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Financial Services Law Insights and Observations

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  • Texas amends residential MLO application procedures

    On May 1, the Texas Finance Commission adopted amendments related to application procedures for regulated residential mortgage loan originators (MLO). The amendments are intended to reduce costs for residential MLOs and to ensure consistency with current licensing procedures and processes. Among other things, the amendments lower MLO application and annual renewal fees from $300 to $200, and implement statutory changes from HB 1342 (enacted last year) related to criminal background checks for residential MLOs. Specifically, the amendments (i) repeal a provision that allowed for the “denial, suspension, or revocation for any offense occurring in the five years preceding the application”; (ii) add provisions requiring an agency to consider the correlation between the element of a crime and a licensed occupation’s duties and responsibilities; and (iii) remove language related to letters of recommendation provided on behalf of an MLO applicant. The amendments are effective as of May 7.

    Licensing State Issues State Regulator MLO Texas

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  • NMLS extends deadline for reports and SAFE MLO test enrollment

    On March 25, in response to the Covid-19 pandemic, the NMLS Policy Committee extended the deadline for certain reporting obligations satisfied through NMLS, and the enrollment window for taking the SAFE MLO test.

    Companies required to submit financial statements, the Mortgage Call Report, and the Money Services Businesses Call Report will have an additional 60 days from pre-established deadlines to submit such reports. Individuals will have the testing window on their test appointments extended 180 days.

    The NMLS Resource Center has been updated with additional resources to provide updates on state agency operating status. In addition, the NMLS Policy Committee is encouraging states to accept documentation electronically that otherwise may have been required in hard copy.

    The full announcement can be found on the NMLS Resource Center.

    Licensing Mortgage Licensing NMLS Mortgage Origination Mortgages MLO Money Service / Money Transmitters Call Report Covid-19

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  • California Department of Business Oversight issues guidance for lenders

    State Issues

    On March 22, the California Department of Business Oversight (DBO) issued guidance directed at escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and MLOs whose customers may be suffering from loss of income or other financial hardships as a result of the Covid-19 pandemic. The guidance states that the DBO will not take enforcement action against licensees for operating unlicensed branches if, during the state of emergency, employees conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. The DBO also will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain conditions are met. While the foregoing applies to Escrow Law licensees, the DBO notes that it cannot modify any restrictions that may be imposed by the Fidelity Corporation or the licensee’s surety bond. The DBO offers additional recommendations to licensees, including offering payment accommodations to avoid delinquencies and negative credit bureau reporting, easing terms for new mortgage loans to affected borrowers, and exercising discretion in determining which of their services and transactions are “essential services” for the purposes of “stay-in-place” or “shelter-in-place” orders. The DBO also noted that it will not criticize any late mortgage recordation that result from the closure of a county recorder’s office due to Covid-19.

    State Issues Covid-19 California DBO MLO Mortgages

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  • Texas regulator issues MLO work from home guidance

    State Issues

    On March 20, the Texas Department of Savings and Mortgage Lending issued a notice temporarily suspending any requirement that a physical office be open to the public during posted normal business hours. In addition, the notice provided that licensed MLOs may work from home or another remote location, whether located in Texas or another state, even if the home or remote location is not a licensed branch. However, MLOs are still subject to certain data security requirements and are prohibited from permitting consumers into the MLO’s home.

    State Issues Covid-19 Texas Mortgages MLO

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  • Indiana regulator issues branch closure and MLO work location guidance

    State Issues

    On March 20, the Indiana Department of Financial Institutions confirmed that because it does not require licenses for mortgage branch locations or require a licensee to work from a specific branch, there are no restrictions on an individual mortgage loan originator (MLO) from working from a home office.

    State Issues Covid-19 Indiana MLO Mortgages

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  • California Department of Business Oversight issues guidance to permit licensees to work from home

    State Issues

    On March 22, the California Department of Business Oversight (Department) issued guidance to escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and mortgage loan originators in light of Covid-19 permitting employees of licensees to conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. Further, the Department will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain data security and other conditions are met. Escrow Law licensees may also follow this guidance, however the licensees must still comply with the Fidelity Corporation or the licensee’s surety bond. Additionally, licensees are encouraged to assist consumers including through, among other things, offering payment accommodations.

    State Issues California Licensing Escrow Student Loan Servicer Mortgage Lenders Covid-19 MLO Bond

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  • South Carolina regulator issues MLO work location guidance

    State Issues

    On March 13, 2020, the South Carolina State Board of Financial Institutions, Consumer Finance Division (division) released guidance for mortgage origination and servicing companies regarding working remotely due to Covid-19. The division’s interim guidance allows licensed mortgage loan originators (MLO) to work from home provided that certain criteria are met including (i) the company establishes temporary supervisory policies and procedures; (ii) the MLO has secure access to the company’s origination system; (iii) the security of the MLO’s computer is maintained; and (iv) the MLO does not keep physical company records at the remote location.

    State Issues Covid-19 South Carolina MLO Mortgages

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  • Prometric closes testing centers

    State Issues

    On March 17, Prometric announced that, effective March 18, Prometric Test Centers in the U.S. and Canada will be closed for 30 days. This directly impacts state MLO license applicants as the SAFE MLO test, which individuals must pass to obtain an MLO license, is administered by Prometric.

    State Issues MLO Licensing Covid-19

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  • Maine Bureau of Consumer Credit Protection provides guidance to MLOs

    State Issues

    On March 18, the Maine Bureau of Consumer Credit Protection provided interim guidance to MLOs, allowing employees to work from home as long as data security provisions are in place, and physical business records are stored only at the licensed main office. The guidance will be effective through May 1, 2020.

    State Issues Covid-19 Maine Consumer Finance MLO Mortgages Privacy/Cyber Risk & Data Security

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  • Minnesota Commerce Department provides “work from home” guidance to regulated institutions

    State Issues

    On March 17, the Minnesota Commerce Department issued guidance to mortgage originators and servicers outlining the process for temporarily or permanently closing branch offices in Minnesota. For permanent closures, a licensee should file a surrender through NMLS. For temporary closures, the licensee should notify the Department. In addition, if the licensee has individual MLOs working from a home office, they must not have consumers come to the unlicensed location, and the company’s data security standards should be maintained. No physical records should be maintained at the unlicensed location.

    Similar “work from home” guidance was provided to industrial loan and thrift companies, licensed non-depository financial institutions, and regulated lenders.

    State Issues Covid-19 Minnesota Mortgages Licensing MLO

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