The share of states implementing federal requirements for mortgage licenses has reached 100 percent. The number of U.S. loan originators being tracked exceeds 100,000. Several states have updated or clarified their licensing requirements, while one state has issued a black list. In addition to firms in New Jersey and Connecticut, 24 licensees in Pennsylvania recently faced license-related actions by state regulators.
A July 28 Federal Register filing indicated that a final rule to implement the Secure and Fair Enforcement for Mortgage Licensing Act was adopted by federal regulators. Those regulators include the Farm Credit Administration, Federal Deposit Insurance Corp., Board of Governors of the Federal Reserve System, National Credit Union Administration, Office of the Comptroller of the Currency and Office of Thrift Supervision. (read full Final Rule)
Hawaii joined the Nationwide Mortgage Licensing System and Registry on Oct. 18, according to a newsletter from Patton Boggs LLP. Hawaii's participation marks full participation in the registry by all 50 states. NMLS now includes 58 state agencies from all 50 states, the District of Columbia and the territories of Puerto Rico and the U.S. Virgin Islands.
Nearly 16,000 mortgage companies and 126,000 loan originators have been tracked to date by the NMLS.
The New York State Banking Department issued an Oct. 20 industry letter clarifying that when exempt financial institutions service their own portfolio mortgages or service loans owned by third parties, they are considered mortgage loan servicers, Washington, D.C.-based Patton Boggs reported. New York's banking law does not require an exempt organization that makes and services mortgages to register as a servicer. But the state clarified that such firms must notify the superintendent that they are acting as servicers and comply with related regulations including the newly enacted Conduct of Business Rules for Mortgage Loan Servicers effective as of Oct. 1.
New York's banking department granted a mortgage banker license to Total Mortgage Services LLC, an announcement Tuesday from the Milford, Conn.-based company said. Total Mortgage claims that it offers " some of the lowest mortgage rates in New York on jumbo loans, FHA-insured mortgages, 30-year fixed-rate mortgages, and adjustable-rate mortgages."
A cease-and-desist order was issued in July by the New Jersey Department of Banking and Insurance against Hawthorne Capital Corp., which originated $42 million last year. The state sought to put the company out of business and was in the process of revoking its mortgage lending license.
According to New Jersey, Hawthorne had already been hit with a $41,000 fine. In July, with search-and-seizure warrants in hand, the Monmouth County Prosecutor's Office raided the company's offices and subsequently made arrests. The state said that investigators "discovered a litany of unpaid mortgage settlements, closing payments returned for insufficient funds and a myriad of other violations."
In Harrisburg, Pa., the Department of Banking's Bureau of Compliance, Investigation and Licensing reported that 24 orders for unlicensed mortgage activity were issued during its first three-month period since launching. Associated fines totaled $456,250.
An effective lobbying campaign by Patton Boggs prompted the Florida Office of Financial Regulation to reverse its policy that all underwriters, including W-2 employees who exclusively engage in underwriting activities in connection with retail or wholesale mortgages, be required to be individually licensed as loan originators. The company recently announced the victory.
Patton Boggs said W-2 underwriters are exempt from licensing if their business activities are limited to analyzing and approving mortgages, their employer holds a mortgage lender license and they only underwrite loans that will be made by their employers. They also need to be supervised by a licensed loan originator.
Colorado Gov. Bill Ritter recently appointed Julie I. Piepho to the Board of Mortgage Loan Originators. Also appointed were Cheryl L. Dingwell-Keckritz and Leslie J. Mitchell. Terms for all three end on Aug. 10, 2012, according to a news release. In addition, Rosemary Marshall and Billy Glenn Bartholomew were appointed to terms expiring Aug. 10, 2014.
The board includes five members and is responsible for licensing originators, registering mortgage companies and enforcing state license laws. It also investigates complaints and disciplines licensees.
The Kansas Office of State Bank Commissioner- Division of Consumer and Mortgage Lending regularly issues an Unauthorized Companies and Individuals. Those listed "are not authorized to engage in consumer lending or mortgage business activities, including lending, brokering, servicing or loan origination activities in the state of Kansas." (read full Unauthorized Companies and Individuals list as of Nov. 5)
California SB 1137 amends existing laws by requiring mortgage originator licenses to expire at midnight on Dec. 31 instead of Jan. 31, 2011, if a licensee fails to satisfy the minimum standards for license renewal, Patton Boggs said. The bill additionally amends existing net worth requirements for finance lender and broker licensees, which must now maintain a net worth of $250,000 if they employ one or more mortgage loan originators -- the sole requirement under the former law -- and make residential mortgage loans. Finance broker licensees that employ one or more mortgage loan originators and arrange, but do not finance, residential loans, must maintain a $50,000 net worth.
"Finally, the bill authorizes the commissioner to, by rule, require a higher bond amount for a licensee who employs one or more mortgage loan originators and who makes or arranges residential mortgage loans," Patton Boggs stated. "Existing law presently requires each finance lender and broker licensee to maintain a surety bond in a minimum amount of $25,000."
Allied Financial Services LLC's license was revoked in Connecticut because of multiple orders against the Norwalk, Conn.-based broker and because it didn't show up at a hearing, according to James Heckman, Legislative Director for Connecticut's Department of Banking. Heckman told Mortgage Daily that Allied is not connected to Houston-based Allied Home Mortgage Capital Corp.
In Nevada, Patton Boggs said that the Division of Mortgage Lending recently issued regulations R035-10 and R038-10. The regulations, which implement and clarify certain requirements of the federal SAFE act that were not expressly included in Nevada's SAFE Act statutes, apply to mortgage brokers, mortgage bankers, mortgage agents and exempt entities.
Nevada clarified that independent contractors acting as loan processors or underwriters, must obtain a license as a mortgage agent. The regulations also require that the unique identifier of any person originating a residential loan be clearly shown on all loan application forms, solicitations or advertisements as well as Web sites and business cards.
The number of mortgage companies operating in Tennessee has fallen to around 600 from 1,600 in 2007, the head of state's Department of Financial Institutions said according to the Nashville Business Journal. The number of loan originators has tumbled to 3,600 from 17,000.
Nebraska recently began implementing SAFE requirements and had granted 648 licenses as of the end of July, the Associated Press reported.