Why Don't You Have a Lawyer on Retainer

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

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.

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

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?

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

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

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?

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.