On October 21, the Georgia Department of Banking and Finance (the Department) announced a consent order with a South Carolina-based mortgage lender and its individual owner to resolve a Notice of Intent to Revoke Annual License and an Order to Cease and Desist. The Department alleged that the individual and the company violated the Georgia Residential Mortgage Act by (i) making false statements or misrepresentations to the Department; (ii) making false statements and misrepresenting material facts in mortgage loan documents; (iii) operating an unapproved branch with an unapproved branch manager; (iv) failing to perform the appropriate background checks on covered employees; and (v) transacting business with an unlicensed person who was not exempt from licensing requirements. Under the terms of the Order, the individual is prohibited from (i) applying for a Georgia mortgage loan originator, mortgage broker, or mortgage lender license; (ii) serving as a director, officer, or any other equivalent role for a Georgia mortgage broker or lender; and (iii) acting as a branch manager for a Georgia branch of a Georgia licensed mortgage broker or lender. In addition, the lender must pay $29,000 to the Department and $1,000 to the State Regulatory Registry, LLC to support the NMLS. The lender also must surrender its license from the Department.
On December 4, President Obama signed into law H.R. 22, the “Fixing America’s Surface Transportation Act” (FAST Act). Although a transportation bill on its surface, the bill also contains various provisions that are intended to provide regulatory relief to community banks and improve the efficiency of state financial regulation. Significant provisions in the bill include: (i) establishing a process that allows parties, including banks and other stakeholders, to petition the CFPB for “rural” or “underserved” designations in certain areas for the purposes of the CFPB’s ability-to-repay rule; (ii) expanding the CFPB’s ability to exempt creditors serving rural or underserved areas from escrow requirements; (iii) granting greater flexibility to the CFPB in regards to treating a balloon loan as a qualified mortgage, if a community bank or creditor operating in a rural or underserved area extended the loan; (iv) increasing the threshold for 18-month exam cycles for well-capitalized banks from $500 million to $1 billion; and (v) authorizing the Nationwide Mortgage Licensing System – which state regulators use to license various nonbank financial services industries, such as money transmitters, payday lenders, and debt collectors – to process background checks for non-mortgage license applicants.
NMLS Updates Resource Center: Encourages Public to Submit Comments on Proposed Changes; Responds to Public Comments
On July 21, the Nationwide Mortgage Licensing System (NMLS) updated its resource center to encourage the public to submit further comments – via the Conference of State Bank Supervisors – on certain proposed changes to the Uniform NMLS Licensing Forms and the Mortgage Call Report. The proposed changes to the licensing forms include, but are not limited to: (i) adding a Filing Comment section to the Company Form (MU1) and the Branch Form (MU3); (ii) expanding the Business Activities section by adding “Reverse Mortgage Lending,” “Reverse Mortgage Brokering,” and “Reverse Mortgage Servicing” as available selections; (iii) expanding the Contact Employees section by adding “Annual/Call Report” as an available selection under Area(s) of Responsibility; and (iv) updating language in the Disclosure Questions section. If implemented, changes to the Mortgage Call Report (“MCR”) would include: (i) adding fields that allow for more accurate reporting on Qualified Mortgage standards; (ii) adding an upload option within the Loans Serviced section; and (iii) exploring the “development of a dynamic MCR based on a company’s business activities and license authority.” Comments on the proposals are due August 20.
Also on July 21, the NMLS posted to its resource center responses to the public’s comments regarding the Pre-Licensure Education Expiration Policy, Electronic Surety Bond Tracking, and the Uniform NMLS Licensing Forms and Mortgage Call Report. Feedback received on the initial proposed changes to the Licensing Forms and MCR prompted the additional comment period for the more targeted proposed changes described above.
