Complete a late renewal.

There is a short window to allow this option depending on the state you live in.  Each state have different requirements, but the federal requirements allow two months for the MLO to complete a late renewal. Some states like New Hampshire will terminate your license if not renewed by 12-31-11.   After the state allowed period, if any, the MLO would be suspended or terminated and be subject to state education, testing, and licensing requirements.

            Need:

Complete specially approved LATE CE courses.  Click here to review offerings and purchase.  (Note:  only special approved courses will be acceptable for late renewal.)

Pay the license renewal late fee and charge.  (Link below for renewal information to find out cost to renew)

Complete the license renewal process.

You cannot function as a MLO until license is reinstated.

Remember:  You must check with your state regulator as state laws may have additional requirements/restrictions greater than the federal requirements.  Link provided below to look up state requirements.

Put your license on inactive.

This option allows the MLO to not be active or employed in the industry, but hold the license from having to start over again with a new license.  The MLO will have to complete continuing education and pay the renewal fees annually.  This may be done for up to five years.  When MLO comes back into the mortgage market, they may have to take the tests over again depending on state requirements.  Federal requires testing after 5 years of inactive licensing.  Check your state requirements. 

            Need:

Complete specially approved LATE CE courses.  Click here to review offerings and purchase.  (Note:  only special approved courses will be acceptable for late renewal.)  If you already completed your education for this year, you may use those classes is handle before renewal is late.

Pay the license renewal late fee (if late) and license fee.

Notify NMLS of request to put license as inactive. 

Cannot function as a MLO until license is reinstated.

You work for a company that has closed.

With the market continuing to shift and adjust to regulations and industry changes, some mortgage companies may decide to leave the business.  This leaves their MLOs with the need for a new sponsorship.  Without an employer, a MLO will not have a sponsor to renew their license. 

You may use any of the options above until you place your license with another company.  If you go beyond the state required time frame to obtain a new sponsor, you’ll be subject to the state license renewal requirements.  Link is provided below for more details.

Do nothing.

Your license will be suspended.  After the allotted time per for late renewal your state allows, your license will lapse.  Normally a termination of license.  If you decide to come back into the industry you will need to complete the pre-licensing education, and other new MLO requirements of your state.  Re-testing may not be required for up to five years, depending on your specific state’s requirements. 

Remember:  You must check with your state regulator as state laws may have additional requirements/restrictions greater than the federal requirements.  Link provided below to look up state requirements.

LATE CE Course Offering

When you’re late with renewing your license, NMLS requires you to complete specially approved LATE CE courses.  Each state may have different lengths of time late renewals will be accepted.  Normally 2 months is allowed.  A link is provided below for you to check your state’s specific requirements.

Click here to review offerings and purchase.   

NMLS Call Center Hours

The NMLS Call Center will remain open an extra hour (until 8:00 p.m. ET) December 19th through December 30th. The Call Center is closed on Saturdays and Sundays (including December 31st).

Link to NMLS all renewal information – this link has all the information needed including state specific renewal requirement and state specific frequently asked questions.

Check out our Industry Resource Links for additional sources and information.  Click Here

Oktoberfest is a week’s long beer festival held annually in German.  It is among the most famous events in Germany and world’s largest fair.  To follow the theme of camaraderie, we’re inviting you to refer a friend or colleague to your favorite education provider!  For your small effort, get 30% off your continuing education for the next year!  It’s easy to learn and save with MTGTNA.

Oktoberfest Referral Program

As a Professional Club member, you are of the elite MTGTNA students that are being offered this opportunity to save BIG on your licensing education.  Refer a student to MTGTNA between now and the end of the year, and you will receive a 30% discount on your course next year.

That’s huge savings for you, just for recommending your favorite education provider.  You already know we’ll take good care of your referral.  So forward this email to someone that still needs their continuing education or pre-licensing NMLS education now!

Referral must enter your name and email address in the “how did you hear about us” section of the shopping cart, before they check out.  We’ll notify you and send you the 30% off discount valid for 2011 or 2012* continuing education.

Terms and Conditions:

Referral must purchase by end of day December 31, 2011

Referral must enter the referral source’s name and email address in the “how did you hear about us” section of the shopping cart.

