Herb Thomas Mortgage License News http://www.thomas-law.com

VT Third Party Loan Servicers Must Be Licensed Effective January 1, 2011

IMPORTANT NOTICE: Your attention is drawn to S.287 which was recently passed by the Vermont Legislature and is awaiting the Governor's signature. Effective January 1, 2011, S.287 will require third party loan servicers to be licensed.   

                                        http://www.leg.state.vt.us/docs/2010/bills/Senate/S-287.pdf

HUD Final Regs Published-Effective Date 5-20-2010 for Increase of Net Worth and Elimination of HUD Loan Correspondent

Effective May 20, 2010, the Department of Housing AND Urban Development has adopted its final rule that increases the net worth requirement for FHA-approved mortgagees to $1 million and also provides for elimination of the FHA approval process for loan correspondents. Loan correspondents will no longer be approved participants in FHA programs. Loan correspondents, however, will continue to have the opportunity to participate in FHA programs as third-party originators (TPOs) through sponsorship by FHA approved mortgagees, as is currently the case, or through application to be approved as an FHA-approved mortgagee. In eliminating FHA’s approval of loan correspondents, FHA approved mortgagees assume full responsibility to ensure that a sponsored loan correspondent adheres to FHA’s loan origination and processing requirements. Finally, this final rule updates FHA’s regulations to incorporate criteria specified in the Helping Families Save Their Homes Act of 2009 (HFSH Act) designed to ensure that only entities of integrity are involved in the origination of FHA insured loans. HUD also takes the opportunity afforded by this final rule to solicit comment on whether to adopt additional net worth requirements for FHA-approved mortgagees that originate multifamily mortgages of $25 million or more.

TX 2nd Mortgage Lender License Exempted if You Hold a TX Mortgage Company License

May I ask the TX Office of Consumer Credit Commissioner a question to clarify the license required to make 2nd residential mortgage loans in TX? 

Below the statement in the NMLS says that the new TEXAS SML MORTGAGE COMPANY LICENSE covers residential mortgage loan origination of TX residential mortgage loans which include first lien, second lien, or home equity loans.

My question and confusion: Is a TX Regulated Lender License still required in order to make 2nd mortgage loans at 10% or above interest rate or is this now covered by the TX Mortgage Company License? If the TX Regulated Lender License is now longer required, when does the change become effective?

on the NMLS:  The TEXAS SML MORTGAGE COMPANY LICENSE says:  "Who is required to have this license? Any corporation, company, partnership, or sole proprietorship that engages in the business of residential mortgage loan origination on real property located in Texas. Residential mortgage loans include first lien, second lien, or home equity loans. Title 7 of the Texas Administrative Code, Chapter 80.302(16) defines “Residential Mortgage Loan” as a loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling or on residential real estate whether the property is intended for investment purposes or owner occupancy. It includes new loans and renewals, extensions, modifications, and rearrangements of such loans. The term does not include a loan which is secured by a structure that is suitable for occupancy as a one-to-four family residence, but is used for a commercial purpose such as a professional office, beauty salon, or other non-residential use, and is not used as a residence."

On 5/4/2010, the TX Office of Consumer Credit Commissioner stated that "Under Chapter 342 of the Finance Code, there is a exemption that if you hold a Chapter 156 license you are exempt from Chapter 342."

"Sec. 342.051. LICENSE REQUIRED. ... (f) A mortgage broker licensed under Chapter 156 is

not required to obtain a license under this chapter to make, negotiate, or transact a mortgage

loan, as defined by Chapter 156."

TX Mortgage Company License previously called TX Mortgage Broker License

Recent Changes in TX:

[1] TX has renamed its Mortgage Broker license as "TX Mortgage Company" License

[2] TX has renamed its Loan Officer License as "Mortgage Loan Originator" License

[3] Both the TX Mortgage Company License and the Mortgage Loan Originator License are now on the National Mortgage Licensing System [NMLS] 

[4] The individual Mortgage Broker License has been reduced to an individual being designated the Qualifying Individual who must get a Mortgage Loan Originator License which reduces the education hours from 90 to 20 and from "live" to "online" and eliminates the 3 years of mortgage experience requirement and the Net worth and Surety Bond have been eliminated

