Maintaining Your Required Minimum Net Worth

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.

Mergers and Acquisitions – You Need Approval from the Regulators

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.

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

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

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

This is the new normal.

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

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

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

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

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

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

Why Mortgage Companies Should Hire an Outside NMLS Administrator

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.

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

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.

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

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!

Managing Multiple Licenses

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!

Inactive status

Maybe I never noticed during the busy years of the real estate bubble, but I am aware now that some states let you put your license in an “inactive” status. What does this mean and why would you want to do this?

Inactive status means that you have notified the state banking department that you are not actively conducting business in their state but you do not wish to relinquish your license. For those states that have an inactive status for licensees, notification may mean sending a letter or completing and submitting a specific form. Arizona, Florida, Montana, New Jersey, New York, Oklahoma, Texas, and Washington are some of the states that have a formal inactive status.

However, other states do not have such a category and if you do not wish to maintain the license and all of its requirements, you must surrender the license.

For states that allow you to go inactive, it is an excellent way to temporarily suspend your expenses in that state and wait until the market comes back. It permits you to postpone making a decision about your current business plan until the subprime mess shakes itself out and you can jump back into the newest trends. You will not need to go through the time and expense of getting a license when you wish to go back into that state. You only have to re-file for active license status.

What if your state does not have a category called inactive licensee? Then you must make a cost-benefit analysis of keeping your license. Is the reason that you obtained the license still valid but market conditions are not permitting you to earn enough in fees to justify the expense of surety bonds, accountants’ fees, renewal fees, and registered agent fees? Then, bolster your marketing dollars so that the license does become profitable. If you feel that you misjudged the market in a particular state, then surrender the license and cut your losses. Not every business proposition is a winner. Know when to hold ‘em and know when to fold ‘em.

License Expiration Dates

If your company has more than one license, someone needs to keep track of your license expiration dates so that you do not let any license lapse. A very few states have licenses that never expire so you only have to keep track of other compliance issues such as annual reports.
If you are in a large mortgage company, you probably have a compliance department and it is their job to keep track of all expiration dates. But if you don't have a compliance department, you need a compliance person. In a very small company, that person might be the owner. Or it might be an administrative assistant. You might even outsource the function to a law firm or company that provides compliance services. I have several clients that just send me all of the compliance paperwork that they receive from the various banking departments and secretaries of state.

I have a calendar marked with all my clients' license expiration dates and also marked about 2-1/2 months before each license expiration date. At 2-1/2 months before each expiration date, I send emails to my clients reminding them that they should be receiving renewal materials from the banking department and that they should forward them to me as soon as they receive them. I start the renewal process as soon as the state permits so that I can get any additional information that is required from the client. For example, in states that require continuing education, the license renewal application asks for details about what courses were taken and who the education provider was.

If you are keeping track of your own license expiration dates, you need to set up your own system so that you get the renewal process completed before the expiration date. In some states, going past the deadline means you pay a late fee. In other states, you might need to start all over with the application process and that can take several weeks, time that you cannot take in any new applications in that state.And who can afford that?

Need a mortgage license solution?

I've been writing about topics that come up frequently in my practice as an attorney to mortgage brokers and lenders. But I'd love some ideas from my readers. If anyone has a topic they would like to see addressed in my blog or has a question that they need an answer to, please send me an email to Robin@mortgagelicensesolutions.com and I can write about it here.

Staying in Compliance

I recently had a conversation with one of the state banking department regulators about ongoing compliance with that state's rules. This particular state had a minimum net worth requirement.

I have many clients who ask me about how to comply with a minimum net worth requirement when they first get their license. For example, New Jersey has a $50,000 minimum net worth requirement for first mortgage brokers. The minimum net worth is $150,000 for first and second mortgage brokers. This is a very high hurdle for many companies. Potential clients ask me all the time "do I need to keep that amount in the company name all the time?" They figure that they can put the money in when they apply for the license and immediately pull it out after the license is granted. Unfortunately, that isn't allowed. The rules usually state "must maintain a minimum net worth of $_______" or "shall register all loan orginators."

How do the state regulators find out that a company hasn't been following the rules after the license is granted? It is carelessness that trips up many companies. Many times that carelessness is uncovered when an examination is conducted by the banking department. Mortgage companies hand the examiner a balance sheet with a negative net worth or a file that has a 1003 signed by a loan officer who is not registered. Or a branch office has not been licensed.

The penalties can be huge. That state regulator that I was talking to mentioned that a company that had not maintained the minimum net worth had their license revoked. Other infractions have cost other brokers and lenders thousands of dollars in fines.

Can you afford to pay large fines or lose a license just because you think you won't get caught breaking the rules? The state regulators don't go after just the big fish. They will go after any licensee, no matter how small or large.

Challenges of Having More Than One License

Have you ever seen the commercial where the lady says “we intend to go global, right after we go national”? I get many inquiries about getting a “national” license. There is no national license for mortgage brokers or mortgage lenders. You get each state's license one by one.

I have clients that are regional – either in New England or the southeast corner of the United States or along the Pacific coast. It helps if all of your states are in the same time zone. Are there any downsides to having more than one license?

The major challenge that my multi-state licensed clients face is the notion that what one state requires or permits may not be the same in another state. I tell those clients that each state is like a mini-kingdom with its own rules about everything. Some states have required disclosures, other states do not. Some states require that you keep a trust account, others do not. You must be knowledgeable about each state’s rules and regulations and follow them. You can plead ignorance only during the first state examination. After that, the fines and penalties for not following the rules become expensive.