Referral must purchase NMLS continuing education or pre-licensing course to qualify the referral benefit.  Non-CE courses do not count toward referral discount program.

Referral must use the discount coupon before September 1, 2012.  Discount expires 8-31-2011.

MTGTNA will acknowledge the referral by email within 48 hours of referral.

MTGTNA will notify the referral source of their discount coupon for their continuing education.

MTGTNA will remind referral of the discount 60 days prior to expiration.

Referral source must be member of the Professional’s Club, if not a member they will be joined.  It’s free to join, and you may quit at any time with no obligation to stay in the club.

Key points:

Education hours must be completed in the calendar year 2011

NMLS does not pro-ration licensing fees

Background and credit check is done annually.  Any issues will need to be addressed.

All states require the core NMLS courses – 3 hour federal law, 2 hours nontraditional mortgage products, and 2 hours of ethics.  The minimum hours per year are 8 hours.  Some states allow the additional one hour to be elective and others require state law courses that may use the 1 hour elective or exceed the 8 hours.

Newer licensees that received their education AND license in 2011 will not have to renew until December 2012.  New licensees that took their education in 2010, and received license in 2011 will likely need to renew in 2011.  The SAFE Act uses calendar year for education.  There may be some exceptions to this rule, as it is interpreted on a state level which allowed some states to use the license year for first year and not education year.  Click here for the chart of states that will answer this question for you.

Licensees that added a state in 2011 (held a license in other state(s) in 2010) will have to renew in all states they are licensed in.  Example:  someone licensed in California in 2010, adds Florida in September 2011.  When they renew, they will renew California and Florida by December 31, 2011.  The requirement goes from when the pre-licensing was completed.  Reference the ‘Newer Licensees’ information above if original pre-licensing is less than 24 months from renewal.  Any questions would be directed to the STATE licensing agency.

If you do not complete your renewal by Dec. 31^st, you will need special classes.  LATE CE course.  These are special courses and can only be taken during January and February.  The course name will state for late renewals.  Any education you took in 2011 will not count toward this ‘late CE’ requirement.

Cost to renew depends on the state you are renewing with.  Here is a link to a chart that will give you the costs.

New for Company Compliance Officers: The 2011 CE Handbook

Here is a link to a step by step guide Click here or power point screen-shot guide to renew Click here

•  Start turning in known or suspected fraudsters
• Set ZERO FRAUD TOLLERANCE office policies
• Train employees in Red Flag Rules to identify fraud and identity theft

Analysis of available law enforcement and industry data indicates the top states for known or suspected mortgage fraud activity during 2010 were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland, and New Jersey; reflecting the same demographic market affected by mortgage fraud in 2009.

Fraud hurts everyone in our industry.  Until we get it under control, how can we expect investors to purchase mortgage backed securities and get our lending sources strong?

For more information and to read the FBI report, CLICK HERE!

http://www.fbi.gov/stats-services/publications/mortgage-fraud-2010/2010-mortgage-fraud-report

As of June 30, 2011, 13% of the expected licensees have completed their required renewal education.  To me this is not surprising.  We’ve been providing education for 16 years, and know the majority will be waiting until the last minute or at least the last month.  With many MLOs’ busy schedules and recent reduction of their income, putting out additional funds to pay for education that is not needed until the end of the year is the norm for many licensees.

For those that are budget conscious, please realize that providers are priced down during slow summer months and are likely to raise their prices once you have run out of time to comply.  Simple supply and demand pricing will apply.  Our advice is to take your education now if you want to save money.

For those that procrastinate and are late with their license renewal, you will pay even more for education as you will be required to take special LATE CE classes.  (I think it’s another way NMLS can get additional fees from providers to approve a course.)  Courses that are offered now will not meet the education requirement if you are late with your renewal, SO DON’T MISS the December 31^st 2011 deadline.

What I found most interesting in the newsletter is the total number of licensee.  There are approximately 85,000 state-licensed MLOs, and approximately 98,000 state-registered MLOs (per NMLS 182,880 total as of March 2011).  When SAFE Act passed in 2008, they estimated 350,000 MLOs would pass through the system.  Keep in mind that by 2008 most of the part-time MLOs had left the system.  The cost to join NMLS for the states was based on their licensed MLOs and the cost to handle their licensing compliance.  With a 52% reduction in the number of licensees, I think the states should ask for a partial refund!

