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  • Nevada Mortgage Regulator Clarifies Wholesale Lender Licensing Requirements

    Lending

    On August 20, the Nevada Division of Mortgage Lending issued a memorandum clarifying licensing requirements for wholesale lenders under the Nevada Mortgage Brokers and Mortgage Agents Act. The Act prohibits anyone from offering or providing mortgage-broker services—such as making mortgage loans or buying and selling mortgage notes—without first obtaining a license. The memorandum states that a wholesale lender must be licensed as a broker if (i) the wholesale lender closes and funds a mortgage in its own name as the lender of record, or (ii) buys a mortgage loan from a mortgage broker after closing. A wholesale lender need not be licensed if it only provides a funding source for a licensed or exempt mortgage broker to close and fund a loan as the lender of record. After closing, the lender of record may assign a closed or funded loan to the wholesale lender. The Division will allow until October 1, 2012 for wholesale lenders to apply for a license under this interpretation, and it will start enforcing the licensing requirement on January 1, 2013.

    Mortgage Licensing Mortgage Origination Wholesale Lending

  • Illinois Amends Its Mortgage Licensing Act

    Lending

    On August 3, Illinois enacted numerous changes to its Residential Mortgage Licensing Act. Effective immediately, House Bill 4521 (i) increases annual licensing fees, (ii) substantially raises the cap on fines for fraudulent and deceptive acts, (iii) authorizes the state regulator to contract with the NMLS to collect and maintain records and process fees, (iv) prohibits advance fees for loan modifications, and (v) restricts short sale facilitation services to those originators who also hold a license under Illinois' Real Estate License Act. The bill amends and adds several definitions to facilitate the substantive changes above, such as its revision of the definition of “mortgage loan originator” to incorporate individuals engaged in loan modification activities. The bill also amends the state Residential Real Property Disclosure Act to require that monthly consumer debt be included in reports prepared by originators for the state predatory lending database. This change takes effect January 1, 2013.

    Mortgage Licensing Mortgage Origination NMLS Predatory Lending

  • State Law Update: Hawaii Establishes Transition Period for Certain Mortgage Loan Originators

    Lending

    On July 25, the Hawaii Department of Commerce and Consumer Affairs (DCCA) announced a transition period for certain mortgage loan originator companies (MLOCs) to comply with recently enacted mortgage loan originator (MLO) licensing requirements. Pursuant to Act 252 (Session 2012), effective July 1, 2012, all exempt registered MLOs and MLOCs of a subsidiary of an insured depository institution regulated by a federal banking agency are required to be licensed under the state’s SAFE Act. Under the DCCA action, affected MLOs can continue to engage in mortgage loan origination activity until September 30, 2012, provided that they take certain preliminary steps towards compliance, such as creating a record in the Nationwide Mortgage Licensing System.

    Mortgage Licensing Mortgage Origination NMLS

  • State Law Update: Hawaii and California Take Actions on Mortgages and Privacy

    Fintech

    California AG Announces Privacy Enforcement Unit. On July 19, California Attorney General Kamala Harris announced the creation of the Privacy Enforcement and Protection Unit. The unit will combine the various existing privacy functions of the California Department of Justice to centrally enforce and protect consumer privacy. The unit will pursue civil prosecution of state and federal privacy laws regulating the collection, retention, disclosure, and destruction of private or sensitive information by individuals, organizations, and the government. These include laws relating to cyber privacy, financial privacy, identity theft, and data breaches, among others.  The new unit will reside within the eCrime Unit, which was created in December 2011 to identify and prosecute identity theft crimes, cyber-crimes and other crimes involving the use of technology.

    California Expands Servicemember Protections. On July 13, California enacted AB 2476, which expands the period of time during which servicemembers are protected from high interest rates. Under current law, a creditor cannot charge, during a servicemember’s period of military service, an interest rate in excess of 6% on any obligation or liability incurred by a servicemember before that person’s entry into service. The bill expands the interest rate protections to prevent an increase in any such rate on a mortgage, trust deed, or other security in the nature of a mortgage for one year after the period of military service.

    Hawaii Enacts Multiple Mortgage-Related Bills and Legislation to Protect Personal Information. Recently, Hawaii enacted a set of bills related to mortgage origination and servicing. With regard to mortgage origination, S.B. 2763 amends the state SAFE Act to reflect changes to the federal law and to adjust originator registration fees. With regard to mortgage servicers, H.B. 2502 allows the Commissioner of Financial Institutions to require registration with the NMLS and makes it unlawful for a servicer to provide loan modifications without first complying with certain licensing requirements. Another bill, H.B. 1875 makes numerous changes to the state’s foreclosure laws, largely implementing recommendations from the Mortgage Foreclosure Task Force created by the state legislature in 2010. Finally, with regard to mortgages, H.B. 2375 establishes criminal penalties for certain violations of the state’s Mortgage Rescue Fraud Prevention Act. Hawaii also recently enacted S.B. 2419, which prohibits businesses from scanning a customer’s identification card or driver’s license with an electronic device capable of obtaining information electronically encoded on that identification card, except for specific purposes.

