The SAFE Act requires all mortgage loan originators (MLOs), also known as loan officers, to create a record that will become part of the Nationwide Mortgage Licensing System (NMLS) registry. Part of the record deals with disclosures about an MLO’s criminal background. To verify the information that the MLO is providing in his NMLS record, the SAFE Act requires criminal background checks for all loan officers.
The questions asked in the NMLS MU4 record concern criminal convictions for a felony, pleading no contest to a felony, pleading guilty or no contest to a misdemeanor involving a financial-services crime, fraud, theft, perjury, forgery, or having control over an organization that pleaded guilty or no contest to these dishonesty crimes.
Questions come to me from loan officers who have been pleaded guilty to drunk driving, to issues when they were stockbrokers, to juvenile crimes that have or have not been expunged from the record. These loan officers ask me what to do and whether these past issues are now a current problem.
I cannot counsel anyone who is not my client so I will not give specific answers in this blog. My general advice is, when in doubt, disclose and explain. Many times criminal convictions that should have been expunged will somehow show up in a criminal database. If you decide not to disclose and the conviction or no contest plea shows up, you look like you are trying to hide something. I always fall on the side of honesty and disclosure.
When you disclose your conviction or no contest plea, the licensing reviewer may have some discretion to still approve your license application, depending on the type of crime and when the conviction or no contest plea happened. The SAFE Act has explicit disqualifiers for license approvals. The SAFE Act prohibits the licensing of an MLO if the applicant has ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering, or convicted of any felony in the seven year period before filing an application for a license. If you are outside of the seven year period, you should be fine.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing (company or MLO). 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.
Monday, September 27, 2010
Monday, September 20, 2010
How To Get Ready to Renew Your Licenses Through the NMLS
The Nationwide Mortgage Licensing System (NMLS) has just notified company administrators that license renewals are coming soon. Actually, license renewals start on November 1, 2010. Each state that is currently on the NMLS has its own set of requirements for what the company, each branch office and each loan originator must do in order to renew its licenses. Additionally, each state has individual time frames for when the license renewals must be completed. And each state charges a different amount for the license renewal fees. However, the NMLS is charging it own fees for license renewals – each company must pay $100 to the NMLS, each branch office must pay $20 and each loan originator must pay $30. These NMLS fees are in addition to the state’s renewal license fees.
If you are licensed in multiple states, your cash outlay at the end of the year can total thousands of dollars, so start hoarding cash now.
Many states are requiring continuing education for loan originators for the first time. The SAFE Act requires 8 hours of continuing education, but some states require state-specific hours on top of the 8 that the SAFE Act requires. All continuing education must be taken from NMLS-approved providers.
Some states are requiring licensees to submit certain documentation in addition to processing the renewal through the NMLS. In some states, that documentation must be submitted before the renewal is done, and in other states, the documentation must be submitted simultaneously with the NMLS renewal.
Get familiar with the requirements that you must follow by going to this URL:
http://mortgage.nationwidelicensingsystem.org/slr/common/renewals/Pages/default.aspx
and selecting each state in which you are licensed to see exactly what requirements you will need to follow in order to get successfully renewed. Remember, there is a huge rush to renew just before licenses expire on December 31st and state regulators will not be able to process that huge backlog that quickly. If your lenders want to see a renewed license on January 3, 2011, you can’t wait for the last minute.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing renewals. 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.
If you are licensed in multiple states, your cash outlay at the end of the year can total thousands of dollars, so start hoarding cash now.
Many states are requiring continuing education for loan originators for the first time. The SAFE Act requires 8 hours of continuing education, but some states require state-specific hours on top of the 8 that the SAFE Act requires. All continuing education must be taken from NMLS-approved providers.
Some states are requiring licensees to submit certain documentation in addition to processing the renewal through the NMLS. In some states, that documentation must be submitted before the renewal is done, and in other states, the documentation must be submitted simultaneously with the NMLS renewal.
Get familiar with the requirements that you must follow by going to this URL:
http://mortgage.nationwidelicensingsystem.org/slr/common/renewals/Pages/default.aspx
and selecting each state in which you are licensed to see exactly what requirements you will need to follow in order to get successfully renewed. Remember, there is a huge rush to renew just before licenses expire on December 31st and state regulators will not be able to process that huge backlog that quickly. If your lenders want to see a renewed license on January 3, 2011, you can’t wait for the last minute.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you need help with your licensing renewals. 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.
Monday, September 13, 2010
Is Your State License Renewing Through the NMLS?
I have recently received communications from a few states that require license renewals soon but either all or part of the renewal process must be done directly through the regulatory agency, and not through the Nationwide Mortgage Licensing System (NMLS). For some states, you need to submit some documentation before the renewal process starts or submit an entire license renewal application and all of its supporting documentation to the agency which granted your license approval. If you are in one of these states, you should have received these communications already. To ensure that you are not in one of the states that renews licenses outside of the NMLS process, call or email your state regulatory agency to confirm that there is nothing that you need to do before renewals through the NMLS start on November 1, 2010.
