Monthly Archives: March 2011

Advisory Regarding New LO Compensation Rules and the SAFE MLO Test

As has been mentioned in previous Newsletter postings, new loan officer compensation rules are scheduled to go into effect April 1, 2011.  As a result of the new rules, beginning on April 1, 2011 and until further notice, MLOs taking the test are to be advised that the Rules of Conduct, which are presented at the start of every test component, will be prefaced with the following notice:


I. Notice– Regulation Z: Loan Originator Compensation and Steering

On April 1, 2011, changes to Regulation Z: Loan Originator Compensation and Steering 12 CFR 226 are effective.  These changes are not reflected in the test question content at this time.  If you receive any questions on your test pertaining to Regulation Z 12 CFR 226 or loan officer compensation referenced in your state statutes or regulations, you should answer the questions based on the statutes and regulations that were in effect on March 31, 2011.

MLO candidates are required to read and electronically accept these rules, including the notice above, before they are permitted to begin taking the test.

Reported Problems Uploading Student Course Completions

NMLS has received reports from a few providers who are having trouble uploading a student’s course completion.  The problem has been isolated to problem that occurred on March 15 when a process to upload newly generated NMLS ID numbers into the PearsonVue database failed.  NMLS is working with PearsonVue to process the file and we expect the problem to be corrected on Thursday, March 24.

What do to if you are unable to credit bank a student: If, during the credit banking process, you encounter a message that says the NMLS ID number of an individual does not exist, please take the following steps:

–          Verify that the student provided their correct NMLS ID number.

–          If the number is correct and you are still unable to credit bank, send an e-mail message to Alan Ridenour ( informing of the student’s name, ID number, your organization’s name, and the date of the course completion.

–          NMLS will verify the problem and will provide follow-up instructions.

–          Continue to process any other student course completions as normal.

Always Available When You Need Assistance, Course Provider User Guides Provide Answers to Questions

Have a question about how to submit a form; a course approval package, or how to report course completions?  NMLS has a user guide that can answer your question!   Several course provider user guides have been written and are available in the NMLS Resource Center that provide step-by-step instructions for how to complete each of the business processes associated with becoming a course provider and managing through the course approval and renewal processes.  The user guides also include screen captures from the online portals, and they provide alerts for where close attention to detail is required.  The following user guides are currently available:

–          User Guide: Course Provider Application Process

–          User Guide: NMLS Course Approval Application Process, Account Set-up & Maintain Course Offering

–          User Guide: Reporting of NMLS Course Completions (Credit Banking)

–          User Guide: NMLS Approved Course Renewal Process

–          User Guide: NMLS Approved Course Provider Renewal Process (coming in April)

Each of the user guides listed above are maintained by NLMS staff and incorporate changes to workflow or policy updates.  Additionally, the user guide on the course renewal process also includes an annex of key changes that have been enacted in federal laws and can serve as a useful reference guide to ensure content is up-to-date prior to submitting a course for renewal.  All of the user guides are in pdf format can be found in the course provider section of the NMLS Resource Center at:

New Info from HUD Regarding RESPA and New LO Compensation Rules

The HUD RESPA Office has issued compliance guidance for RESPA as it applies to the Federal Reserve Board’s new MLO Compensation rule.  The new guidance attempts to clarify RESPA requirements related to proper disclosure on the GFE and HUD-1 settlement statement.  However, the guidance does not address the major issues related to restrictions on mortgage loan originator compensation that remain within the jurisdiction of Federal Reserve Board.  The new guidance is fairly lengthy and includes various compensation scenarios and completed form examples.  Course providers teaching RESPA and how to complete the new GFE and HUD-1 should become familiar with this document.  A copy of the guidance may be accessed at:

FHA Annual Premium Increase Effective April 18, 2011

FHA Annual Premium Increase Effective April 18, 2011

Effective April 18, the Federal Housing Administration (FHA) is increasing the Annual Mortgage Insurance Premiums for forward mortgage.   Please note that the increase is effective for FHA case numbers assigned on or after April 18, 2011.

