Mortgage License System (NMLS). You need to update your MU1 company record. Most states require a change of address fee to be paid when you notify them of your move. If your company has moved, all of your loan originators need to change their MU4 records to show their current employment address. If you have FHA approval, you need to change your address in the FHA Connection. Many states require that, in addition to making changes to your NMLS record, you submit a copy of your new lease.

When you change owners and control, most states treat you almost as a new applicant for a license. You are allowed to close all of the loans in your pipeline, but you are not allowed to solicit new business until the state regulators have approved the change of control. The change of control application process is fairly similar to the new application process – the new controlling shareholder or member must submit all of the information that the original owner initially submitted on the NMLS (MU1 and MU2) and also submit fingerprints, legal documents evidencing the change of control, personal financials and credit reports, resume, and must answer disclosure questions regarding criminal convictions, bankruptcies, regulatory problems, and litigation.

Of course, there are fees to be paid to the state regulators for each change that you notify them of, which vary by state.

Make sure you plan to notify your state regulators on a timely basis. Most states have laws or regulation on how much notice you must provide to the state. Failure to notify the regulators of these changes can leave you open to penalties, fines, and regulatory action.

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!

How Much Money Should a Mortgage Broker or Lender Put into Its Business?

2010-02-22T07:11:00.000-08:00

The answer to this question is different state by state and whether you are a mortgage broker or a mortgage lender.

If you are a mortgage broker, many states have a required minimum net worth of $25,000. New Jersey even requires a minimum net worth of $50,000. What is net worth? It is your company’s assets minus liabilities. For a new company, assets usually consist of cash (in your company's checking account), computer equipment and furniture. It does not include your car, unless title is in the company's name. Existing companies might also have accounts receivable and prepaid expenses. Liabilities are the amount of money a company owes. New companies usually do not have any liabilities.

Even if the state that you are interested in does not have a minimum net worth requirement, the licensing department might want to see a company's financial statement. They are looking to make sure that you can pay any claim that may arise after you are licensed. In order to get approval for a license, you must demonstrate to the banking department that you are serious about your financial responsibilities. Many states require an audited financial statement. This requires a very thorough review of your records by a CPA. Many accountants do not even prepare audited financial statements anymore. The accountants that do this type of work charge thousands of dollars to prepare the audited financials. If your state does not require a CPA-audited financial statement, it requires the president (or other officer) to swear that the financial statement is true and accurate.

The more assets you can show, the better. For existing companies, I counsel my clients not to distribute all of the profits to the shareholders of a corporation or members of a limited liability company. That lowers the net worth of a company. If the company shows that profits are retained to maintain operations or grow the business, the licensing department looks favorably at the company's application. Obviously if you are a start-up, you may have a limited amount of assets, but if you are adding new states, the licensing departments want to see how you have done in the past few years, when times have been more challenging.

The requirements for a mortgage lender license are even higher, typically $100,000 to $250,000. And most states do have a net worth requirement for lenders. If a mortgage lender needs a warehouse line of credit in order to fund its loans, the warehouse line creditor now requires a much higher net worth (I’m hearing numbers in excess of $1,000,000).

Regardless of whether a state requires a minimum net worth, at least at the very beginning of your company's existence, you should put in and keep as much money in the business as you can to show the licensing departments that you are serious about being a successful company that intends to be an upstanding member of the community.

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!

Home Offices for Loan Originators - Are They Allowed?

2010-02-16T12:15:00.001-08:00

Many of us would like to work from home for many reasons - to save on rent, you like the short commute, or maybe you need to take care of your children. But are you allowed to work from home?

As with most of the questions that come up, the answer is it depends on the state in which you wish to originate or broker loans. Some states absolutely prohibit home offices. Other states permit home offices, so long as certain requirements are met. The usual requirement is that zoning laws permit home offices. If your local ordinance prohibits home offices, then your banking department will not permit you to have a home office. Some states allow a home office if it has a separate entrance and you maintain an office separate from the rest of your house.

If your state does allow home offices, remember that regardless of whether the office is the main office or just one person working from his house, that office location must be licensed. Also remember that anyone working from his home who is originating or brokering loans must be licensed as a loan originator.

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!