On April 13, the Georgia Department of Banking and Finance (Department) entered into a Consent Order (Order) with a Pennsylvania-based mortgage lender and its owners for failing to file a timely application with the state regulator. Specifically, the Order was entered into with the lender to resolve a Notice of Intent to Revoke and proposed Orders to Cease and Desist for allegedly, among other things, allowing the acquisition of 10 percent or more of the ownership of a Georgia licensed entity without first filing an application with the Department, conducting business with an unlicensed person who is not exempt from licensing, employing a felon, and making false statements or misrepresenting material facts in mortgage loan documents. Under terms of the Order: (i) the lender must surrender its mortgage license and pay a $5,000 fine; (ii) one of its owners must surrender his MLO license, must pay two fines of $1,000 each to both the Department and the State Regulatory Registry, and is prohibited from being employed by a licensed Georgia mortgage broker or lender for five years; and (iii) another owner must contribute $1,000 to the State Regulatory Registry and is prohibited for five years from acquiring more than 10% voting shares of a Georgia licensed company. The Order also prohibits both aforementioned owners from: (i) applying for mortgage loan originator, mortgage broker, or mortgage lender licenses; (ii) serving as a director, officer or any other equivalent role for a Georgia licensee; and (iii) acting as a branch manager for a Georgia branch of a Georgia licensed mortgage broker or lender.
On August 20, the District of Columbia Department of Insurance, Securities and Banking (DISB) announced that, as of September 3, 2014, it will begin using the NMLS to manage money transmitter, check casher, money lender, retail seller, sales finance company and non-bank ATM licenses and registrations. Beginning on that date, new applicants for such licenses and registrations must apply via the NMLS. Entities currently holding such licenses and registrations must create a complete record in NMLS and submit it to DISB for approval by December 31, 2014.
Recently, the Missouri Division of Finance announced that all mortgage company and branch licenses issued through the Division will transition to the Nationwide Mortgage Licensing System (NMLS). All currently licensed companies must transition their licenses to the NMLS by October 1, 2014, and effective June 2, 2014, new company license applicants must request licensure through the NMLS. The NMLS will host a transition training webinar on June 5, 2014 for all currently licensed mortgage companies.
On February 27, the Nationwide Mortgage Licensing System & Registry (NMLS) announced that Robert S. Niemi, Deputy Superintendent for Consumer Finance at the Ohio Division of Financial Institutions, will serve as NMLS Ombudsman. The NMLS states that the Ombudsman “provide[s] the non-depository financial services industries, and other interested parties, with a neutral venue to discuss issues or concerns regarding NMLS and state licensing” with the objective of fostering “constructive dialogue between NMLS industry users and participating state regulators.”
On January 7, the CSBS announced that, as of January 1, four additional state or U.S. territorial agencies began using the National SAFE MLO test. With the addition of these four agencies—the Nevada Department of Business & Industry, the New Mexico Financial Institutions Division, the Puerto Rico Office of the Commissioner of Financial Institutions, and the U.S. Virgin Islands Division of Banking & Insurance—a total of 39 agencies are now using the test, which was announced last January and launched in April 2013. The test includes a uniform state component to replace the state-specific component in adopting states.
On October 11, the State Regulatory Registry (SRR) proposed changes to (i) the uniform NMLS company, branch, and individual licensing forms developed by state regulators and used by all states through NMLS and (ii) the NMLS Mortgage Call Report (MCR). The proposal incorporates public comments received following an initial April 2013 proposal. The proposed licensing form changes would, among other things, (i) allow a company to designate more than one branch manager within an industry, (ii) revise business activity on company and branch forms, and (iii) collect other trade names on company and branch forms by agency and not by state. Changes to the NMLS licensing forms and certain changes to the format of the MCR are expected to be implemented in March 2014. The proposal notes that given expected changes to HMDA reporting requirements, the SRR will propose substantive changes to the MCR in 2014 with an expected implementation timeframe in 2015. Comments on the proposed changes are due by November 11, 2013.
On October 1, the Conference of State Bank Supervisors announced that five additional state agencies have implemented the new national SAFE MLO test, bringing the total number of participating state agencies to 35. The new test, which was announced in January and launched in April, includes a uniform state component to replace the state-specific component in adopting states.
On May 20, the CFPB issued Bulletin 2013-05, which clarifies that the Uniform State Test (UST) developed by the NMLS may constitute a qualified written test under the federal SAFE Act for state-licensed mortgage loan originators if the UST covers all required areas, including state laws and regulations. The Bulletin further explains that a separate test for each state covering the particular laws and regulations of that state plus a National Test Component developed by the NMLS may also meet the qualified written test requirement under the SAFE Act.
