The federal SAFE Act, which requires loan originator pre-licensing education and then passing a test, has been implemented in part by many states. The law requires that the Nationwide Mortgage License System (NMLS) create that test. The test consists of questions on relevant national laws (National Component) and questions which test your knowledge of the state law for the state license for which you are applying (State Component). The earliest states to implement their version of the SAFE Act have now announced that they will start testing loan originators on July 30, 2009. Arizona, Idaho, Iowa, Louisiana, Massachusetts, Michigan, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Vermont, Washington State are the first states to offer their State Component of the required testing. The National Component will become available on July 30, 2009, as well. You must pass the National Component and State Component once. If you wish to become licensed in more than one state, once you have passed the National Component, you only need to sign up and pass the test for the State Component in each state in which you have applied for a license. Certain states may permit you to be exempt from their State Component if you have already passed their state exam.
In order to schedule tests with Pearson Vue, the test delivery vendor, you must register and pay for that test through the NMLS. Starting June 29, 2009, you can enroll for the National Component and the State Component for the 12 states listed above. Testing centers are located throughout the country and you can register for the one closest to you, no matter which State Component you have signed up for. All State Components exams are given at all testing sites. This eliminates the travel requirement to each state that multi-state licensed loan officers had under the current system.
You are not required to take any prep courses before you take the exam. Nor are you required to take the 20 hours of pre-licensing education that the SAFE Act requires before you take the exam. However, even if you pass the both the National and State Component of the exam, you will need to complete the 20 hours of pre-licensing education.
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Thursday, June 25, 2009
Friday, June 19, 2009
Out-of-Date Information
I have been helping mortgage lenders and brokers get their licenses for over 10 years. I’ve been blogging about licensing and compliance for about 2 years. Much of the information that I needed to know when I first starting working with mortgage companies is useless. Even some of the information that I published in my blog back in 2007 is now wrong.
The laws in the mortgage licensing area keep changing to keep up with events that are happening in our country to the financial industry. When I first started working in this area of law, there were a handful of states that did not require licensing at all. I’ve watched as all of the states passed laws to require the licensing of mortgage companies and then loan originators. Although there are some states now that do not require the licensing of loan originators, that will be a memory in about a year, when the federal SAFE Act becomes fully implemented.
If you are going to try to get yourself licensed without any help, you need to know that the information that you are relying upon is the most up-to-date out there. As I become aware of new legislation, new regulations and new compliance requirements, I write a blog entry about the changes so you can stay current. There are companies that you can subscribe to that will send updates to you when there are changes to the law in any state that yo uare interested in. Unfortunately, most of my clients don’t have time to read those updates or don’t understand them. Another way to get information is to read what is on the website of the regulatory agency that is in charge of mortgage lender, broker or loan originator licensing. The agencies go by different names in different states – they may be the Banking Department or the Department of Financial Institutions or the Commissioner of Banks. In California, it is the Department of Corporations (who would have guessed?). And sometimes, even after reading what’s on the website, I still call the agency and ask to speak to the reviewers in the licensing department. They can’t give legal advice (not that I’m asking for any advice) but they can tell me if the information on their website is current and answer questions about what is on their website or about an announcement about a change in their laws that I’ve received in the mail. You should do the same.
Always make sure that the information that you are working with is as up-to-date as it can be. If you are following a law that has been changed, you are not following the correct law and you could be subject to penalties and fines.
The laws in the mortgage licensing area keep changing to keep up with events that are happening in our country to the financial industry. When I first started working in this area of law, there were a handful of states that did not require licensing at all. I’ve watched as all of the states passed laws to require the licensing of mortgage companies and then loan originators. Although there are some states now that do not require the licensing of loan originators, that will be a memory in about a year, when the federal SAFE Act becomes fully implemented.
If you are going to try to get yourself licensed without any help, you need to know that the information that you are relying upon is the most up-to-date out there. As I become aware of new legislation, new regulations and new compliance requirements, I write a blog entry about the changes so you can stay current. There are companies that you can subscribe to that will send updates to you when there are changes to the law in any state that yo uare interested in. Unfortunately, most of my clients don’t have time to read those updates or don’t understand them. Another way to get information is to read what is on the website of the regulatory agency that is in charge of mortgage lender, broker or loan originator licensing. The agencies go by different names in different states – they may be the Banking Department or the Department of Financial Institutions or the Commissioner of Banks. In California, it is the Department of Corporations (who would have guessed?). And sometimes, even after reading what’s on the website, I still call the agency and ask to speak to the reviewers in the licensing department. They can’t give legal advice (not that I’m asking for any advice) but they can tell me if the information on their website is current and answer questions about what is on their website or about an announcement about a change in their laws that I’ve received in the mail. You should do the same.
Always make sure that the information that you are working with is as up-to-date as it can be. If you are following a law that has been changed, you are not following the correct law and you could be subject to penalties and fines.