Fingerprinting on the NMLS

2010-02-09T07:31:00.000-08:00

The Nationwide Mortgage Licensing System (NMLS) has opened up the ability to get your fingerprints done through their system. All states’ SAFE Acts, which govern the requirements of loan originator licensing, require federal criminal background checks to be conducted by the FBI. The NMLS now permits you to input the information that the FBI needs to run the background check. There is a fee for the background check which must be paid through the NMLS. You also schedule an appointment to have your fingerprints taken by an approved vendor. Your fingerprints will become part of your NMLS record but that part of your record is not allowed to be seen by the public. In many states, you must also have a background check run by your state police.

Many times, a client has told me that they can answer “no” to all of the criminal background disclosure questions even though they have been arrested in the past. The FBI and state criminal background searches show all arrests, even if your criminal record has been expunged, even if you received probation only, or other reasons that your criminal attorney told you that you could state that you had no criminal background. If you answer “no” to all of the disclosure questions, and you have been arrested in the past, you run the risk of having to explain why you have an arrest in your background check that you did not disclose. Now your honesty is in question, as well as the circumstances of the arrest. When in doubt, answer the disclosure question “yes” and send a letter of explanation to your state regulators.

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!

Home Offices - Are Tthey Allowed?

2010-02-01T09:00:00.000-08:00

Many of us would like to work from home for many reasons - to save on rent, you like the short commute, or maybe you need to take care of your children. But are you allowed to work from home?

As with most of the questions that come up, the answer is it depends on the state in which you wish to originate or broker loans. Some states absolutely prohibit home offices. Other states permit home offices, so long as certain requirements are met. The usual requirement is that zoning laws permit home offices. Some states allow a home office if it has a separate entrance and you maintain an office separate from the rest of your house.

If your state does allow home offices, remember that regardless of whether the office is either the main office or just one person working from his house, that office location must be licensed. Also remember that anyone working from his home who is originating or brokering loans must be licensed as a loan originator.

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!

Are There Any Wholesale Banks Still Out There?

2010-01-25T09:15:00.000-08:00

I’ve got mortgage broker clients that are in a bind because their lenders will not let them close loans if their renewals haven’t come through (even though the state banking department still allows the mortgage broker to continue to solicit new business and close loans). So, if there is anyone out there who knows of lenders out there who wish to work with retail mortgage brokers, please send me an email to: Robin@mortgagelicensesolutions.com and let me know their contact information. If anyone actually does send me any names, I will investigate whether they are legitimate, what their requirements are, and let my readers know about them. This could be beneficial for mortgage brokers looking for new lenders and for lenders who want to work with more mortgage brokers.

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!

How to Close Loans if Your Renewal License Hasn’t Come Through

2010-01-11T07:52:00.000-08:00

I have received a number of phone calls from mortgage broker clients who have submitted renewals of their licenses but either the new license hasn’t been sent out yet or the approval of whether the license would be renewed has not yet been received. Either way, their lenders were refusing to let loans close without a new license. They were asking what they should do so their loans could close.

Many states are not printing new licenses when the old licenses expire. These states have made the decision to save on postage and paper costs and they will never go back to printing paper licenses. But, lenders are acting as if they are not aware of these decisions. If you are licensed in a state that has stopped printing paper licenses, you should look at the state’s licensing database. Many times, the state is updating their database to show which licensees are currently licensed and which licensees have expired licenses. If your state’s database shows that you are currently licensed, many lenders will accept a copy of the database which shows that your license is active. Then, they will let you close loans in that state.

If you are in one of the states which has stopped updating its licensing database, you must ask lenders to call your state’s banking department to confirm that you are licensed. The regulators will not give out letters to each mortgage broker to confirm that it has an active license nor will it give out letters to lenders who want to know whether a specific mortgage has a current license.

What if your renewal license application has not yet been approved? Most states will allow you to close loans while the decision on approving your renewal is pending, if you had submitted your renewal application in a timely manner. If you are licensed in such a state, you too can ask your lenders to call the state regulator to confirm that they permit you to close out your pipeline, while your renewal is pending. Some states also allow you to solicit new business while you are waiting for your license renewal.

Eventually, the public will have access to the NMLS databases, which will make it very easy for lenders to confirm that you are licensed where you say you are licensed. Until that actually happens, the beginning of the new year can be a scramble for mortgage brokers.

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!

Missed the Deadline for Renewing Your License Through the NMLS?

2010-01-04T09:40:00.000-08:00

The license renewal period on the Nationwide Mortgage Licensing System (NMLS) ran from November 1, 2009 through December 31, 2009. What if you didn’t get around to renewing your license through the NMLS?

