I represent a number of clients on an ongoing basis, keeping them in compliance with the states in which they are licensed. Because the Nationwide Mortgage Licensing System (NMLS) has been up since January 2, 2008, I’ve been on the system quite a bit.
My experience is that it is somewhat time-consuming to work with the NMLS. I actually have that same opinion about all computer-based systems (i.e. annual reports and renewals that must be done online). If the entry isn’t done in the exact format that they require, the computer kicks it back. If I don’t have the answer to a question for a client, I need to go back to the client and get the answer; otherwise the system will not let me get further through the questions. This is true even with questions that seem to be irrelevant as to whether a mortgage originator or owner is honest and experienced in the industry. Questions about 10 years of residential history, providing month and year for each residence, do not make sense to me. Ten years of employment history, even if it is not mortgage related, seems excessive. When you have a paper-based system, the reviewer seems to have the leeway to allow a small piece of information to be omitted. And the format of the response does not stop you from moving from question to question.
I have not yet had the pleasure of adding a new state to be licensed for a client already in the system. I hope that it will just require a few minutes of input for the new state (each state still has its own requirements for what it requires for licensure) and the application will be submitted. I still need to know each state’s requirements, but the added work of re-typing each state’s application form will eventually disappear. That will make the NMLS a pleasure.
Monday, February 25, 2008
Tuesday, February 19, 2008
Massachusetts Will Require Loan Originator Licensing
We’re adding yet another state to the list of states that require loan originator licensing. Massachusetts has just started to implement a new law that was passed in November, 2007 and becomes fully effective July 1, 2008.
By July 1, 2008, all Massachusetts-licensed mortgage lenders and brokers may not employ or retain loan officers who are not licensed. Starting February 19, 2008 and ending on May 27, 2008, all loan officers who were employed by a licensed mortgage lender or broker on November 29, 2007 must register as a loan officer through the Nationwide Mortgage Licensing System (NMLS). Each mortgage lender or broker must have already created their company’s record with the NMLS by this date. If the loan officer was hire after November 29, 2007, he/she will have to go through a different licensing procedure, which has not yet been disseminated to the public yet.
By July 1, 2008, all Massachusetts-licensed mortgage lenders and brokers may not employ or retain loan officers who are not licensed. Starting February 19, 2008 and ending on May 27, 2008, all loan officers who were employed by a licensed mortgage lender or broker on November 29, 2007 must register as a loan officer through the Nationwide Mortgage Licensing System (NMLS). Each mortgage lender or broker must have already created their company’s record with the NMLS by this date. If the loan officer was hire after November 29, 2007, he/she will have to go through a different licensing procedure, which has not yet been disseminated to the public yet.
Monday, February 11, 2008
Training Your Loan Officers
A couple of months ago, I blogged about the best practices for hiring new loan officers. Now, it’s time to review the procedures to use to ensure that your loan officers stay compliant with all laws.
If your company is large enough, it should have a manual of company policies and procedures (prepared or reviewed by a lawyer who is very familiar with employment law). When a new loan officer starts his/her job with your company, the new loan officer should be given a copy of the company manual, should read the manual and should be required to sign an acknowledgement that the manual was read. If you don’t have a company manual, you need to meet with each new loan officer and explain what the company’s policies are regarding vacation and sick days, dress codes, email and use of the company computers, confidentiality of company information and client privacy information, all statutes and regulations that apply to your company and its business, etc.
Each job should have a job description so that everyone knows what he/her responsibilities are. Review each job description and make sure that all employees are complying with their job duties.
If your loan officers do not have experience in originating or processing loans of any state in which you are licensed, you must give some training to new loan officers in compliance with state laws and regulations. You can hire a trainer to give this training. If you are outsourcing this function, make sure that your trainer is entirely familiar with the subject matter in which he/she is giving training. You should monitor training sessions so that you know what is being taught to your employees. If anything is said that seems to contradict what you know about your state’s requirements, check with the state banking department to clear up all discrepancies. If there is a contradiction between the trainer and the banking department answers, go with the banking department answers.
Each employee should have training on how to deal with customers and potential borrowers. Loan officers should know what they can and cannot say to customers. You may want to hire a professional to teach sales development techniques and marketing skills. All loan officers should be familiar with investor requirements and the different loan programs that you offer to customers. They should be able to explain each program in detail so that it is easily understandable to borrowers.
Training should be ongoing and refresher courses should be given at least annually. Loan officers who need continuing education to maintain their licenses must keep a schedule of when they completed their required hours and employers should require that they receive a copy of that schedule.
Finally, model the type of behavior and standards that you want others to follow. Loan officers that do not follow state and federal law as well as your company’s procedures will get you into trouble. The loan officer may be long gone by the time the problem comes to light. But you will be left with the consequences.