The charts below illustrate the 25 basis points (bps) increase in the Annual Mortgage Insurance Premiums. There are no changes to the Upfront Mortgage Insurance Premium (UFMIP).

Effective for FHA loans for which the case number is assigned on or after April 18, 2011, FHA will increase the annual premiums collected on a monthly basis. For FHA traditional purchase and refinance products, the annual premium, shown in basis points below, is to be remitted on a monthly basis, and will be charged based on the initial loan-to-value ratio and length of the mortgage according to the following schedule:

LTV Annual Premiums for Loans > 15 Years ML 2011-10
= or < 95 percent 110 BPS
>95 percent 115 BPS

The annual premium for amortization terms equal to or less than 15 years remains unchanged and is collected according to the following schedule.

LTV Annual Premiums for Loans > 15 Years ML 2011-10
= or < 90 percent 25 BPS
> 90 percent 50 BPS

Course providers offering FHA courses should update their course material accordingly.  Additional details and specifics can be found on the HUD web site at:

Important Change to File Format for Credit Banking

Course providers who use the “upload” process (using and Excel spreadsheet and .csv file) are advised that there has been a change” to the Excel file format.   The updated file format addresses a problem that been discovered with the awarding of instructor credit.  (Note: that instructor credit is to only be awarded using the “submit” process and not the “upload” process).  Providers are requested to make changes to their Excel file set-up as soon as possible.  Specific details and examples of the new file format are contained in the User Guide: Reporting of NMLS Approved Course Completions which is available in the NMLS Resource Center at:

How to Keep Abreast of Changes in Mortgage Law as a Result of Dodd-Frank and the Consumer Finance Protection Bureau

To say that there are significant changes occurring in the mortgage industry is an understatement.  The 2009-2010 implementations of the licensing requirements associated with the SAFE Act was a significant undertaking, and now there are new rules and regulations being drafted and implemented to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  As never before, new and existing MLOs are becoming increasingly dependent on their course providers to help keep them abreast of changes.  And, as never before, keeping course material current and accurate is becoming vital.

NMLS is committed to working with all course providers to help ensure information pertaining to state and federal residential mortgage lending laws are as up-to-date as possible.   As we have in the past, as we receive information pertaining to pending/enacted changes to state and federal mortgage-related laws and regulations we will disseminate the information to all providers via the Newsletter.  We will also do our best to inform the provider community when we expect content changes to be fully incorporated in course materials.  Ultimately, however, it is the responsibility of all course providers to ensure MLOs are being presented with the right information necessary to perform successfully within the industry.

The rule making process associated with interpreting, reconciling, and then communicating the various nuances of federal laws like the SAFE Act and Dodd-Frank create periods of significant fluidity and uncertainty (note that the final rules pertaining to the SAFE Act, which was passed in 2008, have still not been promulgated).  While we are pretty certain we will not have answers to all the questions that may come about as a result of pending changes, we will do our best to find answers to questions and/or to marry provides with the right resource(s) to find answers.   Accordingly, here are some good resources to keep abreast of changes pertaining to the Dodd-Frank Act:

–          Dodd-Frank Regulatory Reform Rules: an excellent web site with frequent updates maintained by the Federal Reserve Bank of St. Louis and lists rules categorized by open for comment, proposed, interim final, and final rules and notices.

–          Regulatory Reform: web site maintained by the Board of Governors of the Federal Reserve System, provides links to proposed and final rules pertaining to mortgage and banking reform.

–          HUD Office of Risk Management and Regulatory Affairs (SAFE Act office): this site maintains information and links pertaining to the implementation of the SAFE Act including a link to FAQs and the SAFE Act Proposed Rule.

–          Guide to The Dodd-Frank Act: Written by Inside Mortgage Finance, this 134 page document explains all aspects of the Dodd-Frank Act and its impact on the mortgage industry.  It can be ordered online at:

Questions pertaining to course content required in NMLS approved courses should be directed to Rich Madison, Sr. Director, Mortgage Education Programs at