Different states have allowed a late renewal or reinstatement (for an extra fee, of course). Here’s the link for more information: http://mortgage.nationwidelicensingsystem.org/slr/common/renewals/Pages/RenewalStates.aspx

Hurry up! Your state may allow a renewal request only through January 15, 2010. In other states, if you didn’t request a renewal of your license, it has expired and you need to apply for a new license.

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!

Be Proactive About NMLS Requirements

2009-12-18T06:32:00.000-08:00

A number of states are joining the Nationwide Mortgage License System (NMLS) on January 4, 2010. For all of those states, 20 hours of pre-licensing education and passing an exam with a 75% passing rate is required before you can get approved for a loan originator license.

For some of us, the week before or after Christmas is a slow time in the office. For others of us, January is the time when the phones aren’t ringing so often. During your slow periods, if you are in one of the states that is transitioning to the NMLS in January, 2010, get ahead of the curve and start taking your 20 hours of pre-licensing education. And then sign up for the NMLS tests, both the national component (if you haven’t already taken it for another state) and the state component.

When you sign up for your 20 hours of pre-licensing education, you need to give the course provider your NMLS identification number. If you don’t have one yet, just go to this NMLS web page: https://www.statemortgageregistry.com/Public/Default.aspx and click on “Create an Individual Account.” When you create your account, the NMLS will assign to you a user name, a password, and an NMLS identification number. You will use that same NMLS number for every state in which you will be licensed for as long as the NMLS exists. The password that you receive will be a temporary password and then you can change it to one that you will remember.

Until January 4, 2010, you cannot input the information to create your own MU4 record in the NMLS but if you have the time to get your education hours in and take the test, you will not be scrambling to fulfill those requirements when your pipeline gets full.

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!

A Little Advice About the Pre-Licensing Exams

2009-12-11T08:20:00.000-08:00

The SAFE Act, as implemented by each state, requires that all loan originators pass an exam with a 75% passing rate before they can get approved for a loan originator license by each state in which they originate or broker loans. The SAFE test consists of two components – a national test and a state test. Loan originators wishing to get licensed in more than one state must take the state component in each state in which they will be submitting a license application, but must pass the national component only once. The testing requirement must be satisfied by new applicants before they can be approved for a license. If you are currently licensed in a state that is transitioning to the NMLS (nationwide mortgage licensing system), then you transition your license first and the state has set a deadline by which you must pass the two test components.

For those loan originators with testing deadlines, it is important to schedule your test during a slow time at work and not wait until just before the licensing deadline. My clients have found their own state component to be fairly easy to pass but many fail on the first try in states in which they don’t do many loans. I would suggest that for those states, take the required 20 hours of pre-licensing education and then immediately after, take the exam while the material is still fresh in your mind. If you fail the test, you must wait 30 days until you can re-take the exam.

If December is a slow time of the year for you (not so many people are looking for houses during the Christmas season), take your pre-licensing education now and schedule the test for before the New Year starts. Good luck!

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!

New Jersey Transitioning to NMLS Starting January 4, 2010

2009-12-02T07:48:00.000-08:00

New Jersey will start its transition to the Nationwide Mortgage Licensing System (NMLS) on January 4, 2010. In the meantime, while they are preparing the transition, the Department of Banking and Insurance (DOBI) is not accepting any new license applications or changes to an existing license.

All current licensees must complete the transition process by April 30, 2010. If you hold an inactive license, you also must transition your license to the NMLS and fulfill all of the requirements under the new law to maintain your license. Mortgage solicitors who are currently registered with DOBI have until May 15, 2010 to transition their registration onto the NMLS and fulfill the new licensing requirements. All existing licenses and registrations expire on July 31, 2010. New Jersey will still require an officer, member, director, partner or owner to maintain an Individual License for each company under the new law.

Companies and mortgage solicitors who have not yet been licensed will start the application process on the NMLS starting January 4, 2010. All licenses that are issued in 2010 will expire on December 31, 2010.

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!

Updated Loan Originator Licensing Requirements On One Chart

2009-11-20T09:37:00.000-08:00

The Nationwide Mortgage License System (NMLS) has just posted a new chart of each state’s deadline for certain requirements that mortgage loan originators must meet in order to be SAFE compliant. Title V of the Housing and Economic Recovery Act of 2008 (H.E.R.A.), “the SAFE Act”, became effective July 30, 2009 and mandates that state-licensed mortgage loan originators meet certain minimum requirements for licensure. The NMLS does issue a disclaimer that not all requirements are on the chart (for example some states require surety bonds for loan originators). Always check with your state’s regulatory agency in charge of licensing loan originators to find out all of your licensing requirements. Or you can retain an attorney or company that helps loan originators get their licenses.