Tuesday, September 7, 2010
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.
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.
Monday, August 30, 2010
What To Do If Your Florida License Expires on August 31, 2010 and You're Not Sure Whether You Want to Renew It?
I’m located in Ridgewood, New Jersey and a lot of my clients are licensed in Florida, mostly as correspondent lenders. It’s a natural fit as many New Yorkers and New Jerseyans moved to Florida either for retirement or to live a lifestyle in the sun. Florida licenses have historically expired on August 31st. This year starts a big change in Florida licensing, including the transition to the Nationwide Mortgage Licensing System (NMLS). Some of my clients indicated that they may not transition their license to the NMLS and wondered what to do if their license (or branch license) expired August 31, 2010 and they had loans in the pipeline.
If you have a Florida license that expires on August 31, 2010, you should be aware that it has automatically been extended through December 31, 2010. During this period, all licensees will transition their licenses to the NMLS and the Department of Financial Regulation will not know until December 31, 2010 whether you have complied with all of the requirements to transition your license and renew your license (whether you have done your testing, criminal background check, etc). This automatic extension gives you time to decide whether you still have a reason to be licensed in Florida.
If you do not believe that it makes sense for you to maintain your Florida license, then close all of your loans that are in the pipeline now and stop originating new ones. If you decide before December that you would like to keep your Florida license, start familiarizing yourself with Florida’s licensing requirements and the NMLS. The transition period for Florida starts October 1, 2010 and do your transition as early as possible to ensure that your license will extend into 2011.
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.
If you have a Florida license that expires on August 31, 2010, you should be aware that it has automatically been extended through December 31, 2010. During this period, all licensees will transition their licenses to the NMLS and the Department of Financial Regulation will not know until December 31, 2010 whether you have complied with all of the requirements to transition your license and renew your license (whether you have done your testing, criminal background check, etc). This automatic extension gives you time to decide whether you still have a reason to be licensed in Florida.
If you do not believe that it makes sense for you to maintain your Florida license, then close all of your loans that are in the pipeline now and stop originating new ones. If you decide before December that you would like to keep your Florida license, start familiarizing yourself with Florida’s licensing requirements and the NMLS. The transition period for Florida starts October 1, 2010 and do your transition as early as possible to ensure that your license will extend into 2011.
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.
Monday, August 23, 2010
If You Make These Advertising Mistakes, It Could Cost You Plenty
Advertising plays a prominent role in many mortgage companies’ efforts to find new borrowers. As your customers get bombarded by more and more advertising messages, the urge to create an advertising piece that will stand out from the crowd becomes more urgent. This sense of desperation leads many mortgage lenders and brokers to create promotion pieces that cross the lines of permissible advertising. Make sure you don’t make these mistakes that can lead to costly penalties.
1. Don’t lead consumers to believe the government or their existing lender is sending them mail. Many mortgage brokers use direct mail to solicit new business. Companies have distributed solicitations that use names of mortgage lenders in such a way that consumers believe it was sent to them by their lender, leading consumers to also believe, based on these solicitations, that their private financial information has been shared with another entity. These actions are a violation of the regulations of HUD and of the various states that regulate mortgage brokers and lenders. In addition, they can lead to consumer complaints to the regulatory agencies. The number of complaints the agency receives about you impacts how often you will be examined.
2. Do not omit the APR when advertising an interest rate. No matter what state you are conducting mortgage activity, all lenders and brokers are subject to the application of federal Truth-in-Lending laws, specifically Regulation Z. The statute requires, among other things, that if a lender or broker advertises a particular interest rate, they must also quote the Annual Percentage Rate, or APR. The APR is correctly defined as the "cost of money borrowed, expressed as an annual rate." The APR takes into account the note rate, which is the rate a borrower’s monthly payment is based on and any and all lender fees and finance charges. Yes, most borrowers don’t understand APR but you are still required to use it in your advertising and be able to explain it to a potential customer.
3. Do not use terms that indicate unlimited access to credit. Advertisements that contain terms such as "bad credit no problem" (or similar phrases) or language that implies that an applicant will have total access to credit without clearly and conspicuously disclosing the material limitations on the availability of credit are prohibited under many state laws. In most states, lenders and brokers need to list any limitations to getting the advertised mortgage, including income requirements, limitations for consumers with bad credit (such as a higher rate), and that restrictions as to the maximum principal amount of the loan offered may apply.
4. All states require NMLS unique identification numbers in advertising. This one is easy to comply with. You have to add your company and mortgage loan originator NMLS unique identification number to all of your advertising materials, including websites and business cards. In addition, some states require company addresses and specific language that must be used on all advertising materials. You must check with each state in which you are licensed to find out the specific requirements and you must fully comply with all such requirements.