Monday, June 1, 2009
Arizona Transitions to the NMLS
You have until June 30, 2009 to transition your company or sole proprietor mortgage broker license to the NMLS if you are currently licensed in Arizona. Mortgage bankers needed to transition to the NMLS by March 31, 2009.
Remember that transitioning your licenses does not mean amending your license information. If there are any changes to your information (e.g., you’ve moved your office or changed branch managers), you can submit the changes only after your current filings are approved.
The most basic filing is an MU1 for the company and the MU2 for each control person and the Responsible Individual. If you have branch licenses already approved, then you need to complete an MU3 for each branch and the branch managers must complete their own MU2 filings.
New applications for a company or branch license must be submitted through the NMLS. There are no more paper applications.
All loan originators must be licensed by December 31, 2009. The Arizona Department of Financial Institutions (the “DFI”) is still working on the conditions it will require for licensing loan originators since they are still deciding how to fully comply with the federal SAFE Act. However, loan originators can currently input an MU4 on the NMLS to get licensed under the existing Arizona licensing law. Loan originators must wait to input their MU4s until their employer has completed their NMLS filings. The DFI is intending to propose legislation that would postpone the deadline for licensing loan originators until July 1, 2010. But, such legislation has not become law yet so the deadline stays at December 31, 2009.
Remember that transitioning your licenses does not mean amending your license information. If there are any changes to your information (e.g., you’ve moved your office or changed branch managers), you can submit the changes only after your current filings are approved.
The most basic filing is an MU1 for the company and the MU2 for each control person and the Responsible Individual. If you have branch licenses already approved, then you need to complete an MU3 for each branch and the branch managers must complete their own MU2 filings.
New applications for a company or branch license must be submitted through the NMLS. There are no more paper applications.
All loan originators must be licensed by December 31, 2009. The Arizona Department of Financial Institutions (the “DFI”) is still working on the conditions it will require for licensing loan originators since they are still deciding how to fully comply with the federal SAFE Act. However, loan originators can currently input an MU4 on the NMLS to get licensed under the existing Arizona licensing law. Loan originators must wait to input their MU4s until their employer has completed their NMLS filings. The DFI is intending to propose legislation that would postpone the deadline for licensing loan originators until July 1, 2010. But, such legislation has not become law yet so the deadline stays at December 31, 2009.
Monday, May 18, 2009
Illinois
Illinois has started a new newsletter that is available on its website: http://www.obre.state.il.us/RESFIN/NewsLetters/MBNewsLetter042009.pdf. The newsletter details the new licensing fees that have gone effect, which are lower than they used to be. There’s a good article on enforcement actions which itemizes the most common mistakes that get mortgage companies into regulatory hot water. If you’ve ever had your books and files examined by a state banking department, you know how easy it is to find missing documents from files, advertising that is not compliant, or issues with unlicensed branches or loan originators. Such mistakes are costly to you as the banking department assesses penalties. The newsletter also reminds loan originators that it is time to renew their licenses.
Even if you are not licensed in Illinois, you may want to take a look at the newsletter or see if your state has online newsletters. Much of the information in these newsletters can be used by almost any mortgage company in any state since the licensing statutes are similar in most states and getting more uniform as more states join the NMLS.
Even if you are not licensed in Illinois, you may want to take a look at the newsletter or see if your state has online newsletters. Much of the information in these newsletters can be used by almost any mortgage company in any state since the licensing statutes are similar in most states and getting more uniform as more states join the NMLS.
Tuesday, May 5, 2009
Maryland Revises its Licensing Law
Maryland has revised its licensing statute to conform to the federal SAFE Act. The new law requires new license applicants to use the NMLS to apply, starting in early May, 2009. Existing licensees who need to renew their licenses until July 1, 2009 will use the Maryland online system to renew. Existing licensees who do not need to renew their licenses until after July 1, 2009 will be required to transition to the NMLS starting in July, 2009 and will have up to 18 months to transition. If you need to renew your license during the transition period, you will renew on the NMLS. New licenses will be for up to a 1-year period and will expire on December 31st, like all other licenses obtained through the NMLS.
The new law also requires mortgage loan originators to be individually licensed, which requires the applicant to take 20 hours of pre-licensing education, to pass an exam in order to get licensed, pass a criminal background check and a regulatory background check. A mortgage loan originator will not be approved for a license if he has had a license from another state revoked or if during the prior 7-year period pleaded guilty, nolo contendere or been convicted of a felony. If the felony was for an act involving fraud, dishonesty, breach of trust, or money laundering, the application will be denied no matter how far in the past the conviction or nolo contendere plea was. After licensing is approved, the mortgage loan originator will be required to complete 8 hours of continuing education annually.
Mortgage loan originators who are not employed by a licensee can place their license in a “nonactive” status until re-employed by a different licensee.
The new law also requires mortgage loan originators to be individually licensed, which requires the applicant to take 20 hours of pre-licensing education, to pass an exam in order to get licensed, pass a criminal background check and a regulatory background check. A mortgage loan originator will not be approved for a license if he has had a license from another state revoked or if during the prior 7-year period pleaded guilty, nolo contendere or been convicted of a felony. If the felony was for an act involving fraud, dishonesty, breach of trust, or money laundering, the application will be denied no matter how far in the past the conviction or nolo contendere plea was. After licensing is approved, the mortgage loan originator will be required to complete 8 hours of continuing education annually.