The NMLS chart does present an updated list of deadlines for the main requirements – pre-licensing education, continuing education, testing for loan originators, credit reports and criminal background checks. It’s very helpful for loan originators who are or want to be licensed in more than one state. Check it out at this URL:

http://mortgage.nationwidelicensingsystem.org/profreq/Documents/SAFE%20Compliant%20Requirements.pdf

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!

Changed Pennsylvania Deadlines

2009-11-12T09:42:00.000-08:00

Pennsylvania has extended the deadline by which loan originators need to pass the national and state components of the pre-licensing mortgage examination through April 30, 2010. The deadline had previously been December 31, 2009.

Loan originators have 4 opportunities to pass each part of the test components (national and state). If you fail either of the tests , you must wait 30 days to re-take the exam. If you fail 4 times at both tests, you must wait 6 months to take the tests again. And Pennsylvania will suspend your license until you do pass both of the tests.

The deadline for taking the 20 hours of pre-licensing education has not changed and is still December 31, 2009.

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!

NMLS Plusses and Minuses

2009-11-06T08:55:00.000-08:00

I've written an article for the November 2009 Residential Edition of Scotsman Guide on "NMLS Plusses and Minuses which can be found at http://www.sg-resdigital.com/resdigital/200911re#pg28

Check it out and let me know what plusses and minuses you have found with the NMLS.

Pennsylvania is Not a Brick and Mortar State Anymore

2009-10-20T11:36:00.000-07:00

In a move that reverses the current trend of greater regulation, Pennsylvania eliminated its requirement that mortgage bankers, correspondent mortgage lenders, and mortgage brokers be required to maintain at least one office in Pennsylvania. Your company’s books and records can be maintained at your principal place of business or in another office, provided you obtain prior permission from the Banking Department.

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!

Don’t Wait for the Last Minute to Take Your Pre-Licensing Education

2009-10-06T04:51:00.000-07:00

Each state is passing legislation to implement the federal SAFE Act. The legislation requires 20 hours of pre-licensing education and then passing two tests, one is a national component and the second test is a state component. Each state is setting its own deadline for when you need to complete the 20 hours and pass the exams. Don’t wait until the last minute to take the education and sit for the exams.

I have been in the business of helping mortgage lenders and brokers obtain and renew licenses for more than 10 years. Some of my clients are more on top of their licensing needs and I get the signed paper applications or information that I need to renew through the NMLS a few days after I request the information or send the applications for signature. Since I submit paperwork that I get back from clients within 48 hours of my receiving it, for some clients, this can mean that they get their renewals processed by the state banking department before the reviewers get hit by a deluge of renewals. I also have clients who do not respond as promptly and I cannot submit the renewals until maybe a day or two before the deadline. For these clients, the renewal process is very slow and may create a problem with closing loans because their license has expired. Some states are kind enough to send me a letter that states that the licensee can still close loans while the renewal is in processing. But other states are too busy to send me such a letter and my mortgage broker clients are sitting tight with their borrowers because their lenders will not let them close without a renewal license.

Don’t wait until the last minute. The NMLS system is new and you don’t want to learn what you need to know just before your license expires. Take a few minutes to find out what your deadlines are and get the pre-licensing education and exams done weeks ahead of schedule. You’ll be the one closing loans while the procrastinators are still waiting for their license approval.

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!

Do You Still Need to Take North Carolina Pre-Licensing Education? Maybe Not.

2009-09-25T13:37:00.000-07:00

North Carolina has prepared a chart for licensed loan originators to help answer questions they may have about the required pre-licensing education. If you are already a licensed loan originator in North Carolina, you were required to take pre-licensing education before your license application was approved and continuing education each year in order to get your licensed renewed and report that education to the North Carolina Commissioner of Banks. North Carolina is counting those hours towards the required 20 hours of pre-licensing education. Accordingly, if you have been licensed for more than two (2) years, you should have completed the 20 hours already. However, even if you have completed the 20 hours of pre-licensing education, you still need to take eight (8) hours of continuing education before you can renew your license this year (renewals through the Nationwide Mortgage License System (NMLS) start on November 1, 2009). You have until December 31, 2009 to take the pre-licensing education or continuing education.

