January 2008 Mortgage Licensing Update

There have been a lot of changes in 2007, and wefinally issued the new bond form, but to this date, it still
can expect even more in 2008. With the statehas not been approved by the insurance companies to
legislators gathering together and the current marketbe issued. Numerous companies are waiting on this
conditions influencing their legislative decision-makingfinal item in order to get a license and hoping that the
power, we can expect numerous new laws relating toinsurance companies will start issuing surety bonds on
the mortgage industry from each state. Especially ifthe new form soon.
the US Congress decides to pass legislation requiringColorado E&O Requirement Postponed
minimum levels of licensing in each state, which is likelyColorado recently issued a new requirement for all
to pass early this year.individual mortgage brokers (loan originators) licensed in
The updates for January are as follows:o FHAthe state to maintain an E&O policy. The
Licensing Updateo Massachusetts Bond Forminsurance companies starting issuing these around the
Releasedo Colorado E&O Requirementbeginning of December, however, one of the questions
Postponedo Alaska Licensing by 7/1/08o Nationwideon the application was "what percentage of loans
Mortgage Licensing System Releasedoriginated in the previous 12 months were sub-prime
FHA Licensing Updateloans?" Anyone that said more than 20% was either
With legislation recently passing by the US House anddenied or told that they would have to pay thousands
the US Senate, many changes are expected tofor the policy.
happen in 2008. The Senate bill that just passed wasDue to this issue, Colorado has issued an emergency
much more conservative than the House bill and didruling allowing until 1/31/08 for individuals to obtain the
not include items such as the surety bond in lieu ofnecessary insurance as well as increasing the
audited financials, a dramatic increase in the FHA Loanmaximum deductible to make the bond more
Limit, and risk-based pricing. It did, however, includecost-effective. Colorado is getting known for their
some major changes to the HECM loan (Reverseemergency rulings since the state legislator is not giving
Mortgage) that many people are excited about.enough time for the Colorado Division of Real Estate
Now the two bills have been sent to committee forto implement new legislation.
the House and Senate to come to a compromise onAlaska Licensing by 7/1/08
differences in the bills. I would expect the Senate toThis is just a reminder for those of you who are
hold their ground and the final bill to look very similar tocurrently originating loans in Alaska. Many people have
the bill just recently passed by the Senate, but there isbeen able to originate their for years without a license,
still a chance that some of the provisions in the Househowever, there new licensing requirements go into
bill will be adopted. I would expect a final bill to be senteffect on July 1, 2008. Make sure to get your
to the President by February.applications in soon if you plan on continuing to do
Massachusetts Bond Form Releasedbusiness there after the first of the year.
Massachusetts made some new requirements forNationwide Mortgage Licensing System (NMLS)
new licensees back in September, one of which wasReleased
a new bond requirement. Unfortunately, the state failedJust a final reminder for those who are licensed in the
to make the new bond form available. All mortgagefirst 7 states that will be using the system. You will
companies that applied for a mortgage broker licensewant to access the system as soon as possible to
since that date have been on hold. Massachusettsupdate your company information.