[5] The TX physical office requirement remains

Elimination of FHA Approval of Loan Correspondents -Final Regs About to be Published

Elimination of FHA Approval of Loan Correspondents The final rule limits the FHA approval process to mortgagees, but provides that all loan correspondents approved as of the date of the effective date of this final rule will maintain their approval through December 31, 2010. Commencing 30 days following publication of this rule, FHA will no longer approve new applicants for approval as loan correspondents. Processing and Closing a Loan The final rule clarifies that, as a result of HUD’s elimination of the FHA approval process for loan correspondents, the requirements regarding Principal-Authorized Agent relationships will also change. Mortgage loans originated through Principal-Authorized Agent relationships will be permitted to close in either party’s name. However, to participate in such relationships, both the Principal and Authorized Agent must be approved as Direct Endorsement lenders under 24 CFR 203.3. Further, for mortgage loans originated under the relationship, the Principal must originate and the Authorized Agent must underwrite, and their actions must be recorded as such in FHA Connection (FHA's Computer Home Underwriting Mortgage System).

HUD Increases Net Worth to $1M-Final Regs About to be Published

II. This Final Rule – Policies Adopted

In consideration of issues raised by the commenters and HUD’s own further consideration of issues related to this final rule, HUD is making the following changes at the final rule stage:

Net Worth Requirements for Applicants for Approval to Participate in FHA Single Family or Multifamily Programs and for FHA-Approved Mortgagees: 2010 to 2011

The following net worth requirements are effective on

[insert effective date of final

rule

], for new applicants for FHA approval to participate in FHA single-family or multifamily

programs, and effective on [

insert date one year from effective date of final rule], for all

approved supervised and nonsupervised lenders and mortgagees, and all approved investing

lenders and mortgagees with FHA approval as of

[insert effective date of final rule]:

•

Applicants for FHA Approval and Existing Non-Small Business Approved Lenders and

Mortgagees. An applicant for FHA approval or an approved lender or mortgagee that exceeds

the size standards for its industry classification as established by the Small Business

Administration (SBA) at 13 CFR 121.201, Sector 52 (Finance and Insurance), Subsector 522

(Credit Intermediation and Related Activities) shall have a net worth of not less than

$1,000,000, of which no less than 20 percent must be liquid assets consisting of cash or its

equivalent acceptable to the Secretary.

•

Existing Small Business Approved Lenders and Mortgagees. An approved lender or mortgagee

8

that meets the SBA size standards for its industry classification shall have a net worth of not

less than $500,000, of which no less than 20 percent must be liquid assets consisting of cash or

its equivalent acceptable to the Secretary. The net worth requirements for small business

lenders and mortgagees remain applicable as long as the mortgagee continues to meet the SBA

size standard for a small business. If, based on the audited financial statement prepared at the

end of its fiscal year and provided to HUD at the commencement of the new fiscal year, a small

business lender or mortgagee no longer meets the SBA size standard of a small business, the

mortgagee shall meet the net worth requirements for a non-small business mortgagee by the last

day of the fiscal year in which the audited financial statements were submitted.

Net Worth Requirements for Applicants for Approval to Participate in FHA Single Family or

Multifamily Programs and FHA-Approved Mortgagees: 2013 and After

The following net worth requirements are effective on [

insert date three years from effective

date of final rule

], for new applicants for FHA approval to participate in FHA single-family or

multifamily programs, for all approved supervised and nonsupervised lenders and mortgagees, and for

all FHA-approved investing lenders and mortgagees:

•

Single Family Mortgagees. Irrespective of size, all FHA-approved mortgagees and applicants

for approval to participate in FHA single family programs shall have a net worth of $1 million,

plus an additional net worth of one percent of the total volume in excess of $25 million of FHA

single family insured mortgages originated, underwritten, purchased, or serviced during the

prior fiscal year, up to a maximum required net worth of $2.5 million. No less than 20 percent

of the mortgagee’s required net worth must be liquid assets consisting of cash or its equivalent

acceptable to the Secretary.