If you are licensed in another state that has already transitioned onto the NMLS and have completed your twenty (20) hours of pre-licensing education in another state, you will not have to take additional hours of pre-licensing education for North Carolina. But to renew your license, you will need to take your eight (8) hours of continuing education.

The chart is available on the North Carolina Commissioner of Banks’ website here:
http://www.nccob.org/NR/rdonlyres/8D26CEAF-53C4-4104-A688-05A17E9C8651/0/CertificationChart92309.pdf

If you are applying for a new North Carolina loan originator license, you must take twenty-four (24) hours of pre-licensing education before your license application will be approved.

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!

What is on the Mortgage Loan Originator Tests?

2009-09-16T08:43:00.000-07:00

All loan officers who are required to become licensed as mortgage loan originators in every state in which they wish to do business must pass a state exam. You must also pass a national test in order to get your license. If you want to be licensed in two states, you take the national test once, and the state test in the two states in which you intend to be licensed.

The NMLS has posted the course outlines for some of the states on its website:
http://www.stateregulatoryregistry.org/NMLS/AM/Template.cfm?Section=Testing&Template=/CM/HTMLDisplay.cfm&ContentID=24885

As of September 16, 2009, the following states have posted their test course outlines: Georgia, Maryland, Kentucky, District of Columbia, Wyoming, New Jersey, Virginia, Arizona, Idaho, Iowa, Louisiana, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Vermont, and Washington. The National test course outline is also posted on the NMLS website. Massachusetts has posted its course outline but since the test is being revised, the course outline that is posted on the NMLS may be changed as well.

The course outlines are fairly short and just give you the briefest description of what will be tested. For example, the Maryland test has 55 questions, but only 45 questions will be scored. Five per cent (5%) of the test is on the Department of Labor, Licensing and Regulation, Division of Financial Regulation's structure and function. Ten per cent (10%) of the test is on definitions in the various laws that govern the licensing requirements for Maryland loan originators. Twenty five per cent (25%) of the test is about License Law and Regulations and covers who needs to be licensed (both in-state and out-of-state), the qualifications that the loan originator needs, the ground for denying the application, and what needs to be done to maintain the license (such as continuing education and conduct). Half (50%) of the test is about compliance and which types of activities are prohibited, what kind of advertising is not permitted, and what fees and charges are allowed or not allowed. The final ten per cent (10%) of the test covers the discliplinary process if you are not in compliance.

Each state has a slightly different outline so you need to review your state's outline (and the outline for all other states in which you wish to be licensed) to make sure that you know the information that will be tested. You do not need the take the required 20 hours of pre-licensing edcuation before you take the tests.

NMLS Pre-Licensing Education Approved Providers

2009-09-04T11:06:00.000-07:00

The federal SAFE Act, as implemented by each state, requires 20 hours of pre-licensing education. Until recently, the Nationwide Mortgage Licensing System (NMLS) had not approved education providers and therefore the states could not actually require you to fulfill the education requirement in order to approve your being licensed as a loan originator.

NMLS is currently prioritizing approving the pre-licensure education courses for the states of AZ, IA, ID, LA, MA, MD, NH, NC, PA, RI, VA ,VT, and WA. It has also posted a list of approved course providers: http://www.stateregulatoryregistry.org/AM/Template.cfm?Section=Course_Providers&Template=/CM/ContentDisplay.cfm&ContentID=24045

This list is current as of August 31, 2009 and will be updated every Monday. You must take your pre-licensing courses from a provider which is on the NMLS list or the coursework will not fulfill the requirements of your state licensing statute. You do not need to take your 20 hours of pre-licensing education before you take the required test but at some point, you must complete the coursework.

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!

Do You Need a License?

2009-08-28T09:31:00.000-07:00

I periodically get calls and emails, asking me if a certain person needs a license for the activities he is doing. Maybe it’s mortgage loan lead generation, sometimes it’s hard money lending or commercial mortgage brokering. My answer is always to read the statutes in your state (or any state in which you wwant to do business)regarding residential mortgage licensing to see if the activity that you are proposing to do fit within the description of a mortgage broker or mortgage lender. Also read the exemptions from licensing. If your activities fit within the definition of “mortgage broker” or “mortgage lender” and you don’t fit within any of the exemptions, you need a license. If your activity is not residential mortgages, also check the statutes for commercial mortgages to see if any such statute exists, whether your activity falls within the definition of mortgage broker or lender and whether you fall within the exemptions. It’s that simple. If you don't understand the language in the statutes, you need to hire someone like me who can explain the statutes to you.