After 16 years of providing education for the mortgage industry, we have complied with all the law changes to continue to provide quality education that is informative with useful information that doesn’t waste your time.  The costs of NMLS for the states, MLOs, and providers have been enough to choke a horse.  What are they doing with all the money?  Who is making them accountable?

To add to our expense and taxes we have a new agency the Federal Housing Finance Agency (FHFA) which was created by merging the Federal Housing Finance Board (FHFB) and the Office of Federal Housing Enterprise Oversight (OFHEO).  Both agencies failed to prevent the subprime mortgage crisis, so Washington decided we needed a new agency.  Another new agency created to oversee the mortgage industry is the Consumer Financial Protection Bureau (CFPB) to continue the expense of federal regulations and oversight.  Is this a ploy for Washington bureaucrats to obtain jobs for all their friends and business colleagues?

We have all this oversight, yet per MARI (Mortgage Asset Research Institute) fraud is still a major issue.  The Financial Crimes Enforcement Network (FinCEN) estimates losses at more than $1.5 billion, a total that is still likely to be grossly under-reported.

Here is a link to the report released July 19^th, 2011 for more industry details.  http://mortgage.nationwidelicensingsystem.org/about/Documents/Quarter-1-2011-Licensing-Data.pdf

Here is a link to MARI report.

http://img.en25.com/Web/LexisNexis/MortgageFraudReport-13thEdition.pdf

Your company must ensure the “Other Business” section of your MU1 record is accurate.  All companies that are Fannie Mae or Freddie Mac Approved Seller/Servicers or Ginnie Mae Issuers are required to submit more comprehensive information than other companies. The additional information is substantially similar to information these companies submit as part of the Mortgage Bankers’ Financial Reporting Form.

Here is a link to DOC file explaining the requirements and process.  http://www.corp.ca.gov/FSD/MLO/pdf/CallReports012411.pdf

The NMLS Mortgage Call Report will be filed in addition to the regular reports filed under the California Residential Mortgage Lending Act and the California Finance Lenders Law.

DRE Licensees

The endorsement received to allow you to originate mortgage loans expires December 31, 2011.  The renewal requirements for a MLO license endorsement include a renewal request filed electronically through the NMLS, a renewal fee, and filing evidence of completion of 8 hours of CE on the NMLS.  The course must be from a NMLS approved provider.  Mortgage Trainers of North America is approved provider #1400101.

If your 4 year license renews prior to December 31, 2011, you may complete the 8 hr NMLS education to meet your renewal requirement.  You will have two renewals in 2011.  Once on your DRE anniversary, and again at the end of the year to meet NMLS.  Check with DRE for more details if your 4 year renewal is up in 2011.  In 2012, all licensees will have one renewal, December 31, 2012.

At this time, the 45 CE hours of education for a real estate license will not meet the MLO education requirement.  Real estate courses must be approved through DRE, and MLO education must be approved through NMLS.  There are no provisions for an exemption from the NMLS MLO license endorsement annual CE requirement.

DOC Licensees

All MLOs licensed under DOC require annual renewals by December 31, 2011.  The renewal request is filed electronically through the NMLS, with a renewal fee, and filing evidence of completion of 8 hours of CE on the NMLS.  The course must be from a NMLS approved provider.  Mortgage Trainers of North America is approved provider #1400101.

The year a person obtains their Pre-licensing education and license, they will not renew until the following year.  For instance, MLO obtained their new NMLS license April 2011.  They will renew by December 31, 2012.

Click here to see the information on NAIHP website.

These provisions expand beyond previous HOEPA rate and fee triggers to all residential mortgage loans.   

