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Financial Services Law Insights and Observations


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  • NMLS issues “temporary authority” licensing guidelines for MLOs

    Federal Issues

    On April 4, the Nationwide Multistate Licensing System (NMLS) issued a set of guidelines and FAQs clarifying federal SAFE Act amendments created by the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), to establish “temporary authority” provisions for mortgage loan originators (MLOs). According to the guidelines, temporary authority to act as a loan originator while completing state-specific licensing requirements is granted to: (i) qualified MLOs who are changing employment from a depository institution to a state-licensed mortgage company; and (ii) qualified state-licensed MLOs seeking to be licensed in another state. The guidance expands upon temporary authority eligibility requirements; disqualification criteria; and the length of time MLOs may operate under temporary authority.

    The guidelines also emphasize that “any MLO operating under temporary authority is subject to the requirements of the federal SAFE Act, and all applicable laws of the application state, to the same extent as if that MLO was a state-licensed loan originator licensed by the state.” MLOs will be able to apply for a license and become eligible for temporary authority on November 24.

    Federal Issues NMLS Licensing Mortgage Origination EGRRCPA SAFE Act

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  • New Mexico amends financial lending licensing requirements

    State Issues

    On April 2, the New Mexico governor signed HB 584, which amends the Collection Agency Regulatory Act and the Motor Vehicle Sales Finance Act to, among other things, require sales finance companies obtain a license to conduct business in the state. The bill outlines licensing requirements for such companies. State and national banks authorized to do business in the state are not required to obtain a license under the Motor Vehicle Sales Finance Act, “but shall comply with all of its other provisions.” Under HB 584, the Director of the Financial Institutions Division of the Regulation and Licensing Department may utilize the Nationwide Multistate Licensing System and Registry (NMLS) or other entities designated by the NMLS in order to receive and process licensing applications. The Director is also granted the authority to issue and deny licenses.

    HB 584 also amends definitions used within the state’s Mortgage Loan Originator Licensing Act, and outlines provisions related to (i) licensing, registration, renewal, and testing requirements; (ii) certain exemptions; (iii) the issuance of temporary licenses to out-of-state mortgage loan originators who are both licensed through the NMLS and complete the mandatory education and testing requirements; and (iv) continuing education requirements. HB 584 also grants the Director the authority to establish rules for licensing challenges; “deny, suspend, revoke or decline to renew a licenses for a violation of the New Mexico Mortgage Loan Originator Licensing Act”; and impose civil penalties for violations.

    Furthermore, HB 584 also amends the definitions used within the state’s Uniform Money Services Act and the Collection Agency Regulatory Act by listing licensing application requirements, and granting the Director the same authorities provided above.

    The amendments take effect July 1, 2019.

    State Issues State Legislation Consumer Lending Licensing Auto Finance Mortgages Mortgage Origination Money Service / Money Transmitters Debt Collection NMLS

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  • Minnesota clarifies definition of “sales finance company” for licensing purposes

    State Issues

    On April 5, the Minnesota Department of Commerce (Department) issued guidance clarifying the types of entities meeting the definition of “sales finance company” under Minnesota law for purposes of whether a license is needed to conduct business. The guidance requires “any company who purchases motor vehicle retail installment contracts from retail sellers located in Minnesota, and applies a finance charge,” to obtain a motor vehicle sales finance company license. Any company engaged in the business of a “sales finance company” is required to apply for and maintain a license under Minnesota law, regardless of whether the company has a physical presence in Minnesota or whether an in-state retail seller chooses to hold and collect retail installment contracts out-of-state.

    Completed applications by companies that purchase motor vehicle retail installment contracts are due to the Department by July 1. The license application requirement will only apply to those contracts entered into on or after July 1. Non-depository financial institution applicants must apply through the Nationwide Multistate Licensing System (NMLS).

    State Issues Auto Finance Licensing NMLS State Legislation

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  • CSBS agrees to implement recommendations from fintech advisory panel


    On February 14, the Conference of State Bank Supervisors (CSBS) agreed to implement specific recommendations from the CSBS Fintech Industry Advisory Panel. The Advisory Panel, which was formed in 2017 and consists of 33 fintech companies, works to “identify and remove unnecessary pain points in the multistate experience of fintechs and other nonbanks operating regionally or nationwide while improving financial supervision.” Of the 19 recommended actions by the Advisory Panel, CSBS supported 14, including: (i) creating a 50-state model law to license money services businesses; (ii) creating a standardized call report for consumer finance businesses; (iii) expanding the use of the Nationwide Multistate Licensing System across all license types; and (iv) building an online database of state licensing and fintech guidance. Recommendations related to small business lending were among the items saved for future action or implementation.

    Fintech State Issues CSBS Licensing NMLS

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  • NYDFS adds check cashing and virtual currency businesses to nationwide licensing system

    State Issues

    On October 1, NYDFS announced the commencement of the final phase of its initiative to manage the license application and regulation of all non-depository financial institutions operating in the state through the Nationwide Multistate Licensing System and Registry (NMLS). As such, NYDFS now allows financial services companies holding check casher and virtual currency business activity licenses to transition those licenses to NMLS. Additionally, companies applying for new licenses may now submit applications through NMLS. As previously covered in InfoBytes, licensed budget planners, sales finance agencies, money transmitter licensees, and mortgage providers have already made the transition to NMLS. 

