Delaware has sent out a letter to its licensees informing them of how it will comply with the federal SAFE law in connection with mortgage loan originators.
The first step you would have noticed is that, unlike in prior years, when you renewed your Delaware company license, the application asked for the names and addresses of the loan originators that you employ. In the future, on a quarterly basis, you will be required to report any newly hired mortgage loan originators.
If a loan originator is currently employed by a licensed Delaware lender or broker, the loan originator will be required to submit a license application through the Nationwide Mortgage License System (NMLS) by March 31, 2009. The loan originator will be allowed to keep originating while the license application is pending, once the application is timely submitted.
If you hire a loan originator after January 1, 2009, that originator must first submit a license application through the NMLS immediately upon beginning employment (he/she can’t wait until March 31, 2009). Once the application is submitted, the loan originator may start to originate loans until a decision on his/her license application is made.
If your loan originator is already on the NMLS because of licensing in another state, he/she doesn’t need to create a new record. A simple amendment to the MU4, adding Delaware as a new state, is all that is required. Delaware is not yet requiring fingerprinting, credit reports, education hours or a national test yet. But if your loan officer answers ”yes” to any of the disclosure questions, he/she must send in additional information, giving all of the details about the problem that caused the “yes” answer.
There will be a $280.00 application fee which must be paid through the NMLS with a credit card or through electronic debit from a checking account. Once the loan originator license is approved, another $250.00 license fee will be required. There will also be annual assessment fees and annual NMLS processing fees.
Delaware has not announced when it will transition company licensing to the NMLS. The above information is for the licensing of individual loan officers only.
Monday, December 15, 2008
Wednesday, December 3, 2008
New HUD-1 and GFE forms
This is not a licensing issue but I thought I’d give out some information on the compliance front. HUD has announced that it is requiring new Good Faith Estimate (GFE) and HUD-1 and HUD-1A forms. The new HUD-1 forms have references back to the GFE so savvy consumers can compare the two documents. Although the new forms won’t be required until January, 2010, you should take a look at them:
http://www.hud.gov/content/releases/goodfaithestimate.pdf
http://www.hud.gov/content/releases/hud-1.pdf
http://www.hud.gov/content/releases/goodfaithestimate.pdf
http://www.hud.gov/content/releases/hud-1.pdf
Friday, November 14, 2008
Don’t Forget Loan Originators on the NMLS Must Renew Their Licenses
Mortgage companies who are on the NMLS have probably paid attention to their notices to renew the company license through the NMLS. But how many of you have reminded your loan originators to renew their licenses?
Although the renewal process is started on the NMLS, each state has its own follow-up requirements. For instance, in Mississippi, Rhode Island, and Washington, loan originators must submit proof that required continuing education has been completed. In Vermont, loan officers must submit their certification that they do not owe any Vermont taxes and that they do not owe child support. The other states on the NMLS do not require anything from loan officers after they have completed their NMLS renewals.
In order to renew, you must log in to the NMLS, go to Renewals, attest that your record has not changed (did you change employers, did your employer move their offices?), then renew and pay.
Connecticut does not renew until next year and New York is renewing outside the NMLS system. So, check with your state and make sure to renew if it is required.
Although the renewal process is started on the NMLS, each state has its own follow-up requirements. For instance, in Mississippi, Rhode Island, and Washington, loan originators must submit proof that required continuing education has been completed. In Vermont, loan officers must submit their certification that they do not owe any Vermont taxes and that they do not owe child support. The other states on the NMLS do not require anything from loan officers after they have completed their NMLS renewals.
In order to renew, you must log in to the NMLS, go to Renewals, attest that your record has not changed (did you change employers, did your employer move their offices?), then renew and pay.
Connecticut does not renew until next year and New York is renewing outside the NMLS system. So, check with your state and make sure to renew if it is required.
Monday, November 3, 2008
Hire Talent Now
Although much of the mortgage industry is disappearing, you may be bucking the tide and having a good year. Or you may be holding your own, unlike your competitors who are closing up their shops. If you have any plans to be around at the next up part of the cycle, now is the time to hire the talent that is flooding the streets.
Although wages and commissions may be the most costly part of your overhead, if you don’t have the best people working for you, you will never get ahead. Now you have the time to be choosy. You have time to read the resumes, interview the candidates, and check references. You are not desperate to just get bodies in the office, talking to customers. In addition to the hard skills that you always ask for (ability to bring in lots of new loans or strong processing experience), you can now look at how your newest employees will fit into your organization and how likeable they are.
Don’t hire people who seem desperate to get any job. They will leave you when the good times come. And that will cost you in company morale and training costs. You will uncover some excellent talent in a slow job market so wait until the hidden gems emerge. And snatch them up. They will help you move into the next profitable business cycle.
Although wages and commissions may be the most costly part of your overhead, if you don’t have the best people working for you, you will never get ahead. Now you have the time to be choosy. You have time to read the resumes, interview the candidates, and check references. You are not desperate to just get bodies in the office, talking to customers. In addition to the hard skills that you always ask for (ability to bring in lots of new loans or strong processing experience), you can now look at how your newest employees will fit into your organization and how likeable they are.
Don’t hire people who seem desperate to get any job. They will leave you when the good times come. And that will cost you in company morale and training costs. You will uncover some excellent talent in a slow job market so wait until the hidden gems emerge. And snatch them up. They will help you move into the next profitable business cycle.
Wednesday, October 8, 2008
Renewals on the NMLS
You should have received an email from the Nationwide Mortgage License System (NMLS) notifying you that the renewal season is about to start. If you live in a state that has transitioned onto the NMLS, you need to renew your license. For states whose license period was not the calendar year, this may seem strange. When you moved your licensing record onto the NMLS, you were advised that all licenses would, in the future, expire on December 31st. Renewal fees for some states were prorated to accommodate the change in renewal dates.
