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

Nationwide Mortgage Licensing System Expands to 14 States

The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announce that six more states -- Connecticut, Louisiana. Mississippi, North Carolina, New Hampshire and Vermont -- will begin using the Nationwide Mortgage Licensing System (NMLS) beginning July 1st.

The eight states currently using NMLS are Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York, Rhode Island and Washington.

To date, 42 state agencies representing 40 states have committed to participate.

NMLS is a web-based system that allows state-licensed mortgage lenders, mortgage brokers, and loan officers to apply for, amend, update or renew a license online for all participating state agencies using a single set of uniform applications.

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All CO mortgage brokers complete 40 hours of licensing education and pass the two-part licensing exam by January 1, 2009

Mortgage Broker Applicants
Effective January 1, 2009 all mortgage broker applicants must complete the 40 hours of licensing education and pass the two-part exam prior to applying for a mortgage broker license.

Mortgage Broker Licensees
All mortgage brokers who currently maintain a Colorado mortgage broker’s license must complete 40 hours of licensing education and pass the two-part licensing exam by January 1, 2009.
http://www.dora.state.co.us/real-estate/licensing/education/MB/brokereducation.htm#ED
Mortgage Broker Licensing Education Course Information

Total: 40 hours

State and Federal Law (Course time: 19.5 hours of education coursework)
Course objective: To protect the public by providing a course of study for mortgage broker candidates that will enhance their knowledge and awareness of current and relevant state and federal statutes, regulations, and forms as they pertain to the mortgage broker industry.

Mortgage 101 (Course time: 16 hours of education coursework)
Course objective: To protect the public by providing a course of study for mortgage broker candidates that identifies the necessary components and overall anatomy of a mortgage loan transaction.

Business and Trade Practices (Course time: 4.5 hours of education coursework)
Course objective: To protect the public by providing a course of study that provides mortgage broker candidates with the real world application of laws, rules, and standards of practice.

MORTGAGE BROKER LICENSING EXAMINATION - SCHEDULE AN EXAM

PSI, Inc. will develop, administer and grade the mortgage broker licensing examination.
The mortgage broker licensing examination will consist of two parts totaling 100 questions:

1) State and Federal Law (30 State questions and 30 Federal questions)
2) Mortgage Lending Basics – (40 General questions)

IMPORTANT INFORMATION FROM PSI
Please click the link below to download PSI's Candidate Information Bulletin.
PSI Candidate Information Bulletin http://www.dora.state.co.us/real-estate/licensing/education/MB/COMB.pdf

To schedule an appointment to take the exam, please visit http://candidate.psiexams.com/index.jsp or call PSI at 1-800-733-9267.

EXEMPTION QUALIFICATIONS

Under circumstances listed below, Director Erin Toll grants reprieve from the Mortgage 101 and Business and Trade Practices portion of the coursework and the General portion of the examination.

To qualify for the exemption, mortgage brokers must meet all five requirements:
1) Currently maintain a mortgage broker license.
2) A member of a mortgage broker association approved for exemption by the Division of Real Estate.
3) Maintain a mortgage broker association designation that is current and in good standing.
4) Provide the letter of certification to the education course provider prior to completing coursework.
5) Provide the letter of certification to PSI prior to taking the exam.

Currently only members of the National Association of Mortgage Brokers (NAMB), Colorado Association of Mortgage Brokers (CAMB) and Colorado Mortgage Lenders Association (CMLA) meet the exemption qualifications. NAMB, CAMB and CMLA members must contact their respective associations for more information.

Mortgage brokers who qualify for the exemption must complete the 19.5 hours of the State and Federal Law portion of the coursework and pass the State and Federal Law portion of the exam.

CONTINUING EDUCATION REQUIREMENTS

Continuing education enhances the professional competence and professional responsibilities of all licensees. The continuing education requirements for mortgage brokers include not more than nine credit hours during their three-year renewal cycle.

Mortgage brokers are required to start the nine-hour continuing education requirements during their second three-year renewal cycle. No continuing education is required until after the mortgage broker’s first three-year renewal cycle.