If your company is large enough, it should have a manual of company policies and procedures (prepared or reviewed by a lawyer who is very familiar with employment law). When a new loan officer starts his/her job with your company, the new loan officer should be given a copy of the company manual, should read the manual and should be required to sign an acknowledgement that the manual was read. If you don’t have a company manual, you need to meet with each new loan officer and explain what the company’s policies are regarding vacation and sick days, dress codes, email and use of the company computers, confidentiality of company information and client privacy information, all statutes and regulations that apply to your company and its business, etc.
Each job should have a job description so that everyone knows what he/her responsibilities are. Review each job description and make sure that all employees are complying with their job duties.
If your loan officers do not have experience in originating or processing loans of any state in which you are licensed, you must give some training to new loan officers in compliance with state laws and regulations. You can hire a trainer to give this training. If you are outsourcing this function, make sure that your trainer is entirely familiar with the subject matter in which he/she is giving training. You should monitor training sessions so that you know what is being taught to your employees. If anything is said that seems to contradict what you know about your state’s requirements, check with the state banking department to clear up all discrepancies. If there is a contradiction between the trainer and the banking department answers, go with the banking department answers.
Each employee should have training on how to deal with customers and potential borrowers. Loan officers should know what they can and cannot say to customers. You may want to hire a professional to teach sales development techniques and marketing skills. All loan officers should be familiar with investor requirements and the different loan programs that you offer to customers. They should be able to explain each program in detail so that it is easily understandable to borrowers.
Training should be ongoing and refresher courses should be given at least annually. Loan officers who need continuing education to maintain their licenses must keep a schedule of when they completed their required hours and employers should require that they receive a copy of that schedule.
Finally, model the type of behavior and standards that you want others to follow. Loan officers that do not follow state and federal law as well as your company’s procedures will get you into trouble. The loan officer may be long gone by the time the problem comes to light. But you will be left with the consequences.
Friday, February 1, 2008
Banking Department Frequently Asked Questions
Many state banking departments include Frequently Asked Questions (FAQs) on their websites that give answers to questions you had and to some you didn’t have but should have had. It can give you insight on how to approach an issue when dealing with a state regulator or learn that you don’t need a license to make or broker that one loan (only permitted in a few states).
For example, the North Carolina Commissioner of Banks website includes Frequently Asked Questions about examinations. Although some of the information is specific to North Carolina laws and regulations, I find that the majority of information can be applied to most states. One question that I found interesting was about whether referral fees were permissible.
Although I am aware that many mortgage brokers and lenders pay “referral” fees, they should all be aware that it is a RESPA violation. In many states, it is also done to do an end-run around state licensing laws. After all, if you don’t call it a “commission” or “bonus” when the loan closes, how can anyone say you are paying an unlicensed loan officer in violation of the state’s licensing statute? Every state comes down hard on paying fees to unlicensed mortgage originators, no matter what you call the originator (e.g., a net branch) or what you call the fee. Expect to pay a heavy fine or have your company placed on probation if you are caught.
The Washington D.C. Department of Insurance, Securities and Banking’s FAQs lets you know that the exemption for making 3 or fewer loans per year is now gone. You need a license to make or broker even 1 loan. On the other hand, Massachusetts’ Division of Banks FAQs lets you know that 5 or fewer loans per every 12 consecutive months exempts you from their licensing requirements.
Most FAQs deal with licensing qualifications and are helpful to know when diciding whether you should even submit a license application (minimum net worths, minimum number of years of origination experience, etc.). I suggest you look over the FAQs on the banking department websites of every state in which you are licensed and any state in which you are interested in becoming licensed to learn as much about what you need to know as possible.
For example, the North Carolina Commissioner of Banks website includes Frequently Asked Questions about examinations. Although some of the information is specific to North Carolina laws and regulations, I find that the majority of information can be applied to most states. One question that I found interesting was about whether referral fees were permissible.
Although I am aware that many mortgage brokers and lenders pay “referral” fees, they should all be aware that it is a RESPA violation. In many states, it is also done to do an end-run around state licensing laws. After all, if you don’t call it a “commission” or “bonus” when the loan closes, how can anyone say you are paying an unlicensed loan officer in violation of the state’s licensing statute? Every state comes down hard on paying fees to unlicensed mortgage originators, no matter what you call the originator (e.g., a net branch) or what you call the fee. Expect to pay a heavy fine or have your company placed on probation if you are caught.
The Washington D.C. Department of Insurance, Securities and Banking’s FAQs lets you know that the exemption for making 3 or fewer loans per year is now gone. You need a license to make or broker even 1 loan. On the other hand, Massachusetts’ Division of Banks FAQs lets you know that 5 or fewer loans per every 12 consecutive months exempts you from their licensing requirements.
Most FAQs deal with licensing qualifications and are helpful to know when diciding whether you should even submit a license application (minimum net worths, minimum number of years of origination experience, etc.). I suggest you look over the FAQs on the banking department websites of every state in which you are licensed and any state in which you are interested in becoming licensed to learn as much about what you need to know as possible.
Subscribe to:
Posts (Atom)
