August 2008 Mortgage Licensing Update


With the federal government passing the Housing and Economic Recovery Act on July 31, 2008, we can expect to see a lot more laws passed by the states. The Housing and Recovery Act contained the S.A.F.E. Mortgage Licensing Act. That portion of the bill requires the states to put in place a Loan Originator Licensing Scheme that requires loan originators to pass an education course, pass a test, complete a civil, financial, and criminal background check, and provide a fee that goes into a state fund, or a surety bond or meet a net worth requirement. Many states just don’t have such a requirement at this time. Some might wonder whether the federal government is over stepping its bounds based on the constitution, but this is fairly minor compared to many of the other unconstitutional actions that our federal government takes. The bottom line is that the states will need to revamp their loan originator licensing requirements or face have their states loan originators being regulated by the federal government bureaucracy, Department of Housing and Urban Development (HUD). It will be interesting to see what the states do in reaction to this with only 12 months to enact these changes.

Here are some reactions that occurred in anticipation of the President signing this new bill.

Arizona Requires Loan Originator Licensing

On July 7 Arizona’s Governor signed two bills, S.B. 1028 and S.B. 1029. These bills will require the licensure of loan originators and amend renewal dates for existing Mortgage Banker and Mortgage Broker licensees. S.B. 1028 sets forth education and exam requirements necessary to license loan originators. The bill does requires loan originators to become licensed by January 1, 2010. S.B. 1029 establishes an annual renewal date of December 31st for Mortgage Banker and Mortgage Broker licensees.

Pennsylvania Licensing

Pennsylvania has finally decided to join the nationwide mortgage licensing system. They have already started using the new MU forms and will likely start using the NMLS by next year.

New Hampshire Requires Loan Originator Licensing

On July 9, New Hampshire Governor signed H.B. 1286, which requires loan originators to be licensed. Loan Originators will be required to be licensed by April 1, 2009.

Delaware Authorizes Participation in Multi-State Automated Licensing System

Delaware has finally decided to join the nationwide mortgage licensing system. They will likely start using the NMLS by next year.

New Hampshire Passes Mortgage Servicing Companies Act

Mortgage Servicing Companies are required to be licensed in New Hampshire by January 1, 2009 if they service 2nd mortgages.

Nationwide Mortgage Licensing System – Periodic Update

Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) have launched a nationwide licensing system for the residential mortgage industry that will enhance consumer protection and streamline the licensing process for regulators and industry. Below is an update on issues related to this system.

  • NMLS Half Year Operations Update
  • Twenty state agencies to be using NMLS by the end of 2008
  • Statement of Intent – 43 state agencies signed on!
  • SRR seeks comment on Uniform Annual Report Questions
  • NMLS Web Cast Training

NMLS Half-Year Operations Update

The Nationwide Mortgage Licensing System (NMLS) has completed 6 months of operations successfully. Events of note in the first quarter:

  • Fourteen states are now participating on NMLS:
    • Idaho Department of Finance
    • Iowa Division of Banking
    • Kentucky Office of Financial Institutions
    • Massachusetts Division of Banks
    • Nebraska Department of Banking and Finance
    • New York State Banking Department
    • Rhode Island Department of Business Regulation
    • Connecticut Department of Banking
    • Louisiana Officer of Financial Institutions
    • Mississippi Department of Banking & Consumer Finance
    • New Hampshire State Banking Department
    • North Carolina Office of Commissioner of Banks
    • Vermont Department of Banking, Insurance, Securities, and Health Care Administrations
    • Washington Department of Financial Institutions
  • States are finding that approximately 75 – 80% of existing company licensees are transitioning onto NMLS.
  • NMLS has processed 71,740 filings
  • 6,112 companies, 4,648 branches and 22,868 loan officers have a record in NMLS
  • The NMLS Call Center has fielded over 38,000 calls with an average wait time of only 40 seconds.
  • The NMLS website receives an average of 7,600 visits per week.

Twenty state agencies to be using NMLS by the end of 2008

The following state agencies are scheduled to begin participating in NMLS in Fall 2008, bringing the total to 20 state agencies on NMLS.


  • Arkansas Securities Department
  • Indiana Department of Financial Institutions
  • Indiana Secretary of State
  • Michigan Office of Financial and Insurance Regulation
  • Pennsylvania Department of Banking
  • Wyoming Division of Banking

Statement of Intent – 43 state agencies signed on!

The South Carolina Department of Consumer Affairs signed onto the Statement of Intent, bringing the total number of state agencies committed to come onto the Nationwide Mortgage Licensing System to 43.

SRR seeks comment on Uniform Annual Report Questions

The State Regulatory Registry LLC (SRR) has issued a request for comments on the questions developed by the Residential Mortgage Regulatory Taskforce (RMRT) as part of the NMLS Uniform Annual Report. Full information on the NMLS Uniform Annual Report will be provided in the coming months. SRR is specifically seeking comments on the questions that are intended to be a part of this report.

The questions and directions as to how to provide comment can be found on the NMLS Website

The deadline for submission of comments is August 11, 2008.

NMLS Webinar Training Workshops

NMLS is conducting several audio-visual training workshops for companies that wish to learn about the system and gain insight into effectively managing their record in NMLS. Participants will learn how to create an account, complete application forms and manage workflow.

Source by Steven Sheasby

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