    Mortgage Licensing Mortgage Servicing Servicemembers State Attorney General Privacy/Cyber Risk & Data Security Mortgage Origination

  • State Law Update: South Carolina Adopts Mortgage Lending Act Regulations

    Lending

    Recently, the South Carolina State Board of Financial Institutions (Board) adopted regulations implementing the South Carolina Mortgage Lending Act. The regulations set forth definitions for previously-undefined terms, specify circumstances under which a licensee’s Nationwide Mortgage Licensing System unique identification number must be disclosed, clarify periodic reporting requirements applicable to licensees, and provide a timeframe within which a license application must be completed before it is deemed abandoned by the Board. The regulations took effect on June 22, 2012.

    Mortgage Licensing

  • State Law Update: North Carolina, Connecticut, Ohio Update Banking, Mortgage Laws

    Lending

    North Carolina Alters Mortgage Regulation Funding Mechanism. On June 20, North Carolina enacted Senate Bill 806, which creates a new funding mechanism for mortgage regulation. The new law replaces the current licensing fee, which offsets the state’s regulatory costs, with an assessment structure similar to the one currently applicable to banks. The change takes effect October 1, 2012.

    Connecticut Enacts Bill to Update State Banking Laws. On June 8, Connecticut enacted Senate Bill 67, which makes numerous revisions to the state banking laws. Among the changes, the law (i) alters mortgage licensing requirements to exempt “housing finance agencies” and nonprofit groups, (ii) requires certain lender and broker employees to be licensed as mortgage loan originators, (iii) requires banks to review a mortgage loan before excusing the borrower from amortization of the principal, (iv) requires that banks consider an obligor’s credit exposure arising from a derivative transaction when determining the obligor’s liability limitations, (v) exempts from certain requirements “loan production offices.” The law also gives new investigatory powers to the state banking commissioner and allows the commissioner to require, without seeking a court order, restitution and disgorgement for banking law violations. Most of the law’s provisions take effect October 1, 2012.

    Ohio Levels Playing Field for State Banks. Recently, Ohio Governor John Kasich signed House Bill 322, permits Ohio-chartered banks, savings banks, savings and loan associations, and credit unions to charge the same or lower rates or amounts of interest, fees, and other charges under a revolving credit agreement that their out-of-state counterparts may charge Ohio customers. The change does not apply to residential mortgages.  It takes effect September 4, 2012.

    Mortgage Licensing Bank Compliance

  • State Law Update: Michigan E-Signature Rule, Numerous Mortgage Licensing Changes

    Fintech

    Michigan Court Rule Change Allows Electronic Signatures. Recently, the Michigan Supreme Court approved a rule change that allows the use of electronic signatures for any document filed in the state court system, including any signature required by a law or court rule to be notarized or made under oath. Several States Adjust Mortgage Registration, Licensing Regulations. Recently, five states amended their laws to clarify the scope of their mortgage-related registration and licensing requirements. First, New Hampshire passed House Bill 247, which exempts from licensing requirements mortgage bankers and brokers who negotiate three or fewer residential mortgage loans in a calendar year. The bill will take effect July 13, 2012. New Hampshire also enacted House Bill 408 to provide an exemption for attorneys, which took effect on May 29, 2012. Second, Louisiana enacted, effective immediately, House Bill 508, which defines "regularly engaged" to clarify thresholds for activity requiring licensure as a mortgage loan originator or mortgage broker or lender. Third, Mississippi enacted Senate Bill 2897, which makes several changes to the state’s S.A.F.E. Mortgage Act including a change to the definition of mortgage loan originator to exclude certain activities. The changes go into effect July 1, 2012. Fourth, in Michigan, the Governor recently signed Senate Bill 908, which immediately amends the Mortgage Loan Originators Licensing Act to require, among other things, that a person have an approved sponsor in the NMLS in order to be licensed as a mortgage loan originator. Finally, New York enacted Senate Bill 3779, which as of January 1, 2013 will exempt from licensing any individual, person, partnership, association, corporation or other entity which makes three or fewer loans in a calendar year and no more than five in a two year period, provided that no such mortgage loans were solicited, processed, placed or negotiated by a mortgage broker, mortgage banker or exempt organization. New York also extended again its emergency rules regarding mortgage loan originator licensing, this time through August 12, 2012.