Mortgage loan originators who are not employed by a licensee can place their license in a “nonactive” status until re-employed by a different licensee.
Tuesday, April 7, 2009
Did you Miss the Michigan Requirement to Register Loan Officers?
Michigan requires mortgage companies to register loan originators and the deadline was April 1, 2009. If you did not submit registration applications for your loan officers to the NMLS, they cannot originate loans for you now.
The first thing you need to do is notify the Michigan Office of Financial and Insurance Regulation that you are employing a loan officer who is not registered in Michigan. Then the company must register the loan officer through the NMLS. The loan officer must give the employer access to the NMLS record, then the company must request attestation from the loan officer before the company can submit the MU4. Once the loan officer completes the attestation, then the company can submit the MU4.
Loan officers must get fingerprinted to get registered. The company must get an Agency ID number from the Michigan State Police to be used for all loan officers that it employs. If your company is located in Michigan, your loan officers will schedule an appointment for a LiveScan Fingerprint. If you are out-of-state, you need to use FBI fingerprint cards.
In addition to the fingerprinting, Michigan requires 24 hours of pre-licensing education taken through an approved provider. If you have been employed as a loan officer in 4-1/2 out of the last 5 years, you are exempt from the pre-licensing education. Then you have to pass a test with a score of at least 75%.
If your loans officers did not get registered before the April 1, 2009 deadline, your loan officers can originate loans for the next 90 days only if they are not compensated for their originations and if they meet the “notification” requirement (which means that the loan officer had their fingerprints taken, the fingerprints were submitted to the Michigan State Police and the FBI for criminal background checks, there are no disqualifying results from the background check, and the employer notified the Office of Financial and Insurance Regulation of the loan officer’s employment).
The Office of Financial and Insurance Regulation promises to conduct investigations to ensure that loan officers are properly registered. Failure to register your loan officers will lead to penalties and fines.
The first thing you need to do is notify the Michigan Office of Financial and Insurance Regulation that you are employing a loan officer who is not registered in Michigan. Then the company must register the loan officer through the NMLS. The loan officer must give the employer access to the NMLS record, then the company must request attestation from the loan officer before the company can submit the MU4. Once the loan officer completes the attestation, then the company can submit the MU4.
Loan officers must get fingerprinted to get registered. The company must get an Agency ID number from the Michigan State Police to be used for all loan officers that it employs. If your company is located in Michigan, your loan officers will schedule an appointment for a LiveScan Fingerprint. If you are out-of-state, you need to use FBI fingerprint cards.
In addition to the fingerprinting, Michigan requires 24 hours of pre-licensing education taken through an approved provider. If you have been employed as a loan officer in 4-1/2 out of the last 5 years, you are exempt from the pre-licensing education. Then you have to pass a test with a score of at least 75%.
If your loans officers did not get registered before the April 1, 2009 deadline, your loan officers can originate loans for the next 90 days only if they are not compensated for their originations and if they meet the “notification” requirement (which means that the loan officer had their fingerprints taken, the fingerprints were submitted to the Michigan State Police and the FBI for criminal background checks, there are no disqualifying results from the background check, and the employer notified the Office of Financial and Insurance Regulation of the loan officer’s employment).
The Office of Financial and Insurance Regulation promises to conduct investigations to ensure that loan officers are properly registered. Failure to register your loan officers will lead to penalties and fines.
Tuesday, March 24, 2009
Audited Financial Statements and the NMLS
I find the NMLS to be an exasperating system to use at times. However, one function they have instituted has been very helpful to me and others who maintain compliance for mortgage lenders and brokers who operate in more than one state.
Many states have a requirement that you send them a copy of an audited financial statement every year. This involves keeping track of which states have this requirement and when the statements are due. Then you have the manual task of sending the same statement to each of those states.
Those states on the NMLS have revised their deadlines to all coincide on March 31st. Your audited financial statement must be in PDF form in order to be uploaded through the NMLS. And you are required to input the assets, liabilities, and shareholder/member capital even though those figures are in the financial statement. However, you upload one financial statement and it is distributed to all the states on the NMLS who require you to submit financials. That is one less task that your compliance department (which may be the owner of the company) must do more than once.
Many states have a requirement that you send them a copy of an audited financial statement every year. This involves keeping track of which states have this requirement and when the statements are due. Then you have the manual task of sending the same statement to each of those states.
Those states on the NMLS have revised their deadlines to all coincide on March 31st. Your audited financial statement must be in PDF form in order to be uploaded through the NMLS. And you are required to input the assets, liabilities, and shareholder/member capital even though those figures are in the financial statement. However, you upload one financial statement and it is distributed to all the states on the NMLS who require you to submit financials. That is one less task that your compliance department (which may be the owner of the company) must do more than once.
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