In order to renew all of the licenses that you have on the NMLS, you need to review your records to make sure that all of the information is accurate. You can start doing that as of October 13th. Even if there are no changes, you must attest that your records are accurate. Regardless of whether there are any changes, each state may require that you send in additional paperwork, such as financial statements, continuation certificates for surety bonds, or proof that continuing education requirements have been met. Those additional documents must be submitted to the licensing agency within 5 days of your renewing your license. To find out what additional documentation is required, you need to check the NMLS website here:
http://www.stateregulatoryregistry.org/AM/Template.cfm?Section=Renewals&Template=/CM/ContentDisplay.cfm&ContentID=17970
Don’t forget that, in those states that license individual loan officers, each loan officer must update his/her record and renew his/her license. After that is done, the company must finish up the loan officer renewal process. Renewal for the company cannot be completed until after loan officer licensing is finished.
Remember that all license renewals must be reviewed by the state banking departments so get your renewals done by December 1, 2008. If you wait, your license may expire before your renewal license is issued.
In order to renew all of the licenses that you have on the NMLS, you need to review your records to make sure that all of the information is accurate. You can start doing that as of October 13th. Even if there are no changes, you must attest that your records are accurate. Regardless of whether there are any changes, each state may require that you send in additional paperwork, such as financial statements, continuation certificates for surety bonds, or proof that continuing education requirements have been met. Those additional documents must be submitted to the licensing agency within 5 days of your renewing your license. To find out what additional documentation is required, you need to check the NMLS website here:
http://www.stateregulatoryregistry.org/AM/Template.cfm?Section=Renewals&Template=/CM/ContentDisplay.cfm&ContentID=17970
Don’t forget that, in those states that license individual loan officers, each loan officer must update his/her record and renew his/her license. After that is done, the company must finish up the loan officer renewal process. Renewal for the company cannot be completed until after loan officer licensing is finished.
Remember that all license renewals must be reviewed by the state banking departments so get your renewals done by December 1, 2008. If you wait, your license may expire before your renewal license is issued.
Tuesday, September 16, 2008
Update on Virginia laws
As of July 1, 2008, Virginia has required that all employers must obtain a criminal history record from the Virginia Central Criminal Records Exchange for all new employees who have access to personal identifying or financial information from customers. The report must show that the prospective employee has not been convicted of any felony or misdemeanor involving fraud, deceit, or misrepresentation in any state or under federal law. If there is such a conviction, no matter how old, you must get permission from the Bureau of Financial Institutions to hire this person. You must keep the criminal records report in the event of an examination of your books and records by the Bureau of Financial Institutions.
Employers also need to provide initial training and continuing education for all employees who are involved in the origination, marketing, underwriting, closing or quality control of Virginia loans. The initial education must be provided to all who were your employees who fit the definition that I just stated and anyone else who fits that definition who is hired after July 1, 2008. You have until May 1, 2009 to have the initial training completed for employees who were with your company on July 1, 2009. You have 90 days to have the initial training completed for anyone new who is hired after July 1, 2009. The initial training consists of at least 12 hours of federal law including the Truth-in-Lending Act, RESPA, Equal Credit Opportunity Act, and the Fair Credit Reporting Act, 4 hours of Virginia law, including the Virginia Mortgage Lender and Broker Act and 2 hours of mortgage fraud prevention, including the penalties for participating in mortgage fraud. Marketing and sales training courses don’t count.
Additionally, there is continuing education required for these employees on an annual basis after the initial training and consists of at least 4 hours of federal law, 2 hours of Virginia law, and 1 hours of mortgage fraud prevention. All employers must keep documentation showing which employees had initial and then continuing education, which courses they took (you must provide descriptions of each course), how many hours each course was, who the provider was, and when each course was completed.
You should have received a copy of this new law if you are currently licensed in Virginia. If you are like many of my clients, when you receive notice of a new law, you quickly skim the notice and decide you can’t figure out what it says. And then you wonder what you need to do next. You should have retained a lawyer to explain the new laws to you if you cannot understand what the Bureau of Financial Institutions has sent to you. Your inability to understand the new laws, rules, or regulations will not serve to protect you if you violate them.
Employers also need to provide initial training and continuing education for all employees who are involved in the origination, marketing, underwriting, closing or quality control of Virginia loans. The initial education must be provided to all who were your employees who fit the definition that I just stated and anyone else who fits that definition who is hired after July 1, 2008. You have until May 1, 2009 to have the initial training completed for employees who were with your company on July 1, 2009. You have 90 days to have the initial training completed for anyone new who is hired after July 1, 2009. The initial training consists of at least 12 hours of federal law including the Truth-in-Lending Act, RESPA, Equal Credit Opportunity Act, and the Fair Credit Reporting Act, 4 hours of Virginia law, including the Virginia Mortgage Lender and Broker Act and 2 hours of mortgage fraud prevention, including the penalties for participating in mortgage fraud. Marketing and sales training courses don’t count.
Additionally, there is continuing education required for these employees on an annual basis after the initial training and consists of at least 4 hours of federal law, 2 hours of Virginia law, and 1 hours of mortgage fraud prevention. All employers must keep documentation showing which employees had initial and then continuing education, which courses they took (you must provide descriptions of each course), how many hours each course was, who the provider was, and when each course was completed.
You should have received a copy of this new law if you are currently licensed in Virginia. If you are like many of my clients, when you receive notice of a new law, you quickly skim the notice and decide you can’t figure out what it says. And then you wonder what you need to do next. You should have retained a lawyer to explain the new laws to you if you cannot understand what the Bureau of Financial Institutions has sent to you. Your inability to understand the new laws, rules, or regulations will not serve to protect you if you violate them.
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.
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