    Mortgage Licensing Electronic Signatures

  • NMLS Releases First Ever Quarterly Reports

    Lending

    On June 6, NMLS released for the first time two quarterly publications that together provide a comprehensive overview of all individuals, mortgage companies, and depository institutions originating residential mortgages in the United States. The first report, the Nationwide View of State-Licensed Mortgage Entities, compiles data concerning companies, branches, and mortgage loan originators who are state-licensed or state-registered through NMLS. The report provides information about new applications activity, the legal status of licensed or registered companies, and state-by-state licensing data. The second report, the NMLS Federal Registry Quarterly Report, provides summary information about the charter type of federally registered entities and state-by-state summary data.

    Mortgage Licensing NMLS

  • State Law Update: Mortgage Law Changes in Alabama & West Virginia

    Lending

    Alabama Enacts Residential Mortgage Satisfaction Act. On May 3, Alabama enacted Senate Bill 347, which establishes procedures by which a borrower can obtain a payoff statement for a residential mortgage, including the form of such a request, deadlines for responding to a request (14 days), and the method for providing the statement, among other things. The bill also requires a secured creditor to record a mortgage satisfaction within 30 days after it receives full payment and performance of the obligation, and establishes a process for enforcing the recording requirement. The bill takes effect March 1, 2013. 

    West Virginia Amends Mortgage Record Keeping Requirements. Recently, West Virginia amended regulations that implement the record keeping requirements for all licensed residential mortgage lenders, brokers, and servicers. For lenders who provide the initial funding on a loan, the rules now make clear that the requirement to retain electronic records includes emails between the lender and borrower. Initial lenders and mortgage brokers also must maintain an itemized list of all fees and charges imposed on each loan and received by the lender or broker and by any third party. Further, the regulation adds a new requirement that a lender or broker document tangible net benefit to the borrower prior to refinancing a residential mortgage. The regulation also contains a new section on the process by which the state Division of Banking will determine if mortgage loan originator applicants meet certain standards of financial responsibility required by West Virginia law. The requirements took effect May 1, 2012.

    Mortgage Licensing Mortgage Origination Mortgage Servicing

  • State Law Update: Recent Changes in Maryland, Minnesota, and Mississippi

    Consumer Finance

    Maryland Adds Foreclosure Registration Requirement, Authorizes Pre-file Mediation, Amends Mortgage Licensing. On May 2, Maryland Governor O’Malley signed House Bill 1373, which establishes a state foreclosed property registry. Foreclosure purchasers are required to (i) file an initial registration and pay a $50 registration fee for each foreclosed property within 30 days after a foreclosure sale, and (ii) file a final registration, with no additional fee, within 30 days after a deed transferring the title has been recorded. The law allows local jurisdictions to (i) enact laws that impose a civil penalty for failure to register under the new state requirement and (ii) collect from the foreclosure purchaser, as a charge on the property’s property tax bill, any costs associated with abating a nuisance on a registered property. The Governor also signed on May 2, House Bill 1374, which authorizes a secured party to offer to participate in pre-file mediation with a mortgagor or grantor to whom the secured party has delivered a notice of intent to foreclose. If the mortgagor or granter elects to participate, an order to docket or complaint to foreclose cannot be filed until the completion of the mediation. The bill also establishes a process through which a person with a secured interest in residential property that is in default can seek from a local jurisdiction a certificate of vacancy. If a certificate is not challenged by the record owner or occupant of the property the secured party can expedite the foreclosure process.

    Finally, on the same date, Maryland enacted Senate Bill 546, which (i) requires a mortgage lender licensee to provide the commissioner with proof satisfying specified minimum net worth requirements within 90 days after the last day of the licensee’s most recent fiscal year and (ii) establishes a nonactive license status and process for licensees that cease to be employed by an approved financial institution.

    Minnesota Amends Debt Collector Requirements. On April 23, Minnesota enacted House Bill 2335, which amends requirements for individual debt collectors and collection agencies. The bill (i) provides individual collectors additional time to report a change of contact information, (ii) sets requirements for a personnel screening process that a debt collection agency must follow in hiring and retaining individual collectors, and (iii) revises the list of past events that disqualify a person from registration as a debt collector. The final bill did not include a proposed revision that would have allowed individual debt collectors to remedy violations of the statute.

    Mississippi Adds Protections for Bank Self-Assessments. On April 19, Mississippi enacted House Bill 1460 to grant privileged treatment to certain bank reports. The law takes effect July 1, 2012. Under the new law, reports reflecting voluntary self-assessments by banks, which are submitted to a bank regulator but not otherwise provided to third parties, will be considered privileged and not admissible in any legal or investigative action and are not subject to discovery in such actions. The law sets forth exceptions and circumstances under which the protections do not apply, including if a court determines that a report shows that a bank was not in compliance with a material provision of banking law, the bank did not initiate good-faith efforts to achieve substantial compliance within a reasonable time after the noncompliance was  discovered, and the bank's failure to comply caused material harm to a bank customer or consumer.

    Foreclosure Mortgage Licensing Mortgage Servicing Debt Collection

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