The Future of Mortgage Broker Licensing by George H. Marentis, J.D.

The purpose of this article is to provide TNR readers with some incite on the ever changing mortgage lender, broker and loan officer licensing environment. It is not my intent to express an opinion or view at this time. That may come in future articles. Introduction With the recent collapse of the mortgage lending industry and the dramatic changes that have occurred over the past year as well as unknown future changes, approximately 10 states are now participating in the new Nationwide Mortgage Licensing System (NMLS). This system will influence mortgage lenders, brokers and loan officers licensed in the participating states. Creation of a national mortgage licensing database The NMLS was developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. NMLS was officially launched in January of 2008. The system is an Internet based system designed to allow you to complete one set of standard comprehensive forms. These forms are then forwarded to all the participating states the mortgage broker intends to conduct business activities in. Ultimately, the NMLS paper forms will be replaced by an online version thus reducing paper submissions at the state level as well as within the NMLS system. NMLS has implemented three separate processing fees. The system processing fees will be assessed at the time an application is submitted to a state when applying for a license, transitioning an existing license onto the system, renewing an existing license, or submit information to establish a relationship with a loan officer to sponsor a license. Streamlining of the licensing process The NMLS is a database where state-licensed mortgage lenders, brokers and loan officers will have the ability to apply for, amend, update and renew licenses. According to the creators of NMLS, the new system would streamline the licensing process since about 48 states currently regulate mortgage lenders, brokers or loan officers in some fashion. Of the 41 state agencies that have signed the Statement of Intent to participate, 30 states are listed below. The NMLS would allow regulators to share information regarding the enforcement of individuals and entities, reduce regulatory burdens on the states and reduce fraud while increasing consumer protection through enhanced financial safety and soundness and ultimately bringing uniformity and transparency to the mortgage industry. In addition, to the streamlined licensing application and the information gathered through the application process, any jurisdiction-specific requirements such as surety bonds or financial statements will need to be sent to each participating state separately within 5 business days of submitting the NMLS applications. There are currently 10 participating states Currently, the following states are participating in the NMLS: Idaho, Iowa, Kentucky, Massachusetts, Mississippi, Nebraska, New York, North Carolina, Rhode Island and Washington. If you are currently licensed in a participating state, you will need to transition your current licensing information into the database by the transition deadline. Each state is different; to find out your states deadline, contact Compliance Made Simple. Looking into the future There are a number of states that have expressed their commitment to participating in the NMLS. These states are projected to go online with NMLS sometime in 2008 and 2009. States included are Alabama, Arizona, Arkansas, Connecticut, District of Columbia, Georgia, Louisiana, Maryland, Michigan, Missouri, Montana, New Hampshire, New Jersey, North Dakota, Oklahoma, Oregon, Pennsylvania, South Dakota, Vermont and Wyoming. Conclusion The regulatory burdens affecting the mortgage professional are ever changing and this new licensing system has added another layer of requirements with the intent to streamline the mortgage licensing process, enhance consumer protection, and fight fraud and predatory lending practices. Author Bio: George H. Marentis is President/CEO of Compliance Made Simple, LLC, a company that provides licensing services and other compliance related services to the mortgage lending industry nationwide. For more information see or call them at 303.859.8550. Mr. Marentis has a Juris Doctorate and over 15 years of mortgage lending experience ranging from frontline operations, origination to regulatory and legislative compliance. Information provided in this article is not intended to be considered legal advice, seek advice from in-house counsel or outside attorney.