The other major challenge when you have multiple state licenses is that you must keep on top of the license renewals, banking department annual reports and secretary of state annual reports (when those pesky Certificates of Authority?). For one or two states, this is not a big problem, with several states to keep track of, you might need an employee to keep track of all of your requirements. Or you can hire outside help, which I provide for many of my clients who don’t want to be bothered with remembering when it’s time to prepare another filing.

Surety bonds

Most of the states require surety bonds as part of the licensing process. What is a surety bond? A surety bond is a contract with an insurance underwriter, which ensures that the Banking Departments can collect unpaid fees from the licensee.

The surety bond requirement varies from state to state. It can range from $10,000 for a New York mortgage broker license to $150,000 for a New Jersey 1st and 2nd mortgage broker license. Mortgage lenders tend to have higher requirements than mortgage brokers although some states don't require the surety bond at all because they require higher net worths or proof of a certain dollar amount in the bank.

From where do you get a surety bond? I use a company that specializes in surety bonds for the mortgage industry. There are a few out there. I like the fact that they know what the requirements are for each state and what form of surety bond each state requires. That saves me a lot of time. If you go to the insurance agent who sold you your business insurance, he will probably ask you for a copy of the surety bond language. It is available on the banking department web site.

Most insurance companies require you to complete an application and for you to submit both company and personal financial statements. And they will pull the credit reports of the owners to ensure that you are a good credit risk. Because you are taking most of the risk. Most underwriters require a personal indemnity from the owners of the mortgage company.

It can take a few weeks to several weeks to get the surety bond so don't wait until the last minute to get yours. It will hold up the application process.

Mortgage Brokers and Lenders and Certified or Audited Financial Statements

Many states have minimum financial requirements for mortgage brokers and lenders. The more serious states want you to prove that you have established and continue to maintain the required net worth by submitting certified (also known as audited) financial statements, both with the initial application and annually, either with the renewal application or the annual report.

What is a certified (or audited) financial statement? It is a personal financial statement (if you are a sole proprietorship) or business financial statement (for corporatations, limited liability companies and partnerships) which have been reviewed and authenticated by a certified public accountant.

Let's break out that definition into its different components. A financial statement consists of a balance sheet and a profit and loss statement. The balance sheet shows either your personal assets and liabilities (for sole proprietorships) or the business' assets and liabilities (for corporations, limited liability companies and partnerships). The profit and loss statement details your income (and its sources) versus your expenses, in their various categories. Before you start the business, the profit and loss statement is a guestimate of what you hope to take in as income against what you will need to spend to keep the business going. Once the business is licensed and hopefully making money, the figures are actual calculations in each category of income and expense.

What do I mean by "reviewed and authenticated by a certified public accountant"? The Banking Department is not taking your word on what figures appear on the financial statement. It wants you to hire a C.P.A. who will review all of your financial books and records and verify that what you have stated on the financial statement is the truth. The certification process is very quick before your company starts business and will cost you relatively little at this point. Once you are conducting your mortgage business, the review of your books and records and the verification of each piece of information will take several weeks and can costs thousands of dollars. Why so much money for the certification? Because of liability issues. Accountants get sued if there is a discrepancy between what is in the financial statement that they have certified as accurate and what is really in your books and records. Think Enron. Their accountants, Arthur Andersen, don't exist anymore, stemming from the fallout from the Enron debacle.

Where certified or audited financial statements are required on an annual basis, some states, such as Virginia and New Hampshire, require their submission at a fairly early date (February 1). For those companies whose fiscal year ends on December 31st, this deadline is very difficult to adhere to. However, there is no way to get an extension and you could be in regulatory trouble if you cannot find a C.P.A. who can work within these timeframes. Accordingly, it is important to find a C.P.A. who understands the mortgage industry requirements and whose fee will work within your budget.

License Renewals

Only a few states, i.e., New York, Virginia, and California, issue mortgage broker and mortgage lender licenses that never expire. The vast majority of the states issue licenses that expire every year. The rest of the states have licenses that are renewed every 2 years.

The Banking Department (or whatever they call it in each state) will send out a renewal application about 2-3 months in advance of the expiration date of the license. More and more, the renewal is done online and the information is inputted. Some of the smaller states have very streamlined renewal procedures. They just require that you notify them of any changes since the previous year. The more time-consuming ones need to include updated surety bonds, Certificates of Good Standing, and proof that continuing education was completed. It takes several weeks to get all of the documentation together so you have to be very organized and keep on top of each requirement to ensure that you can send in a complete renewal application.

What should you do if the renewal license application isn't complete and the deadline is drawing near? I send in whatever I have and forward any missing documentation as I receive it. I have found that most states will grant some leeway if the renewal application is in their office. At least then they know you are trying to renew your license. If you have missed the deadline because you are still waiting for one last piece of paper, the Banking Department will not let you continue to broker or originate loans and will assess fines for a late filing.

Most of the Banking Departments take several weeks past the expiration date of your license to process all of the renewal applications. They know that lenders may not let brokers close loans if the new license has not been issued. The Banking Departments will usually confirm with the lenders that a renewal license is pending and that the Department is allowing the broker to cintinue to close loans while the application is being processed.

What if you have decided that you do not wish to renew your license in a particular state? Check that state's requirements. Some states merely let the license lapse on its expiration date and no further action is necessary. Other states require you to let them know that you are not renewing and you must comply with that instruction. You never know when you might change your mind and want to re-apply.