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Financial Services Law Insights and Observations

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  • Texas adopts licensing requirements for MLOs

    On August 16, the Finance Commission of Texas adopted provisions to amend various licensing requirements for residential mortgage loan originators (MLOs) regulated by the state’s Office of Consumer Credit Commissioner (OCCC), and implement licensing provisions in HB 1442, which took effect September 1. The amendments adopted by the Commission in August “maintain the current one-year term, the current December 31 expiration date, and the current reinstatement period from January 1 through the last day of February.” The Commission further clarified that these amendments apply to MLOs regulated by the OCCC, not just those applying for licensure. The amendments took effect September 5.

    Licensing State Issues Mortgage Origination Mortgage Licensing

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  • Indiana issues rule providing temporary authority for mortgage loan originators

    On August 28, the Indiana Department of Financial Institutions published in the Indiana Register an emergency rule providing 120-day temporary authority for certain mortgage loan originators (MLOs) to originate loans in Indiana without a state license, pursuant to Section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The new rule provides that in order to be eligible for temporary authority to operate, an MLO, among other things, must have been licensed as an MLO in another state continuously during the past 30 days or operating as a registered MLO for a depository institution continuously for the past year. The rule permits an eligible MLO applicant to engage in mortgage transactions while their application is pending for licensure for up to 120 days or upon approval of the licensing application, whichever is sooner, beginning November 24.

    Licensing State Issues State Regulators Mortgages EGRRCPA Mortgage Licensing Mortgage Origination

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  • Hawaii approves temporary authority to act as a registered mortgage loan originator

    On June 7, the Hawaii governor signed HB 988, which provides 120-day temporary authority for certain mortgage loan originators to originate loans in Hawaii without a state license. Pursuant to Section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the bill allows a federally-registered mortgage loan originator (MLO) holding an MLO license in another state while employed by a Hawaii-licensed mortgage company, to have temporary authority to act as a state-licensed MLO for a period not to exceed 120 days while the MLO’s Hawaii license application is pending. MLOs with temporary authority are subject to the applicable laws of Hawaii to the same extent as persons licensed by Hawaii. The bill is effective on November 24.

    Licensing State Issues State Legislation Mortgage Licensing EGRRCPA Mortgage Origination

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  • Texas approves temporary authority to act as a registered mortgage loan originator

    State Issues

    On June 10, the Texas governor signed SB 2330, which provides, among other things, for a federally-registered mortgage loan originator (MLO) who does not hold a state license to have temporary authority to act as a state-licensed MLO for a period not to exceed 120 days while their state MLO license application is pending. Subject to certain conditions, a federally-registered MLO who becomes employed by an entity that is licensed or registered in Texas for mortgage loan origination may temporarily act as a state-licensed  MLO in the state before their license is issued for up to 120 days if (i) the individual was registered in the Nationwide Mortgage Licensing System and Registry as a loan originator within one year of the state application; or (ii) is licensed by another state or governmental jurisdiction to engage in mortgage loan origination. The bill is effective on November 24.

     

    State Issues Mortgage Licensing Licensing Mortgages State Legislation NMLS

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  • Georgia amends mortgage lender licensing laws

    State Issues

    On May 7, the Georgia governor signed HB 185, which amends various state laws related to financial institutions, including the licensing requirements for mortgage lenders and mortgage loan originators. The bill specifies that any licensed mortgage lender is authorized to engage in all activities that are authorized for a mortgage broker and therefore, is not required to obtain a mortgage broker license. Additionally, the bill specifies that a mortgage loan originator license shall become inactive in the event that a mortgage loan originator is no longer sponsored by a mortgage lender or mortgage broker that is licensed. The bill becomes effective July 1.

    State Issues Mortgage Licensing Licensing Mortgages Mortgage Origination State Legislation

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  • Kansas updates GAP waiver guidance

    State Issues

    On May 19, the Office of the State Bank Commissioner of Kansas published in the Kansas Register an amended Administrative Interpretation No. 1004 covering Guaranteed Asset Protection (GAP). In general, the interpretation provides guidance for creditors to follow to exclude the cost of GAP waiver agreements from the calculation of the finance charge with consumer credit sales and closed-end consumer loans pursuant to the Uniform Consumer Credit Code. The revision amends paragraph 3(g) of the interpretation, which requires clear disclosure on how to contact the GAP provider in connection with claims for GAP coverage. Paragraph 3(g) states that the information must be written in bold font and the word “claims” must be bolded and underlined. Additionally, the form must also advise Kansas consumers that they can contact the Kansas Office of State Bank Commissioner with complaints about their GAP waiver agreement. The revised interpretation was effective on May 15.

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  • Vermont streamlines mortgage licensing

    State Issues

    On May 14, the Vermont governor signed S.154, which, among other things, amends the state’s mortgage licensing statute. Specifically, the legislation repeals various provisions of the state’s licensing process for mortgage lenders and servicers and replaces the provisions with a new chapter (8 V.S.A. Chapter 72) intended to streamline the law and bring more clarity and cohesion to the licensing process. The bill is effective July 1.

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  • Nebraska amends mortgage licensing law

    State Issues

    On March 7, the Nebraska governor approved LB 355, which amends various sections of the state’s financial laws, including the Nebraska Residential Mortgage Licensing Act (RMLA). Among other things, the RMLA is being amended to (i) provide requirements for the submission of fingerprints for specified principals of mortgage firm applications; (ii) adopt the transitional licensing process required by federal law, effective November 24, 2019, to allow certain federally-registered mortgage loan originators and mortgage loan originators licensed by another state to temporarily conduct business in Nebraska for up to 120 days after becoming employed by a Nebraska-licensed mortgage firm; (iii) limit the term of inactive mortgage loan originator licensees; and (iv) change the records retention period from three to five years. The amendments take effect September 2019.

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  • New Jersey amends mortgage statute, includes “transitional mortgage loan originator license”

    State Issues

    On August 24, New Jersey Governor Phil Murphy signed AB 2035, which amends the New Jersey Residential Mortgage Lending Act and certain related statutes. Among other technical and clarifying changes, the amendments create a framework for the issuance of a “transitional mortgage loan originator license,” which would allow an “out-of-state mortgage loan originator” or a “registered mortgage loan originator” to obtain temporary authority to engage in the business of mortgage loan origination in New Jersey for 120 days before obtaining a New Jersey mortgage loan originator license. The amendments provide specific definitions for what constitutes a “registered mortgage loan originator” and what constitutes an “out-of-state mortgage loan originator.” Specifically, the amendments define an “out-of-state mortgage loan originator” as an individual who is registered with Nationwide Mortgage Licensing System and currently holds a valid mortgage loan originator license issued under the law of any other state or jurisdiction in the country. And the law amends the definition of “registered mortgage loan originator” to include a requirement that such a person must be validly registered as a mortgage loan originator with a depository institution employer for at least the one-year period prior to applying for licensure under the act. 

    The amendments revise the types of fees that residential mortgage lenders have the right to charge related to the origination, processing, and closing of a mortgage loan: (i) application fee; (ii) origination fee; (iii) lock-in fee; (iv) commitment fee; (v) warehouse fee; (vi) discount points; and (vii) fees necessary to reimburse the lender for charges imposed by third parties, such as appraisal and credit report fees. The amendments also create a different list of fees a mortgage broker may charge in connection with the brokering of any mortgage loan transaction.

    The amendments take effect 90 days after the bill’s enactment.

     

    State Issues Mortgages Mortgage Licensing Mortgage Origination Fees Mortgage Broker Licensing

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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.

     

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