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!

Vermont Sole Proprietor License

2009-08-20T07:25:00.000-07:00

Vermont has created a separate broker license for sole proprietors. This means that you don’t have any employees working for you. If you do have employees, then you must obtain a Mortgage Broker Company License. The requirements are that you must be licensed in your home state, you must be in good standing with your home state regulators, you must register a resident agent with the Vermont Secretary of State, and you must purchase a $25,000 surety bond.

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!

Oklahoma Joins the Nationwide Mortgage Licensing System

2009-08-03T11:45:00.000-07:00

Today is the day that Oklahoma joins the Nationwide Mortgage Licensing System (NMLS). The Oklahoma Department of Consumer Credit will no longer accept paper applications for a mortgage broker license. They must apply through the NMLS. Current licensees must create a company record on the NMLS (called an MU1) by December 1, 2009. If your company already has a record on the NMLS because of licensing in another state, you simply add Oklahoma as an additional jurisdiction to your MU1. There will be a late filing penalty of $100 if your company transitions between December 1, 2009 and December 31, 2009. After December 31, 2009, your license expires and you will not be able to renew it. You will need to submit a new application. If your company has branch offices, each branch must create a record on the NMLS by completing an MU3 form. The person in charge of each office is called the Qualifying Individual on the MU1. The fee for transitioning your broker license is $350, including the NMLS fee. New licenses cost $1,100.

All existing Oklahoma mortgage loan originators as of July 30, 2009 must transition their licenses prior to December 31, 2009 by completing an MU4. All current loan originators will 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 by December 31, 2009. New applicants for a loan originator license must complete the requirements by December 31, 2010. The license costs $210, which includes the NMLS processing fee, if you transition your loan originator license by December 1, 2009. If you do not make the deadline, there is an additional fee of $100. After December 31, 2009, you need to submit a new application. These fees do not include the cost of fingerprinting and credit report fees. You pay the fee through the NMLS and the fee is nonrefundable.

All of the additional requirements with which loan originators need to comply (pre-licensing education, exam, etc.) are not fully available on the NMLS yet so you will need to keep checking back with the NMLS in order to find out whether each requirement has been added to the NMLS. 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!

Virginia transitioning to NMLS for Mortgage Loan Originators

2009-07-28T08:17:00.000-07:00

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!

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

2009-07-20T08:35:00.000-07:00

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!

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

2009-07-10T12:13:00.000-07:00

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!

Why You Absolutely Need to Have a Broker Fee Agreement?

2009-07-02T09:12:00.000-07:00

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!

Loan Originator Testing Starting Soon

2009-06-25T08:04:00.000-07:00

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.

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!

Out-of-Date Information

2009-06-19T13:20:00.000-07:00

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.

Arizona Transitions to the NMLS

2009-06-01T09:30:00.000-07:00

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.

Illinois

2009-05-18T14:16:00.000-07:00

Illinois has started a new newsletter that is available on its website: http://www.obre.state.il.us/RESFIN/NewsLetters/MBNewsLetter042009.pdf. The newsletter details the new licensing fees that have gone effect, which are lower than they used to be. There’s a good article on enforcement actions which itemizes the most common mistakes that get mortgage companies into regulatory hot water. If you’ve ever had your books and files examined by a state banking department, you know how easy it is to find missing documents from files, advertising that is not compliant, or issues with unlicensed branches or loan originators. Such mistakes are costly to you as the banking department assesses penalties. The newsletter also reminds loan originators that it is time to renew their licenses.

Even if you are not licensed in Illinois, you may want to take a look at the newsletter or see if your state has online newsletters. Much of the information in these newsletters can be used by almost any mortgage company in any state since the licensing statutes are similar in most states and getting more uniform as more states join the NMLS.

Maryland Revises its Licensing Law

2009-05-05T08:57:00.000-07:00

Maryland has revised its licensing statute to conform to the federal SAFE Act. The new law requires new license applicants to use the NMLS to apply, starting in early May, 2009. Existing licensees who need to renew their licenses until July 1, 2009 will use the Maryland online system to renew. Existing licensees who do not need to renew their licenses until after July 1, 2009 will be required to transition to the NMLS starting in July, 2009 and will have up to 18 months to transition. If you need to renew your license during the transition period, you will renew on the NMLS. New licenses will be for up to a 1-year period and will expire on December 31st, like all other licenses obtained through the NMLS.