•

Multifamily Mortgagees. Irrespective of size, all existing FHA-approved mortgagees and

9

applicants for approval to participate in FHA multifamily programs shall have a minimum net

worth of $1 million. For those multifamily mortgagees that also engage in multifamily

mortgage servicing, an additional net worth of one percent of the total volume in excess of $25

million of FHA multifamily mortgages originated, purchased, or serviced during the prior fiscal

year, up to a maximum required net worth of $2.5 million, is required. For multifamily

mortgagees that do not perform multifamily mortgage servicing, an additional net worth of one

half of one percent of the total volume in excess of $25 million of FHA multifamily mortgages

originated during the prior fiscal year, up to a maximum required net worth of $2.5 million, is

required. No less than 20 percent of the mortgagee’s required net worth must be liquid assets

consisting of cash or its equivalent acceptable to the Secretary.

•

Single Family and Multifamily Mortgagees. Irrespective of size, all existing FHA-approved

mortgagees and applicants for approval to participate in both FHA single family and

multifamily programs must meet the net worth requirements for a single family mortgagee.

Therefore, if a mortgagee is a participant in both the multifamily

and single family programs, it

is required to meet the greater net worth requirements for single family mortgagees.

WA Now Requires Licensure for Mortgage Servicers and their residential mortgage loan modification specialists

The Washington legislature passed H.B. 2608 which becomes effective on July 1, 2010.

 

The new licensure requirements are:

[1] a Washington Consumer Loan license under the Consumer Loan Act is now required in order to service residential mortgage loans

[2] a Washington mortgage loan originator license is now required in order for individuals to perform residential mortgage loan modification services under the Consumer Loan Act and/or the Mortgage Broker Practices Act by July 1, 2011

[3] the collection of an advance fee for performing residential mortgage loan modification services is prohibited, unless the borrower has been provided with a written fee agreement summarizing all material terms

http://apps.leg.wa.gov/documents/billdocs/2009-10/Pdf/Bills/Session%20Law%202010/2608.SL.pdf

WA Mortgage Loan Originator (MLO) Requirements

Mortgage Loan Originator (MLO) Requirements To Conduct Business In Washington

Current requirements
The following MLOs must have an active Loan Originator License:

• All MLOs working for a Mortgage Broker Practices Act (MBPA) licensee (including employees and independent contractors)
• Independent contractor MLOs working for a Consumer Loan Act (CLA) licensee

Future requirements
Effective July 1, 2010, all MLOs (independent contractors and employees of either MBPA or CLA licensees) must have an active Loan Originator license

• The Department will begin licensing MLO employees of CLA licensees on January 1, 2010

Beginning 1/12010, non-delegated correspondent lenders licensed under the Mortgage Broker Practices Act must hold a WA Consumer Loan Act license

Converting From A WA MBPA License To WA CLA License
Beginning January 1, 2010, non-delegated correspondent lenders licensed under the Mortgage Broker Practices Act (MBPA) must hold a Consumer Loan Act (CLA) license in order to make residential mortgage loans. To avoid potential business interruption and ensure timely licensure, DFI recommends that all MBPA licensees wishing to make residential mortgage loans apply for a CLA license no later than October 31, 2009.

Instructions On How To Convert From MBPA To CLA License  http://www.dfi.wa.gov/cs/convert-consumer-loan.htm

WA Consumer Loan Companies Making Reverse Mortgages

WA Consumer Loan Companies Making Reverse Mortgages
EHB 1311 (PDF)* regulating reverse mortgages became effective July 26, 2009. While the department is conducting rulemaking on the provisions that create an approval process for proprietary reverse mortgage products, all provisions of the bill are now effective including the provisions, sections 12 and 13 that allow consumer loan companies to make HECMs.

If you have any questions, contact Cindy Fazio at 360-902-8800

Brokering WA Reverse Mortgages
License holders under both the Consumer Loan Act (CLA) and Mortgage Broker Practices Act (MBPA) can broker reverse mortgages to entities exempt from the CLA (nationally chartered entities). The lending entity must be exempt from the CLA due to RCW 31.04.125, a provision in the CLA that prohibits the compounding of interest on loans secured by real estate. Examples of exempt entities are Washington chartered banks, credit unions, their affiliates or subsidiaries and nationally chartered banks, credit unions, or their affiliates or subsidiaries

Contact Cindy Fazio, 360-902-8800 if you have questions.