If the consumer trusted the MLO, he didn’t mind paying more for the services.  It is a common practice in a service industry to pay more for experience and expertise.  Attorneys charge according to their level experience and demand.  Doctors that are specialist charge more for their expertise.  Now mortgage loan originator experience and expertise has been discounted with these new provisions.  The government does not trust the consumer to know what a quality MLO is worth.  The consumer’s wiliness to pay more to have someone helps them work through his difficult situation and overcome lending challenges are gone.  Most consumers with excellent credit, cash to close, and stable income seldom paid excessive fees.  They took their credit seriously, and generally understood competition which encourages shopping.  Now the consumer with the loan challenges and the consumer with the perfect file will likely pay the same amount.  This may cause the perfect file consumer to pay more than he would have prior to this legislation as the lender struggles to get the perfect balance for profitability.

The flat income policy encourages MLOs to produce a larger volume of business.  It is likely the MLOs will look at the time needed for the challenging borrower, and determine his time would be better spent getting another client.  The predicted result, the consumer will suffer by not achieving the ‘American dream of homeownership’.  The challenging borrowers will be left out of the home buying process with few willing to devote the time needed to package their situations into approvals loan files. 

In addition, the consumer lost the flexibility to use YSP and/or upfront fees to better meet his financing budget.  Now it’s all or nothing with YSP, with less pricing flexibility to meet unique consumer financing needs.

This legislation amends TILA with Title XIV of the Wall Street Reform Act.  It establishes certain mortgage loan origination standards.  Section 1403 of the Wall Street Reform Act creates new TILA Section 129B(c), which imposes restrictions on loan originator compensation and on steering by MLOs.  This section was open for commentary, but has seen little change or clarification for the mortgage industry advocates.  Although this legislation is similar to FRB’s rules, this provision further codifies and expands some aspects of TILA reform. 

Wall Street Reform Act added key points or clarifications to TILA legislation:

•       Prohibits acts or practices that are unfair to the consumer
•       Prohibits abusive refinancing practices not in the borrower’s best interest (such as churning)
•       Prohibits MLO from receiving compensation on the loan from both the YSP and the consumer
  • Compensation from the consumer includes no upfront payment to the lender for points or fees on the loan other than true third party fees such as the credit report.
•       Apply to residential mortgage loans, which includes closed-end (like TILA Reform), but exclude open-ended credit such as HELOCs. 
  • With this definition, it does not apply to real estate transactions that do not include a dwelling.  Such as commercial property lending.
  • Excludes certain persons and entities that originate loans.  Creditors that provide seller financing for properties that the originator owns.
•       Apply to Originators who arrange, negotiate, or obtain an extension of mortgage credit for a consumer in return for compensation or gain.

Safe Harbor Provision

In an attempt to clarify the steering provision, the Board established a Safe Harbor Provision.  This requires the MLO to give the consumer three choices for the transaction.  Allowing the consumer a choice:

1. The lowest interest rate
2. The second lowest interest rate (possibly using discount points)
3. The lowest settlement costs (using YSP to offset upfront closing costs)

With the current MLO compensation plans being rolled out over the last weeks, the use of YSP flexibility will be minimal to meet this Safe Harbor Provision.  It seems that MLOs will be given a rate with little or no ability to change.  Will the underwriter or secondary market staff take over the actual locking of the loans?  How will MLOs meet the Safe Harbor provisions without flexibility in loan pricing?

The MLO is considered to have met the anti-steering provision if the MLO has presented the consumer with loan options that provide:

1. The lowest interest rate
2. No risky features, such as a prepayment penalty, negative amortization, or a balloon payment in the first 7 years; and
3. The lowest total dollar amount for origination points or fees and discount points

A surprise to this legislation was in the definition of loan originator.  It included correspondent mortgage brokers who lost their ‘table fund’ protection.  Wholesale lenders that offered mortgage brokers the opportunity to fund loans in their own name, allowed them to not disclose the back-side pricing.  The check (or wire) on the table was often the wholesale lender’s as the loan was purchased on the closing table. 

Normal secondary market transactions purchases the loan after the loan was funded and recorded.  To keep the secondary market definition, the loan may need to be funded and recorded prior to the sale of the Note. 

Works Cited

Board, B. o. (2009, Aug 26). 74 FR 43232.

Board, B. o. (2010). Final rule;official staff commentary. In R. Z, & D. N. R-1366.

HR4173. (2009). http://www.gpo.gov/fdsys/pkg/BILLS-111hr4173enr/pdf/BILLS-111hr4173enr.pdf. Retrieved from Thomas Library.