NMLS Announces New Ombudsman

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.”

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CSBS Announces Four More State Agencies Transitioning To Uniform Mortgage Test

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.

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State Regulators Proposes Changes to Uniform Licensing Forms and Mortgage Call Report

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.

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Thirty-Five State Agencies Now Using Uniform Mortgage Test

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.

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CFPB Bulletin Supports Uniform State Test for Mortgage Loan Originators

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.

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CSBS Seeks Comment on NMLS Licensing Forms, Mortgage Call Report

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.

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NMLS Proposes Uniformed Authorized Agent Reporting Processing Fee

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.

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Special Alert: Report on 2013 NMLS Annual Conference

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…

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State Law Update: Virginia Amends Broker Licensing Rule

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.

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CSBS Announces Implementation Date for National Mortgage Loan Originator Test

On January 16, the CSBS announced that a new national mortgage loan originator (MLO) test with a uniform state component will be available on April 1, 2013. The 2009 SAFE Act requires that MLOs pass a test in order to obtain a state originator license through the NMLS. Since adoption of the SAFE Act, the test has been comprised of two parts: a national component and a state-specific component. The new test administered by the NMLS is meant to streamline the licensing process for originators seeking to obtain licenses in multiple states. Twenty state agencies will no longer require a state-specific test component as of April 1, 2013, with four more states removing the requirement on July 1, 2013. The NMLS posted additional details about the test, including costs and enrollment eligibility.

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NMLS Publishes 2013.1 Release Portfolio

On December 21, the NMLS announced that NMLS Release 2013.1 is planned for March 18, 2013. As summarized in the Release Portfolio, the updated systems will (i) allow state agencies to invoice licensees for various fees, (ii) provide money transmitters the ability to submit periodic reports regarding authorized agents, (iii) allow state regulators to adopt the newly created Uniform State Test Component in lieu of existing State-specific Test Components to satisfy the SAFE Test State Component Requirement, and (iv) display through NMLS Consumer Access self-reported disciplinary actions for federally registered mortgage loan originators.

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NMLS Announces 2013 Annual Conference

On December 18, the NMLS announced that its fifth Annual Conference and Training will be held February 26 – March 1, 2013, in San Antonio, Texas. The Conference allows companies that manage financial services licenses or registration through NMLS to hear directly from state and federal policymakers regarding the NMLS system and regulatory and compliance developments.

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NMLS Issues Annual Renewal Reminder

On November 1, the NMLS issued a reminder that the renewal period for state-licensed entities and individuals runs from November 1, 2012 through December 31, 2012. The NMLS also provided a Renewal Handbook to guide users in the renewal process, as well as state-specific renewal FAQs, and deadline and fees charts.

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Oklahoma Transitions Money Transmitter Licensing to NMLS

On October 1, Oklahoma began transitioning state-licensed money transmitters to the NMLS. Existing and new licensees must create a company record in the NMLS and begin using the system for new licenses and renewals. The NMLS has issued instructions for new applications as well as company transition requests. Because the Oklahoma State Banking Department cannot receive electronic payments, licensees still must mail fee payments to the Department with a copy of the new or renewal application.

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CSBS Proposes Uniform Reporting of Authorized Delegates for Money Service Businesses

On September 28, the Conference of State Bank Supervisors (CSBS) proposed a system for state-licensed money service businesses (MSBs) to report information concerning authorized delegates through NMLS. Licensed MSBs are permitted to contract with third-parties-authorized delegates-to perform the function of receiving and dispensing funds on behalf of the MSB. Most state regulators require that MSBs report information regarding their authorized delegates. NMLS currently is expanding to allow state agencies to manage filings by non-mortgage companies, including MSBs. To date, nine states have started to manage or have announced their intent to manage MSB licenses through NMLS. An NMLS working group has determined that the reporting of authorized delegate information is not supported by NMLS’ existing platform. The instant proposal (i) identifies new NMLS functionality to facilitate reporting of authorized delegate information, (ii) outlines policies to implement such reporting, and (iii) describes the process by which an MSB would report such information through NMLS. The CSBS has requested comment from licensees and regulatory agencies by November 1, 2012.

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