FL License Application Online System Allows You To Schedule Your Exam

New Way to Apply for a FL Application and Schedule Your Exam:  Login below to the new FL REAL System Online by the 7th day of each month and you can schedule yourself for the exam for that month that is held on the last Tuesday of that month rather than having to sign up a month and a half ahead of time which was the old method.  Of course you should still schedule yourself for the 3 day 24 hour course the weekend before exam.  A good school to schedule with is the FL Mortgage Broker School   Out-of-state candidates are generally scheduled to take the exam in Ft. Lauderdale at either 8:30am or 1:00pm on that last Tuesday of each month.

The new  FL REAL System Online Services allows applicants and licensees to:  manage their account, apply for a license, amend a license, renew a license, withdraw a filing for a license, terminate an existing license, file a quarterly report, file an online complaint, search for public license records, and download licensing data.

To Log in to the Real System

FL REAL System Guides

Account Management - provides a step-by-step walkthrough for an applicant/licensee to maintain their REAL Online Services account.  Users can grant access to another Online Services user to view or manage their license.  This guide provides the following information:

Ø      Access REAL Online Services

Ø      Create an Online Account

Ø      Login Into Online Services

Ø      Update Profile Information

Ø      Change Your Password

Ø      Reset Your Password

Ø      Associate an Application or License to a User Account

Ø      Request Authorization Code

Ø      View License(s) & Manage Details

Ø      Manage Online Accounts

Apply for a New License

– provides a step-by-step walkthrough for an applicant/licensee to apply for a license using REAL Online Services.  This guide uses the Mortgage Broker license type as an example for the online application form and provides the following information:

Ø      File an Application

Ø      Complete Online Application Form

Ø      Pay Invoice

Ø      Filing Confirmation

Ø      Schedule Mortgage Broker Test

Ø      Filing Details (View Deficiencies)

Ø      View Mortgage Broker Test Scores

Ø      View PDF Form

Ø      View Filing History

Ø      Print Friendly License

New Legislation Changes KY HUD Exemption

:

KENTUCKY

Companies Filing a Claim of Exemption (HUD and Nonprofit Exemptions)

1. HUD and nonprofit exemptions will expire annually on Dec. 31, and must be renewed prior to that date pursuant to KRS 286.8-020(3).

2. Each location operating under a HUD exemption must fund/broker 12 FHA-insured loans on

Kentucky

properties per year to maintain the exemption. A Kentucky HUD loan report for each exempt location must be filed with OFI no later than Dec. 31 each year pursuant to KRS 286.8-020(8).

3. Any mortgage loan company, mortgage loan broker or branch thereof must have held a license or been approved and regulated by HUD for five consecutive years prior to filing an application for exemption pursuant to KRS 286.8-020(9)(a) and KRS 286.8-020(9)(b).

4. HUD-exempt and nonprofit-exempt entities are now subject to the following provisions of KRS 286.8:

a. Examination provisions of KRS 286.8-170 and KRS 286.8-180 when it appears on grounds satisfactory to the executive director that an examination is necessary.

b. Any investigation and enforcement provisions of KRS 286.8.

c. Prohibited acts under KRS 286.8-220 and the Mortgage Fraud Act (KRS 286.8-990).

d. Any mortgage loan originator or mortgage loan processor who is an employee of the above referenced HUD- or nonprofit-exempt entity shall be registered pursuant to KRS 286.8-255 and KRS 286.8-260.

5. Holding both a claim of a HUD exemption and a license is now prohibited pursuant to KRS 286.8-020(11).

6. The expense to the consumer that an originating lender or broker can receive is capped at $2,000 or 4 percent of the total loan amount, whichever is greater.

The total loan amount is the amount financed minus the net income. Service released premiums that are listed on the HUD-1 at closing are included in the net income calculation. Premiums that are realized after closing are not considered net income for the purposes of this calculation. The amount financed is the face amount of the note, which includes the fees.

The following charges are to be included: all fees, income or compensation of any kind collected, received or charged by the person originating the loan, including but not limited to origination fees, broker fees, lender fees, discount points if retained by the originating person as income, processing fees, administrative fees, document preparation fees, yield spread premiums, servicing release premiums and financial counseling fees. The following charges are not to be included: interest on the mortgage loan itself or fees paid to compensate unaffiliated third parties.

Any fees passed on to third parties shall be contracted at rates that are in the best interest of the borrower. Sham arrangements shall be considered in violation of KRS 286.8.