5. Be aware of the catch-all “fraudulent, deceptive or misleading” prohibitions. Both the Federal Trade Commission and different state regulatory agencies have statutes that prohibit an “unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact in an advertisement if the representation or statement is false or misleading or has the tendency or capacity to be misleading” or variations of this phraseology. Lately, the regulators are cracking down on advertisements regarding low interest rate loans that fail to mention that there may be negative amortization. If you think, but are not sure that your advertising contains inaccurate or misleading language, change the advertisement.
If you violate an advertising statute or regulation, at best, you will be asked to “cease and desist” the prohibited advertising and be subjected to increased scrutiny of all of your business activities. At worst, you could lose your licenses and pay heavy fines. This could also impact your premiums with your surety bond underwriter.
1. Don’t lead consumers to believe the government or their existing lender is sending them mail. Many mortgage brokers use direct mail to solicit new business. Companies have distributed solicitations that use names of mortgage lenders in such a way that consumers believe it was sent to them by their lender, leading consumers to also believe, based on these solicitations, that their private financial information has been shared with another entity. These actions are a violation of the regulations of HUD and of the various states that regulate mortgage brokers and lenders. In addition, they can lead to consumer complaints to the regulatory agencies. The number of complaints the agency receives about you impacts how often you will be examined.
2. Do not omit the APR when advertising an interest rate. No matter what state you are conducting mortgage activity, all lenders and brokers are subject to the application of federal Truth-in-Lending laws, specifically Regulation Z. The statute requires, among other things, that if a lender or broker advertises a particular interest rate, they must also quote the Annual Percentage Rate, or APR. The APR is correctly defined as the "cost of money borrowed, expressed as an annual rate." The APR takes into account the note rate, which is the rate a borrower’s monthly payment is based on and any and all lender fees and finance charges. Yes, most borrowers don’t understand APR but you are still required to use it in your advertising and be able to explain it to a potential customer.
3. Do not use terms that indicate unlimited access to credit. Advertisements that contain terms such as "bad credit no problem" (or similar phrases) or language that implies that an applicant will have total access to credit without clearly and conspicuously disclosing the material limitations on the availability of credit are prohibited under many state laws. In most states, lenders and brokers need to list any limitations to getting the advertised mortgage, including income requirements, limitations for consumers with bad credit (such as a higher rate), and that restrictions as to the maximum principal amount of the loan offered may apply.
4. All states require NMLS unique identification numbers in advertising. This one is easy to comply with. You have to add your company and mortgage loan originator NMLS unique identification number to all of your advertising materials, including websites and business cards. In addition, some states require company addresses and specific language that must be used on all advertising materials. You must check with each state in which you are licensed to find out the specific requirements and you must fully comply with all such requirements.
5. Be aware of the catch-all “fraudulent, deceptive or misleading” prohibitions. Both the Federal Trade Commission and different state regulatory agencies have statutes that prohibit an “unfair or deceptive act or practice for a mortgage broker or lender to make any representation or statement of fact in an advertisement if the representation or statement is false or misleading or has the tendency or capacity to be misleading” or variations of this phraseology. Lately, the regulators are cracking down on advertisements regarding low interest rate loans that fail to mention that there may be negative amortization. If you think, but are not sure that your advertising contains inaccurate or misleading language, change the advertisement.
If you violate an advertising statute or regulation, at best, you will be asked to “cease and desist” the prohibited advertising and be subjected to increased scrutiny of all of your business activities. At worst, you could lose your licenses and pay heavy fines. This could also impact your premiums with your surety bond underwriter.
Monday, August 16, 2010
Continuing Education For Mortgage Loan Originators
Most mortgage loan originators (MLOs) are now aware that they have a requirement to take 20 hours of pre-licensing education in order to get their license. Many of you are unaware that the SAFE Act requires that you also take 8 hours of continuing education each year. The continuing education must be comprised of 3 hours of federal laws and regulations, 2 hours of ethics, 2 hours of training related to lending standards for the nontraditional mortgage product market, and 1 hour of undefined instruction on mortgage origination. Each state has the obligation to refine these requirements.
If you are licensed in a state that required you to take the 20 hours of pre-licensing education in 2009, then in order to renew your license in November, 2010, you will need to complete your continuing education hours by December 31, 2010. If you are licensed in more than one state, you should check with each state’s regulatory agency to make sure that you complete that state’s continuing education requirements. If you took your 20 hours of pre-licensing education in 2010, you do not need to take continuing education until 2011.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you want to explore expanding into new states or need help with your licensing applications (company or loan originator). I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.
If you are licensed in a state that required you to take the 20 hours of pre-licensing education in 2009, then in order to renew your license in November, 2010, you will need to complete your continuing education hours by December 31, 2010. If you are licensed in more than one state, you should check with each state’s regulatory agency to make sure that you complete that state’s continuing education requirements. If you took your 20 hours of pre-licensing education in 2010, you do not need to take continuing education until 2011.
Contact Robin Gronsky at Robin@Mortgagelicensesolutions.com if you want to explore expanding into new states or need help with your licensing applications (company or loan originator). I’ll keep what you tell me confidential but I cannot give you any specific legal advice until you become a client of the firm. This is done by written agreement only.
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