    State Issues NYDFS NMLS Licensing Virtual Currency

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  • California governor approves revisions to Student Loan Servicing Act

    State Issues

    On September 14, the California governor approved AB 38 amending the state’s Student Loan Servicing Act (Act). The Act provides for the licensure, regulation, and oversight of student loan servicers by the California Department of Business Oversight (CDBO). Among other things, the amendments: (i) clarify the circumstances under which the Commissioner of the CDBO may deny a student loan servicer’s application; (ii) remove debt collectors of defaulted student loans from the definition of a “student loan servicer”; (iii) authorize the Commissioner to require license applicants and licensees to submit required filings with, and pay assessments to, the Commissioner through the Nationwide Multistate Licensing System and Registry; (iv) require the Commissioner to report violations of the Act “as well as other enforcement actions and information to the licensing system and registry to the extent that the information is a public record”; and (v) extend to 10 business days the time for a licensee to acknowledge receipt of a qualified written request from a borrower. The amendments also grant the Commissioner the authority to prescribe circumstances under which electronic records, including applications, financial statements, and reports, may be accepted.

    State Issues State Legislation Student Lending Student Loan Servicer Licensing NMLS

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  • Illinois updates Residential Mortgage License Act

    State Issues

    On August 14 and 10, the Illinois governor signed HB 4404 and SB 2615, which amend the Illinois Residential Mortgage License Act of 1987. Effective immediately, SB 2615, now Public Act 100-0795, requires, among other things, that mortgage loan advertisements in Illinois, whether print or electronic, reference the Nationwide Multistate Licensing System (NMLS) and Registry’s Consumer Access website, except where exempted by the Secretary of Financial and Professional Regulation.

    HB 4404, now Public Act 100-0851, provides that an entity that is engaged solely in independent loan processing through the sponsoring of individuals is considered exempt from the licensing requirements of the Residential Mortgage License Act but is required to annually apply through the NMLS for an exempt company registration for the purpose of sponsoring one or more licensed mortgage loan originators. The changes are effective immediately.


    State Issues Mortgages Mortgage Licensing Mortgage Advertising NMLS Licensing

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  • Connecticut governor signs amendments to state banking statutes

    State Issues

    On June 14, the governor of Connecticut signed HB 5490, which makes various amendments to the state’s banking statutes, including standardizing various requirements across several mortgage and nonmortgage licensing types. Among other things, the law (i) extends the commissioner’s authority over certain mortgage-related licensees (mortgage lenders, brokers, and originators; correspondent lenders, and processors or underwriters) to include small loan lenders, sales finance companies, sales finance companies, mortgage servicers, money transmitters, check cashers, debt adjustors, debt negotiators, consumer collection agencies, student loan servicers, and lead generators; (ii) outlines provisions concerning the commissioner’s authority to conduct investigations and examinations; (iii) establishes that for loans under $5,000, the maximum annual percentage rate (APR) shall not exceed the lesser of 36 percent or the maximum APR for interest “permitted with respect to the consumer credit extended under the Military Lending Act”; and (iv) requires sales finance companies to acquire, maintain, and report to the commissioner certain demographic information on ethnicity, race, and sex for any retail installment contract or application for such contract covering the sale of a motor vehicle. The law is effective October 1, with the exception of specified provisions.

    State Issues State Legislation Mortgages Licensing NMLS

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  • NYDFS enters next phase in use of nationwide licensing system

    State Issues

    On April 25, the New York Department of Financial Services (NYDFS) announced the next phase in its initiative to manage the licensing and regulation of all nondepository financial institutions operating in the state. Beginning May 1, budget planners and premium finance companies will be able to transition their licenses to the Nationwide Multistate Licensing System and Registry (NMLS). Companies applying for new licenses will be also able to submit applications through the NMLS. As previously covered in InfoBytes, licensed lenders, sales finance companies, and money transmitters made the transition to NMLS last year. “The Department is proud to continue our work with [the Conference of State Bank Supervisors] and our fellow state regulators in the ongoing modernization of financial services regulation, enhancing the strong regulatory framework created by states, and supporting industry innovation,” stated NYDFS Superintendent Maria T. Vullo.

    State Issues NYDFS NMLS Non-Depository Institution Licensing

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  • Wyoming allows state board to use NMLS to assist in regulation of debt collection industry

    State Issues

    On March 12, the Wyoming governor signed SF 26, which amends the preexisting licensing law to authorize the state’s collection agency board to use information from, and furnish information to, the nationwide multistate licensing system (NMLS) to assist in the regulation of the debt collection industry. In addition, among other things, SF 26 allows the board to establish application requirements; require background investigations of licensees and applicants; and receive criminal history record information. The law also amends provisions relating to the disposition of fees and expiration and renewal of licenses. The law is effective immediately. 

    State Issues NMLS Licensing Debt Collection

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