Clarification of CO Licenses Needed

LICENSES NEEDED BY EACH TYPE OF COMPANY:

[1] Retail Mortgage Lender Companies need a CO Supervised Lender License and each of its Loan Officers & their Supervisor needs an individual Mortgage Broker License.

[2] Wholesale Mortgage Lender Companies only need a CO Supervised Lender License.

[3] Mortgage Broker Companies need its Loan Officers & their Supervision to obtain individual Mortgage Broker Licenses. http://www.dora.state.co.us/real-estate/rulemaking/MB/PS_Licensing_Required.pdf

TYPES OF LICENSES:

Mortgage Broker License:  This license is issued to individuals and not companies.  Loan officers and their Supervisor of retail mortgage lender and mortgage brokerage companies are required to obtain an individual CO mortgage broker license. 

1st Mortgage Lender License:  no such license exists at present time.

2nd Mortgage Lender [Supervised Lender] License:  required by lenders who wish to close CO mortgage with an APR of 12% or above.

IN SUBORDINATE LIEN MORTGAGE LENDER: RENEW BY 12-31-2008 ON NMLS.

Current loan licensees making subordinate lien mortgage loans will renew that license annually, starting with the 2009 renewal, via the Nationwide Mortgage Licensing System (NMLS). Licensees should create their record in NMLS anytime before November 1, and transition their license to the Subordinate Lien Mortgage Lending license after November 1 and before December 15.

IN FIRST LIEN MORTGAGE LENDER: NEW 1ST LIEN MTG LENDER LICENSE REQUIRED: IMMEDIATE ACTION REQUIRED BY 1-1-2009

New IN 1st Lien Mtg. License.

Effective January 1, 2009, a person who is regularly engaged in IN as a creditor in first lien mortgage transactions, and who is funding the loan with their own assets or line of credit, must first obtain a license from the Indiana Department of Financial Institutions (“DFI” or “Department”). The licensing requirement is per licensed entity/creditor and does not apply to individual employees of a first lien mortgage licensee. [IC 24-4.4-2-401]  Legislation passed in the 2008 session of the Indiana General Assembly, IC 24-4.4, First Lien Mortgage Lending, is effective January 1, 2009, and contains regulatory provisions for first lien mortgage lending.  The new statute is contained in House Enrolled Act 1359, Section 20.  License applications will be available by November 1, 2008.  Application for the License and the annual renewal will be handled via the Nationwide Mortgage Licensing System.

How do I determine if I should be licensed as a Mortgage Lender with the DFI

under the new First Mortgage Law or as a Loan Broker with the Secretary of State?

In answering that question, there are two issues:

• First, did you extend first lien mortgages transaction payable in more than four (4) installments for which you were responsible to provide the funding (i.e. through your own funds, through a warehouse line of credit or through some other financing device that you have established).

• Also, remember that if you tablefund a transaction you are not a creditor for purposes of determining if you should be licensed with DFI under the new First Mortgage Law.

If no, you do not need a license under the new law with the DFI. You may need a

license (and certain registrations) under the Loan Broker Act found at IC 23-2-5

et seq.

If yes, go to the next paragraph.

• Second, are you regularly engaged in extending first lien mortgage transactions?

Remember that to be regularly engaged you must act as a creditor and funding agent on

more than five (5) first lien mortgage transactions in IN in 2009.

If no, you do not need a license under the new law with the DFI. You may need a

license (and certain registrations) under the Loan Broker Act found at IC 23-2-5

et seq.

If yes, you do need a license under the new Mortgage Licensing Law.

http://www.in.gov/dfi/QA_FirstLienMortgage.pdf

IN BROKER EXEMPTIONS TERMINATED: IMMEDIATE ACTION REQUIRED BY 1-1-2009

If you are authorized to broker IN loans under an exemption based upon your HUD, Fannie Mae, Freddie Mac, Ginnie Mae, VA lender approval status your status has been revoked, terminated, repealed eliminated as of 1-1-2009. IN Broker Exemption Eliminated  Therefore, you have about 6 months to apply for and received approval for an IN Mortgage Broker License IN Broker License  through the IN Securities Division, Secretary of State, in order to continuing brokerage in IN in 2009. Authority: Public Law 145-2008 [House Enrolled Act 1359] effective date 1-1-2009.

