| With the mortgage industry in turmoil and state | | | | authorization process will utilize the Nationwide |
| legislatures in session, we can expect a lot of changes | | | | Mortgage Licensing System (NMLS) which becomes |
| to occur in the next 2 quarters. The Nationwide | | | | operational on January 2, 2008. Applicants will also be |
| Mortgage Licensing System debuted last month and is | | | | required to submit fingerprints, credit histories, and |
| already going strong in 7 states. FHA is expected to | | | | documentation of their financial and criminal history |
| change dramatically with the US Congress | | | | disclosures. |
| compromising on a new bill. Many states are likely | | | | Nationwide Mortgage Licensing System (NMLS) |
| going to be proposing bills to require the lender to | | | | Update |
| verify the ability of the borrower to repay their loan. | | | | With the release of the new Nationwide Mortgage |
| This means stated income will likely be a program of | | | | Licensing System on January 2nd, 2008, there has |
| the past. States will be increasing their regulations | | | | been much speculation about whether the system |
| dramatically in an industry that is already over | | | | would stand up to it's goals to unify the licensing |
| regulated. This will mean more states requiring loan | | | | process, make license maintenance easier for |
| officer licensing and branch licensing. | | | | licensees and regulators, and help regulators to track |
| Here is an update on Mortgage Licensing items to be | | | | down the bad companies. Still being in the transition |
| aware of:o Colorado Clarifies Trigger for Licensingo | | | | stage, we haven't seen whether the last goal has |
| Nebraska Branch Licensingo New York Loan | | | | been met, but we have had a chance to see what the |
| Originator Licensingo Nationwide Mortgage Licensing | | | | system does and how easy it is to use. So far, I have |
| System (NMLS) Updateo FHA Update | | | | found the system to unify the process quite |
| Colorado Clarifies Trigger for Licensing | | | | dramatically. Much of the time of applying in multiple |
| On January 7, the Colorado Division of Real Estate | | | | states before was the process of filling out the same |
| issued a position statement seeking to resolve | | | | information over and over for each state. The system |
| "uncertainty... in the market place regarding who is | | | | has been created fairly user friendly to allow multiple |
| required to be licensed." The guidance specifies that | | | | users to access company, branch, and loan originator |
| "persons who directly supervise individuals that | | | | information to update it and amend for each state at |
| negotiate, originate, or offer or attempt to negotiate or | | | | the same time. Another thing that has worked well for |
| originate for a borrower, and for a commission or | | | | the system is the call center. The people working there |
| other thing of value, a residential mortgage loan to be | | | | are very helpful, answer the phones promptly, and try |
| consummated and funded by a mortgage lender" | | | | their best to answer all questions as thoroughly as |
| must become individually licensed as mortgage | | | | possible. Personally, I have had a run in with the state |
| brokers. The Division goes on clarify that persons | | | | where they were still not very cooperative as most |
| performing only administrative tasks are not required | | | | states are, but the system forced them to follow |
| be individually licensed as mortgage brokers. The | | | | protocol and move forward whereas they would have |
| position statement defines administrative tasks to | | | | let it go in the past. Altogether, I see the system |
| include: (i) receipt, collection, distribution, and analysis of | | | | bringing much needed changes to a major problem |
| information common for the processing or underwriting | | | | with the current way mortgage licensing is handled in |
| of a mortgage; and (ii) communicating with a consumer | | | | many states. |
| to obtain the information necessary for the processing | | | | FHA Update |
| or underwriting of a loan, to the extent that such | | | | FHA is one of the most interesting items to speak of |
| communication does not include offering or negotiating | | | | this month. The House has passed a bill that will raise |
| loan rates or terms, or counseling consumers about | | | | the FHA loan limits to as high as 125% of the median |
| rates or terms. | | | | house price, which would be around $775,000 in |
| Nebraska Branch Licensing | | | | California. The House bill also has a provision for a |
| Nebraska is the first state to transition to the | | | | surety bond in lieu of audited financials when applying |
| Nationwide Mortgage Licensing System (NMLS) with a | | | | for or renewing an FHA Loan Correspondent |
| transition deadline of February 28, 2008. Included in that | | | | (Mini-Eagle) Approval. The Senate bill only proposed to |
| deadline is new branch licensing requirements for the | | | | raise the FHA limit to the Fannie Mae Conforming Loan |
| state. Make sure to add all branch locations that you | | | | Limit, which is at $417,000 right now. The Senate bill |
| want to be able to do business in Nebraska by that | | | | also did not include the surety bond provision. At this |
| deadline. | | | | moment, the Senate and the House are in Committee |
| New York Loan Originator Rules | | | | working on a compromise on these two bills. To add |
| On December 19, the New York State Banking | | | | to the excitement, the House, Senate, and |
| Department (NYSBD) issued rules implementing the | | | | Administration signed an Economic Stimulus |
| state's new mortgage loan originator licensing statute | | | | Agreement last week that called for the FHA bill to |
| (NY CLS Bank Article § 599-a et seq.) which | | | | move forward quickly as well as a number of other |
| goes into effect on January 1, 2008. Under the rules, | | | | major changes to specifically help the ailing housing |
| originators who have not worked previously in New | | | | market. This means that the House and Senate bill will |
| York will be required to apply for approval prior to April | | | | be likely compromised on in a couple of weeks if not |
| 1, 2008, but originators employed by or affiliated with a | | | | sooner. The pressure is very great right now as we |
| New York banker or broker prior to 2008 are not | | | | may be heading into a recession. Expect to see some |
| required to file an application until July 1, 2008. The | | | | major changes to FHA in the very near future. |