June 2008 Mortgage Licensing Update

The activity in the states continues to rise. Numerousthe Division of Banks. However, applicants may submit
states are considering legislation to curb thetheir application filings to Massachusetts through NMLS
foreclosure crisis. Nothing of course can stop it at thisprior to completing a course. Individuals who are
point, but the states seem to feel that increasedpresently working as loan originators may continue to
regulation of mortgage companies will at least help theoperate after June 30th only if they have submitted a
situation. Mortgage Licensing is one of the hotlymortgage loan originator license application to
debated topics in the states. Consumer groups feelMassachusetts through NMLS. Beginning July 1st, any
that there should be increased licensing, education, andindividual who does not have a license application
bonding requirements for the mortgage companies andpending with the Division of Banks may not continue to
their employees. Many people think that too manyoriginate loans in Massachusetts. Any individual who
requirements may increase the difficulty of a borrowersubmits an application before July 1st will have until
to find the right loan for the right price as mortgageAugust 31, 2008 to complete a residential mortgage
companies have to spend more money to complylending course. If such an applicant fails to complete a
with these requirements. Let's take a look at thecourse prior to September 1, 2008, his/her mortgage
recent regulatory activity as it relates to mortgageloan originator license application will be terminated.
licensing.For information regarding the educational requirements
Washington Mortgage Lender Licensingfor Mortgage Loan Originator license applicants, please
Washington has changed their requirements forsee Regulatory Bulletin 5.1-105. The Division of Banks
mortgage lenders. Many will now need to be licensedcurrently accepting applications for the approval of
under the Consumer Loan License. What activities canMortgage Loan Originator educational courses.
a licensed mortgage broker engage in under theOklahoma Amends the Education Requirements for
Mortgage Broker Practices Act (MBPA) withoutMortgage Brokers and Mortgage Loan Originators
triggering the license requirements of the ConsumerEffective November 1, 2008, new applicants for a
Loan Act (CLA)? As a licensed mortgage broker youmortgage broker license in Oklahoma will be required
may act in these capacities:to have completed 20 hours of approved education
Broker - assisting borrowers, or holding yourself out asduring the three years immediately preceding the date
able to assist borrowers, in obtaining a residentialof application, and new applicants for a mortgage loan
mortgage loan. Loans close in the name of the lender.originator license will be required to have completed 16
Table Fund - "Table-funding" means a settlement athours of approved education during the three years
which a mortgage loan is funded by aimmediately preceding the date of application.
contemporaneous advance of loan funds and anTennessee Amends Mortgage Licensing
assignment of the loan to the person advancing theRequirements
funds. The mortgage broker originates the loan andEffective January 2009, applicants for a license as a
closes the loan in its own name with funds providedmortgage lender, mortgage loan broker, mortgage loan
contemporaneously by a lender to whom the closedservicer, or mortgage loan originator will be required to
loan is assigned. WAC 208-660-006.complete an educational training course. Criminal
Non-delegated Correspondent - You close loans inbackground checks will also be required for mortgage
your name with funds provided by a lender through alender, mortgage loan broker, mortgage loan servicer,
line of credit. The lender provides the underwritingor mortgage loan originator applicants, and for
criteria the borrower must meet and makes the finalregistered mortgage loan originators seeking to
underwriting decision.continue registration.
Masachussetts Loan Originator LicensingMinnesota Adds Commercial Loans to Definition of
WHO IS REQUIRED TO HAVE A MORTGAGEResidential Loans
LOAN ORIGINATOR LICENSE?Effective August 1, 2008, the definition of "residential
Any natural person who: (a) is employed by ormortgage loan" under the Residential Mortgage
associated with one (1) and not more than 1 mortgageOriginator and Servicer Licensing Act (the "Act") will
lender or mortgage broker licensee regulated by theexpand to include commercial loans secured by 1-4
Division; and (b) negotiates, solicits, arranges, providesfamily residential real estate. The bill also expands the
or accepts residential mortgage loan applications ondefinition of "residential real estate" to include
real property located in Massachusetts, or assistsnon-owner-occupied property, and extends certain
consumers in completing such applications.record-retention requirements from 26 to 60 months.
Sole proprietors licensed as mortgage brokers orColorado Adopts Emergency Rule Making Initial and
mortgage lenders by the Division, as well as owners,Continuing Education Mandatory for Mortgage Brokers
officers and directors or entities licensed as mortgageEffective January 1, 2009 all mortgage broker
lenders or mortgage brokers, are required to beapplicants must complete the 40 hours of licensing
licensed as mortgage loan originators in Massachusettseducation and pass the two-part exam prior to
if they meet the definition above.applying for a mortgage broker license.
WHEN CAN AN INDIVIDUAL APPLY FOR AAll mortgage brokers who currently maintain a
MORTAGE LOAN ORIGINATOR LICENSE?Colorado mortgage broker's license must complete 40
LOAN ORIGINATORS WHO WERE WORKING FORhours of licensing education and pass the two-part
A LICENSED MORTGAGE LENDER ORlicensing exam by January 1, 2009.
MORTGAGE BROKER PRIOR TO NOVEMBER 30,Illinois Anti-Predatory Lending Database Registration for
2007:Mortgage Brokers and Loan Officers
Applications must be submitted to MassachusettsOn May 15, Illinois began registration of mortgage
through NMLS before May 28, 2008. The requirementbrokers and loan officers on the Anti-Predatory
for applicants to have completed a residentialLending Database. The Anti-Predatory Lending
mortgage lending course does not apply to anyDatabase Program, pursuant to Public Act 95-0691, will
individual who was working for a licensed Mortgagebecome operational on July 1, 2008. In order to record
Lender or Mortgage Broker prior to November 30,any mortgage against Cook County property, a
2007. Individuals who have changed employers sinceCertificate of Compliance or Certificate of Exemption
November 30th are also not required to complete amust be attached to the mortgage. Property located
course prior to becoming licensed. Please note thatoutside of Cook County is not subject to the act. A
any individual who meets these dates of employmentmortgage broker or loan originator that takes a loan
standards and who does not file a license applicationapplication will be required to enter certain information
with the Division of Banks prior to May 28th mustinto the database. The database will first determine
complete a residential mortgage lending course prior towhether the property is exempt. If it is not exempt, the
becoming licensed.database will then determine if it will be necessary for
LOAN ORIGINATORS WHO FIRST BEGANthe borrower(s) to obtain counseling. If counseling is not
WORKING FOR A LICENSED MORTGAGErequired, the loan may proceed to closing. If counseling
LENDER OR MORTGAGE BROKER AFTERis required, the borrower(s) will be notified and given a
NOVEMBER 29, 2007:list of all participating counseling agencies. The act aims
Applications must be submitted to Massachusettsto reduce predatory lending practices by assisting the
through NMLS before July 1, 2008. Prior to becomingborrower in understanding the terms and conditions of
licensed, all applicants must complete a residentialthe loan for which he or she has applied. The act does
mortgage lending course that has been approved bynot prohibit any type of loan.