The new law also requires mortgage loan originators to be individually licensed, which requires the applicant to take 20 hours of pre-licensing education, to pass an exam in order to get licensed, pass a criminal background check and a regulatory background check. A mortgage loan originator will not be approved for a license if he has had a license from another state revoked or if during the prior 7-year period pleaded guilty, nolo contendere or been convicted of a felony. If the felony was for an act involving fraud, dishonesty, breach of trust, or money laundering, the application will be denied no matter how far in the past the conviction or nolo contendere plea was. After licensing is approved, the mortgage loan originator will be required to complete 8 hours of continuing education annually.

Mortgage loan originators who are not employed by a licensee can place their license in a “nonactive” status until re-employed by a different licensee.

Did you Miss the Michigan Requirement to Register Loan Officers?

2009-04-07T13:18:00.000-07:00

Michigan requires mortgage companies to register loan originators and the deadline was April 1, 2009. If you did not submit registration applications for your loan officers to the NMLS, they cannot originate loans for you now.

The first thing you need to do is notify the Michigan Office of Financial and Insurance Regulation that you are employing a loan officer who is not registered in Michigan. Then the company must register the loan officer through the NMLS. The loan officer must give the employer access to the NMLS record, then the company must request attestation from the loan officer before the company can submit the MU4. Once the loan officer completes the attestation, then the company can submit the MU4.

Loan officers must get fingerprinted to get registered. The company must get an Agency ID number from the Michigan State Police to be used for all loan officers that it employs. If your company is located in Michigan, your loan officers will schedule an appointment for a LiveScan Fingerprint. If you are out-of-state, you need to use FBI fingerprint cards.

In addition to the fingerprinting, Michigan requires 24 hours of pre-licensing education taken through an approved provider. If you have been employed as a loan officer in 4-1/2 out of the last 5 years, you are exempt from the pre-licensing education. Then you have to pass a test with a score of at least 75%.

If your loans officers did not get registered before the April 1, 2009 deadline, your loan officers can originate loans for the next 90 days only if they are not compensated for their originations and if they meet the “notification” requirement (which means that the loan officer had their fingerprints taken, the fingerprints were submitted to the Michigan State Police and the FBI for criminal background checks, there are no disqualifying results from the background check, and the employer notified the Office of Financial and Insurance Regulation of the loan officer’s employment).

The Office of Financial and Insurance Regulation promises to conduct investigations to ensure that loan officers are properly registered. Failure to register your loan officers will lead to penalties and fines.

Audited Financial Statements and the NMLS

2009-03-24T06:51:00.000-07:00

I find the NMLS to be an exasperating system to use at times. However, one function they have instituted has been very helpful to me and others who maintain compliance for mortgage lenders and brokers who operate in more than one state.

Many states have a requirement that you send them a copy of an audited financial statement every year. This involves keeping track of which states have this requirement and when the statements are due. Then you have the manual task of sending the same statement to each of those states.

Those states on the NMLS have revised their deadlines to all coincide on March 31st. Your audited financial statement must be in PDF form in order to be uploaded through the NMLS. And you are required to input the assets, liabilities, and shareholder/member capital even though those figures are in the financial statement. However, you upload one financial statement and it is distributed to all the states on the NMLS who require you to submit financials. That is one less task that your compliance department (which may be the owner of the company) must do more than once.

Is Your Competition Out of Business? Market To Their Referral Sources

2009-02-25T08:02:00.000-08:00

I am probably not the only licensing lawyer who has had some of her clients go out of business. In probably every state, the number of licensed mortgage brokers and lenders is down. Many of them have gone out of business or placed their license in “inactive” status until the market turns around.

This is your opportunity to find those referral sources – realtors, builders, buyers, and sellers who no longer have a mortgage professional to whom they will automatically turn if they know of someone who needs a mortgage. This is your chance to contact everyone who you heard was referring business to your competitors and try to get a relationship started.

And of course, stay in contact with everyone who already is a referral source to you. They need to know you are still in business, ready to serve their needs. Don’t forget the borrowers you already have done business with. Although there is little loyalty between mortgage brokers and their customers, you can increase your retention rate if you keep your name in front of people that you have already helped and liked you.

There are business opportunities even in a recession. I hope you take advantage of them and keep yourself in business.