As state authorities continue to increase mortgage license requirements and take actions against alleged license violations, the number of license holders continues to fall in some states and cities as a result of the decline in housing activity.
Florida has eliminated its in-house mortgage processor licensing requirement. In the process, state law was amended to create a new category of “contract loan processor,” a category which involves the receiving and collecting of information for loan processing and communicating with the consumer to obtain such information.
Loan processors who fit that category are employees of a single licensed mortgage broker or single licensed mortgage lender, and engage only in loan processing. As such, they no longer are required to be licensed. In addition, such individuals must work at the direction of and be subject to the supervision that broker or lender. All other loan processors, including independent contractors who act for a mortgage broker or a mortgage lender and who only engage in loan processing activities, still must be licensed.
Also, under Florida law, all mortgage lenders now are required to submit mortgage call reports or reports of condition to the Nationwide Mortgage Licensing System and Registry.
Mortgage Loan servicers now are required to be licensed in Texas and Montana.
The Texas registration requirement applies to any person or entity who “receives scheduled payments from a borrower under the terms of a residential mortgage loan, including amounts for escrow accounts” and also “makes the payments of principal and interest to the owner of the loan or other third party and makes any other payments with respect to the amounts serviced from the borrower as may be required under the terms of the servicing loan document or servicing contract.”
Registrants are required to file a bond or other collateral of like kind with the Texas Department of Savings and Mortgage Lending, with the amount to be determined by the department’s commissioner. In addition there is a non-refundable $700 application fee.
Texas-regulated loan licensees are exempt but only to the extent that they do not service first-lien Texas loans. Also exempt are state and federal depository institutions.
In Montana, a mortgage servicer license is now required for any entity that “engages, for compensation or gain from another or on its own behalf, in the business of receiving any scheduled periodic payment from a borrower pursuant to the terms of a residential mortgage loan, residential mortgage servicing documents or a residential mortgage servicing contract,” or any entity that meets the definition of “servicer” under RESPA. Applications are available through the NMLS.
Montana license costs are $750 plus a $100 NMLS fee for a main office plus a $250 state fee and a $20 NMLS fee for each branch office. Servicers also must carry a $100,000 surety bond. Credit, criminal and civil background checks are required of control persons and ultimate equity owners.
Lenders and servicers were recently found in violation of state licensing requirements in Georgia and Pennsylvania.
In Georgia, Cornerstone Mortgage Co. has agreed to pay $90,000 in penalties to resolve claims by the Georgia Department of Banking and Finance that the Houston-based firm allowed unlicensed loan officers to originate mortgages.
The department also issued a cease-and-desist order against Pittsburgh-based Fortune Mortgage Co. for engaging in residential mortgage brokering and lending without a state license or without an applicable exemption in violation of a state ordinance. That order became final on Dec. 12.
Cease-and-desist orders against five other lenders became final in December. Those five are Houston-based Allied Home Mortgage Corp.; Strongsville, Ohio-based Axis Financial Group Inc.; Marietta, Ga-based BE Capital Lending LLC; Hammond, La.-based First Access Mortgage Corp.; and Canton, Ga.-based Homeowners Assistance Corp.
In Pennsylvania, David A. Stortz & Associates, P.C. d/b/a Stortz Mortgage Services entered into a consent agreement and order last December with the Department of Banking’s Bureau of Compliance and Licensing and will pay a $500 fine and take corrective action for operating in violation of the Mortgage Licensing Act and the Proper Conduct of Lending and Brokering in the Mortgage Loan Business regulations.
Consent agreements and orders and fines were entered into against 19 other mortgage lending companies during the fourth quarter of 2011, the department reported.
During the third quarter, Pennsylvania’s Department of Banking’s Bureau of Compliance and Licensing suspended 178 mortgage originator licenses, prohibited two individuals from engaging in mortgage business in Pennsylvania, and issued statutory violation orders against 27 companies for engaging in unauthorized mortgage loan activity.
And earlier last year, the department took action against 25 companies for engaging in unlicensed mortgage loan origination activity, four companies for engaging in unlicensed mortgage loan modification activity, and 17 companies for engaging in other unauthorized mortgage loan activity. In addition, the department suspended 158 mortgage originator licenses and prohibited two other individuals from engaging in mortgage business in Pennsylvania.
In Tennessee, the state’s Department of Financial Institutions obtained an order from an administrative law judge against Birmingham, Ala.-based First Choice Funding Inc., ordering them to pay $100,000 in civil monetary penalties for 10 violation of the Tennessee Mortgage Act of 1988, including for a loan originator who was not registered; $1.41 million for 141 other violations of the Tennessee Mortgage Act involving the lack of registration numbers on loans; and to pay a past due examination fee of $11,600. The payment of that $1,521,600 total has since become a final order by operation of law, according to Tennessee Department of Financial Institutions Executive Assistant Neil MacDonald.
New licenses to originate mortgage loans in Colorado, Mississippi and Ohio have been issued to Total Mortgage Services LLC by the appropriate departments in those three states, the Milford, Conn.-based announced. Total says it is now licensed to originated loans in 24 states and the District of Columbia with five additional state licenses pending.
Meanwhile the number of licensed mortgage bankers, mortgage brokers and mortgage loan officers continues to fall.
In California last October, the most recent figures available, there were 144,242 licensed mortgage brokers, down from 148,066 a year ago and 153,015 two years ago, according to figures from the state’s Department of Real Estate.
Ohio’s Division of Financial Institutions estimates there were about 7,900 loan originators in residential mortgage lending in the state in 2006. In 2011 that figure had fallen to about 4,700.
In Houston, during that same five-year period, the number of mortgage bankers, mortgage brokers and loan officers fell more than 60 percent from 24,162 in 2006 to 9,522 last year, according to data from the Texas Department of Savings and Mortgage Lending.