Earlier this month, the CSBS sought comment on potential revisions to (i) the uniform NMLS company, branch, and individual licensing forms and (ii) the quarterly NMLS Mortgage Call Report. The forms create a national standard of information collection for entities licensed through NMLS, while the quarterly call reports provide comprehensive and uniform information concerning the financial condition of licensed mortgage companies, their mortgage loan activities, and the production information of their mortgage loan originators. The state regulators are seeking comment on, among other things, potential improvements to form changes made in 2012. With respect to the call reports, the state regulators are seeking input on (i) the definition of “application” in the call report, (ii) criteria to be used when determining which companies file the different versions of the report, (iii) whether any policies, requirements, data fields, or definitions should be amended, and (iv) which aggregate call report data should be publicly reported. Comments are due by June 11, 2013.
On March 20, the NMLS proposed a processing fee to support a uniform and automated method for state-licensed money transmitters to report information concerning authorized agents/delegates to NMLS participating state agencies. The proposal notes that as of March 2013, 10 state agencies manage their money transmitter licenses through NMLS and an additional 20 agencies intend to do so by the end of 2014. The NMLS proposes to support that functionality through a fee of no more than fifty cents ($.50) per active agent/delegate location, assessed once per year, based on the number of all active agent/delegate locations as of a certain date. Money transmitter licensees with less than 100 active agent/delegate locations reported through NMLS will not be assessed a fee. The fee, which is distinct from and independent of fees or assessments required by state agencies, would be charged starting in 2014. The NMLS seeks comments on the proposal by April 19, 2013.
The Nationwide Mortgage Licensing System and Registry (NMLS) held its fifth annual NMLS User Conference and Training in San Antonio, Texas from February 26 through March 1, 2013. The Conference brought together state and federal mortgage regulators, industry professionals, compliance companies, top law firms, and education providers to learn about the latest developments in mortgage supervision and to discuss pressing issues confronting the industry.
The first day of the Conference included the bi-annual NMLS Ombudsman Meeting, which provided an opportunity for NMLS users to raise issues concerning the NMLS, state and/or federal regulation. NMLS Ombudsman Timothy Siwy, Deputy Secretary of Non-Depository Institutions with the Pennsylvania Department of Banking, presided over the meeting, in which specific questions submitted by industry representatives were addressed. Several of the submitted questions focused on the new Uniform State Mortgage Loan Originator (MLO) Exam or Uniform State Test (the UST) of which 24 agencies have already adopted. Concerns were raised by the regulators as some state statutes require that a state’s specific laws be tested as a pre-requisite of MLO licensure. Others, such as regulators from California and Utah, had concerns that MLOs would not adequately learn state specific laws and regulations prior to licensure. In light of these concerns, industry representatives indicated that the UST is only the first step in licensure, and continuing education requirements, monitoring, and examinations would also serve as opportunities to ensure MLOs are well-versed in applicable state specific licensing laws and regulations.
Other areas of focus included NMLS’s expansion to include non-mortgage licenses, such as payday lender and pawn broker licenses. Some industry representatives voiced concern that approval of a license via the NMLS now carries with it an image of legitimacy with the public and expanding licensure to non-mortgage, less regulated industries could undermine that image. Regulators responded that the NMLS is a tracking mechanism—a way for regulators to track licensees state-to-state and industry-to-industry—not an independent licensing credential.
Full details regarding the specific issues submitted for comment, as well as accompanying exhibits, will be available on the NMLS Website, Ombudsman Page. A recording of the Ombudsman Meeting should be posted to the NMLS Resource Center in the near future.
The remaining days of the Conference covered Read more…
Recently, the Virginia State Corporation Commission adopted regulations proposed by the Bureau of Financial Institutions to clarify that individuals engaged in the business of a loan processor or underwriter, who do not otherwise engage in mortgage broker activities, are not mortgage brokers subject to state licensing requirements. The final rule also (i) broadens the scope of prohibited activities for licensees, (ii) establishes requirements for licensees’ outsourcing of loan processing and underwriting, (iii) requires licensees to update its NMLS loan originator sponsorship information following changes in originator status, (iv) adds a definition for “refinancing” that includes any loan modification, and (v) expands the Bureau’s enforcement authorities. The amended regulations took effect January 28, 2013.