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4 States Pass License Laws, 1 Closes 87 Companies

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Four states have passed legislation in conjunction with federal mortgage licensing laws signed last year by President Bush, while another state awaits its governor’s signature. Nearly 90 Massachusetts mortgage companies faced cease-and-desist orders because they didn’t comply with stiffer approval requirements in the state.

In Oklahoma, Senate Bill No. 1062 required the Department of Consumer Credit to join the Nationwide Mortgage Licensing System. The state said Friday that it will begin using the system, which requires national registration by each individual originator as well as each company, on Aug. 3.

The state said it will be sending out letters to current and exempt licensees.

New Jersey’s Department of Banking and Insurance distributed Bulletin No. 09-16 last month that The New Jersey Residential Mortgage Lending Act, P.L. 2009, c. 53, was established as required by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

Beginning around Jan. 1, 2010, New Jersey will begin processing license applications under the new state act. Existing licenses under the old procedures will expire by July 31, 2010.

Idaho’s Department of Finance issued a June interpretation of the Idaho Residential Mortgage Practices Act, Idaho Code § 26-31-101 et seq., which goes into effect on July 1 and replaced the old act. In addition to incorporating the required provisions of the S.A.F.E. act, the state act clarifies that originators are individuals who get paid to take a residential loan application.

Under Idaho’s revised act, many who were exempt from licensing under old regulations are now required to register under the nationwide system by July 31, 2010. Originators who were exempt because they were employed by affiliates of financial institutions only have until July 1, 2009, to meet state licensing requirements — though they have until July 31, 2010, to comply with federal S.A.F.E act requirements.

But individuals who hold an Idaho mortgage loan originator license as of June 30 and successfully renew by Dec. 31 will have until Jan. 1, 2011, to satisfy all of the new requirements for licensing under the Idaho S.A.F.E. Act. Originators at federally insured depository institutions will need to register with the national registry but do not need to get a state license.

Kentucky Gov. Steven Beshear signed House Bill 106 in March, an announcement from the state said. The bill, which becomes law this month, puts the state in compliance with the S.A.F.E. act. Kentucky said it has already joined the Nationwide Mortgage Licensing System.

“Additionally, HB 106 complies with S.A.F.E. by setting forth stringent licensing requirements for those who originate mortgage loans,” Kentucky said. “This includes increasing the required pre-licensing education, adding a competency test and requiring originators to be covered by or post a surety bond.”

Over in Missouri, the state’s House of Representatives sent HB 382 to the governor for signing. The bill replaces the Residential Mortgage Brokers License Act with the Missouri Secure and Fair Enforcement for Mortgage Licensing and Residential Mortgage Brokers Licensing Act. The measure increases mortgage regulation and requires originators to register with the national licensing system. Mortgage brokers would be required to demonstrate financial responsibility and pass a written test.

An emergency clause in the Missouri bill will make it effective as soon as it is signed by the governor.

The Division of Banks for the Commonwealth of Massachusetts announced this month that it issued 87 cease-and-desist orders against licensed mortgage lenders and mortgage brokers who failed to provide required financial information and failed to post a bond. Five immediately responded and provided satisfactory evidence that they have a bond.

The mass closings were prompted by stiffer state regulations enacted in September 2007 requiring a $75,000 bond for mortgage brokers as well as formal financial statements. Lenders were required to obtain audited financials and bonds ranging from $100,000 to $500,000. A transition period ended on Dec. 31, 2008.

Even after the deadline, the division gave the state’s 824 licensees another 90 days.

“The companies closed today have had ample opportunity to secure and submit the required bond,” Division of Banks Commissioner Steven L. Antonakes said in the announcement. “Failure to submit a bond could be an indication of the underlying weakness of the company.

“However, given the current state of the mortgage industry, I expect that the unresponsiveness of these companies is a result of their winding down their operations or having already closed. In any event, the division will not tolerate any licensee that has willfully failed to comply with these requirements.”

AllRegs — an advertiser with — announced in April that its coursework meets loan originator continuing education requirements in 11 states. Five instructor-led online courses approved by various states include FHA training, fair lending and reverse mortgages.

Accenture recently announced that it helped Florida’s Office of Financial Regulation implement a significant operational and technology upgrade on-budget and ahead of schedule.

Net branch lender Centurymark Home Loans has formed an alliance with The School of Mortgage Lending to improve education at the branch level, a May 20 announcement said. Two courses were designed for Centurymark employees with the goal of gaining activity participation by loan originators.

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