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.
Showing posts with label credit report. Show all posts
Showing posts with label credit report. Show all posts
Monday, December 20, 2010
Monday, October 18, 2010
Will Your Credit Report Prevent You From Getting Your Loan Originator License?
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).
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).
Monday, June 28, 2010
Credit Reports – the Next Requirement for Licensing
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.
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.
Wednesday, September 10, 2008
New Law in North Carolina
There is a new law set to go into effect on October 1, 2008. This new law affects all mortgage companies currently licensed in North Carolina as well as those companies thinking of getting licensed in that state.
The most cutting edge provision of the law is the ban on yield spread premiums on loans that are defined in North Carolina as “rate spread” loans. Basically, yield spread premiums on subprime loans are not permitted in North Carolina as a result of this new law. North Carolina is the first state to eliminate yield spread premiums on any type of loans.
In addition, the new law provides that all branch offices must be located in commercial office space. Home offices are now prohibited. I am aware that many loan officers operate out of their own houses, and no one even thinks of this arrangement as a branch office. But in North Carolina, this pattern on cutting down on office space will not be allowed. And remember that North Carolina is a brick-and-mortar state so that if you are an out-of-state mortgage company thinking of getting licensed in North Carolina, your in-state office cannot be a home office.
If you are a loan officer who is now employed by a North Carolina licensee, you are classified as an employee and must receive a W-2 at the end of each year, showing your wages. There are no loan officer independent contractors in North Carolina.
If you want to apply for a license as a loan officer, you must now take 24 hours of approved pre-licensing education and pass an exam. When you have passed the exam, and are submitting your application, your background check must show a FICO score of at least 600. Moreover, your credit report cannot show any outstanding tax liens or judgments in the past 7 years.
The new law also affects minimum net worth requirements. If you are a mortgage broker, you must maintain a minimum net worth of at least $25,000. Your statement of net worth does not need to be from an accountant but must be certified by an authorized officer or member of the company. Additionally, the mortgage broker must provide the Commissioner of Bank’s office with bank statements or other proof that they have liquid funds of at least $10,000. For mortgage bankers, the net worth requirement is a minimum of $100,000 and that amount must be proven by an audited financial statement. In addition, the mortgage banker must show evidence of a line of credit or other available funds of $1,000,000.
Other provisions of the new law:
1. Reporting about closed loans will now be on a quarterly basis.
2. Renewals will be done at the end of the year as all licenses expire on December
31st.
3. Requires licensing for servicers as of January 1, 2009, however, you do not need an additional license if you are a mortgage banker who will be servicing (you will need to provide notice to the Commissioner of Banks).
If you need further information about the new law, you should look at the Commissioner of Bank’s website at www.nccob.org, place your cursor on Mortgage and then on Legal Compliance References.
The most cutting edge provision of the law is the ban on yield spread premiums on loans that are defined in North Carolina as “rate spread” loans. Basically, yield spread premiums on subprime loans are not permitted in North Carolina as a result of this new law. North Carolina is the first state to eliminate yield spread premiums on any type of loans.
In addition, the new law provides that all branch offices must be located in commercial office space. Home offices are now prohibited. I am aware that many loan officers operate out of their own houses, and no one even thinks of this arrangement as a branch office. But in North Carolina, this pattern on cutting down on office space will not be allowed. And remember that North Carolina is a brick-and-mortar state so that if you are an out-of-state mortgage company thinking of getting licensed in North Carolina, your in-state office cannot be a home office.
If you are a loan officer who is now employed by a North Carolina licensee, you are classified as an employee and must receive a W-2 at the end of each year, showing your wages. There are no loan officer independent contractors in North Carolina.
If you want to apply for a license as a loan officer, you must now take 24 hours of approved pre-licensing education and pass an exam. When you have passed the exam, and are submitting your application, your background check must show a FICO score of at least 600. Moreover, your credit report cannot show any outstanding tax liens or judgments in the past 7 years.
The new law also affects minimum net worth requirements. If you are a mortgage broker, you must maintain a minimum net worth of at least $25,000. Your statement of net worth does not need to be from an accountant but must be certified by an authorized officer or member of the company. Additionally, the mortgage broker must provide the Commissioner of Bank’s office with bank statements or other proof that they have liquid funds of at least $10,000. For mortgage bankers, the net worth requirement is a minimum of $100,000 and that amount must be proven by an audited financial statement. In addition, the mortgage banker must show evidence of a line of credit or other available funds of $1,000,000.
Other provisions of the new law:
1. Reporting about closed loans will now be on a quarterly basis.
2. Renewals will be done at the end of the year as all licenses expire on December
31st.
3. Requires licensing for servicers as of January 1, 2009, however, you do not need an additional license if you are a mortgage banker who will be servicing (you will need to provide notice to the Commissioner of Banks).
If you need further information about the new law, you should look at the Commissioner of Bank’s website at www.nccob.org, place your cursor on Mortgage and then on Legal Compliance References.
Tuesday, January 16, 2007
Mortgage license solutions and your credit report
Many of the states request that you send in a current credit report or agree that the banking department can pull your credit report. What are they looking for? The same things you are looking for when you have a potential customer - how good you are at managing money.
Does your credit report have a low FICO score? Lots of late pays? Open judgments? Some states, like West Virginia, will automatically deny the application if you have a FICO score in the 500s. Other states will also deny the application if you have open judgments and refuse to pay (no matter what the reason for the non-pay). The banking departments take the position that if you can't manage your own finances, how will you be able to advise consumers on what is the best financial decision among the many loan programs that are out there.
What do you do if you suspect you have a problem credit report? First, get a copy of your credit report and FICO score. Review the report and note any items that would raise a red flag. If there are problems with your credit report, pay the judgments, take a few months to make all of your payments on time, get your FICO score up. If you cannot solve this dilemma, do not become an owner of record. Let your partner be the one to submit only his/her credit report.
Does your credit report have a low FICO score? Lots of late pays? Open judgments? Some states, like West Virginia, will automatically deny the application if you have a FICO score in the 500s. Other states will also deny the application if you have open judgments and refuse to pay (no matter what the reason for the non-pay). The banking departments take the position that if you can't manage your own finances, how will you be able to advise consumers on what is the best financial decision among the many loan programs that are out there.
What do you do if you suspect you have a problem credit report? First, get a copy of your credit report and FICO score. Review the report and note any items that would raise a red flag. If there are problems with your credit report, pay the judgments, take a few months to make all of your payments on time, get your FICO score up. If you cannot solve this dilemma, do not become an owner of record. Let your partner be the one to submit only his/her credit report.
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