Whether to choose the WA Lender License [to avoid LO Licenses] or choose the WA Broker License [to avoid large Surety Bond]

There are 3 Primary Strategies in Modern Day Mortgage Licensing [Post-Subprime Meltdown]: [1] Avoid Physical Offices [2] Avoid or Minimize LO Licenses [3] Reduce Surety Bond Aggregate. 

In WA, let's examine whether to choose the WA Lender License [to avoid LO Licenses] or choose the WA Broker License [to avoid large Surety Bond]:

The WA Lender License [called Consumer Loan] Surety Bond is $400,000 for the main office and $100,000 of bonding for each the next 4 branch locations. Thereafter, additional locations require an additional $10,000 of bonding for each location. Even WA recognizes the difficulty the industry is having in obtaining surety bonds, so it has proposed to reduce the $100,000 of bonding for each the next 4 branch locations to $10,000 per branch. TOO LITTLE TOO LATE.

The best strategy is to avoid the WA Lender License unless you have outstanding capitalization and can afford to enter into capital retention agreements, standby letters of credit, general indemnity agreements, personal guarantees with Surety Bond companies. HOW?  Understand and utilize the broad activities permitted under the WA Mortgage Broker License which only requires a $20,000 Surety Bond.  See if any of these 3 activities permitted under the WA Mortgage Broker License are broad enough to meet your needs as a substitute for "lending" and the WA Lender License:  [1] when you act as a Broker you are assisting borrowers, or holding yourself out as able to assist borrowers, in obtaining a residential mortgage loan. Loans close in the name of the lender.[2]  when you act as a Table Funder you are "Table-funding" which means at closing the mortgage loan is funded by a contemporaneous advance of loan funds by the lender and an assignment of the loan to the lender advancing the funds. The mortgage broker originates the loan and closes the loan in its own name with funds provided contemporaneously by a lender to whom the closed loan is assigned. [3] when you act as a Non-delegated Correspondent you close loans in your name with funds provided by a lender or other loan purchaser through a line of credit. The lender or other loan purchaser provides the underwriting criteria the borrower must meet and that lender or other loan purchaser makes the final underwriting decision. If you choose the WA Broker over the WA Lender License because you cannot afford the large surety bond you must also accept the disadvantage of Loan Officer Licenses & Exams which is also one of my 3 strategies you should avoid.  It is "pick your own poison". 

AK or Bust: Immediate Action Required Before 6-30-2008 for Deferral to 3-2009

If you are already operating as a mortgage lender, mortgage broker, or originator, you do not have to be licensed under the AMLRA until March 1, 2009.  This means that if you are operating as a mortgage lender, mortgage broker, or originator in AK on June 30, 2008, you are not required to be licensed until March 1, 2009. The Division of Corporations, Business, and Professional Licensing will consider a person to be operating in AK on June 30, 2008, if the person is engaging in business as a mortgage lender, mortgage broker, or originator pursuant to a current AK business license issued for that purpose. For example, if an AK business license has been issued to a mortgage company prior to June 30, 2008, that would indicate the company was doing business prior to July 1, 2008. MORAL OF THE STORY: GET A BUSINESS LICENSE BY 6-30-2008 TO DEFER GETTING COMPANY, LO AND BR LICENSES TO 3-1-2009. ONLINE BUSINESS LICENSE

If you enter the mortgage business as a lender, broker, or originator in AK after June 30, 2008, you are subject to the AMLRA that takes effect on July 1, 2008. LENDER, BROKER, LO APPLICATION FORMS 

Some highlights of the new law are:

All mortgage brokers or lenders that make or provide mortgage loans to AK residents shall be required to obtain a license.  This includes all companies that operate on the internet or provide remote lending from another state by mail, or telephone. All mortgage originators will be required to pass a background investigation and a competency test prior to providing service to AK residents. All mortgage originators will be required to complete 24 hours of continuing education every biennial licensing period. All mortgage originators will be required to pay into a surety fund. The fund will be used to compensate consumers for losses they may incur due to unethical or illegal behavior on the part of an originator. The division will conduct examinations of licensed entities on a three-year cycle, or sooner if a complaint is made by a consumer. Under the AMLRA, mortgage lenders and mortgage brokers must obtain a "mortgage license" and individual originators must obtain an "originator license." An individual who is the principal owner or legally authorized manager of the applicant may apply for a dual license as a mortgage licensee and the single designated originator for the mortgage licensee.