Monthly Archives: July 2014

Annual CE Season Begins August 1 – What You Need to Know

Within the past year a number of state agencies have also imposed new state-specific PE and CE requirements. In some cases these requirements are part of the 20 or 8 hours as required by the SAFE Act; in a few cases the hours are above the federal requirement. Regardless, when displaying the requirements please be sure to state the required number of hours accurately. As we begin the CE period please keep in mind that many agencies have a CE deadline that is earlier than the renewal deadline. Some agencies like CO, UT-DRE, and NY, also have very specific CE requirements that if not met, may result in the MLO having a license item placed on their record.   All of these requirements are detailed on the State-Specific Education Charts.

MLOs with questions about CE requirements should be directed to review their course completion record. Directions for how to view the record are available in the form of a Quick Guide which is available on the NMLS Resource Center. The education record displays the CE requirement for every license the MLO holds as well as their previous course history. Keep in mind that PE courses do not satisfy CE course requirements and the SAFE Act’s Successive Year Rule prohibits an MLO from taking the same course two years in a row.   NMLS will not remove or modify any records for MLO’s who violate these requirements.

On Friday, August 1, NMLS will place a license item on every MLO license that is not yet compliant for 2014 CE. The license item is a REMINDER to complete CE this year and does not impact the current license status nor is it in response to any previous year’s CE requirements. During the third week of every month between August and December NMLS will also be sending out an e-mail reminder to every MLO who is not yet compliant for annual CE.   NMLS will not be providing CE compliance status reports to course providers or industry.

In order to allow enough time for CE to be reported into the system and for the MLO to file for renewal, NMLS has set SMART Deadlines. This year’s deadlines are:

SMART DEADLINE: CE course(s) reported to NMLS by Friday, December 19
At RISK TO MISS RENEWAL: Course(s) reported to NMLS by Friday, December 26
GUARANTEED TO MISS RENEWAL: Course(s) reported to NMLS on Wednesday, December 31

Ensure Courses and Web Sites are Accurate with Testing & CE Information

In preparation for the start of the annual CE renewal season we have been visiting various course provider web sites and have noted many of them contain old or inaccurate information about the Uniform State Test (UST) and state CE requirements.   Please be advised that the stand-alone UST is no longer available and that a majority of state agencies have now adopted or are in the process of transitioning to the UST.   Detailed information about the UST and other testing requirements are available on the NMLS Resource Center.

Annual CE License Item Being Set August 1

Course providers are advised that on Friday, August 1, 2014, NMLS will place a license item on every MLO license not yet compliant for Continuing Education (CE) for 2014. The purpose of the license item is to remind individuals that they need to complete CE as a condition to renew their license for 2015.

What you need to know if you get calls from students who previously completed CE:

  • An MLO and company will receive an e-mail for every license they hold that is not yet compliant for 2014.
  • The license item does NOT impact a MLO’s current license status or the ability to originate loans; it’s a reminder to complete CE this calendar year.
  • The e-mail and license item does not have anything to do with any CE that has been completed in the past.

If you receive calls from MLOs with questions about CE please encourage them to review the status of their education by logging in to NMLS and clicking “View Education Record.”  If their record shows pending for 2014, then they need need to complete CE.  Directions for how to view the course completion record are available on the Resource Center.

NMLS Seeks Comment on Proposed Pre-Licensure Education Expiration Policy

NMLS is inviting comment on the proposed Pre-Licensure Education Expiration Policy. Implementation of this policy would provide a uniform time-frame related to the expiration of pre-licensure education. More information may be found on the NMLS Resource Center. Comments on the proposed policy are due August 22, 2014.

CFPB Issues Guidance RE: Brokers Shifting to “Mini-Correspondent” Model and Describes Bureau’s Eval of Mini-Correspondent Transactions

The Consumer Financial Protection Bureau (CFPB) is issuing guidance regarding mortgage brokers transitioning to a “mini-correspondent” lender model. The CFPB is concerned that some mortgage brokers may be shifting to the mini-correspondent model under the mistaken belief that identifying themselves as such would automatically exempt them from important consumer protection rules affecting broker compensation. The guidance sets out how the Bureau evaluates mortgage transactions involving mini-correspondent lenders. It confirms who must comply with the broker compensation rules, regardless of how they may describe their business structure.

“Before the financial crisis, consumers seeking mortgages were steered toward high-cost and risky loans that were not in the consumer’s interest,” said CFPB Director Richard Cordray. “The CFPB’s rules on mortgage broker compensation are intended to protect consumers from this type of abuse. Today we are putting companies on notice that they cannot avoid those rules by calling themselves by a different name.”

Mortgage brokers connect borrowers with lenders who underwrite and fund loans. In contrast, a correspondent lender, as generally understood in the mortgage industry, processes applications, provides legally required disclosures, frequently underwrites the loans, makes the final credit approval decision, funds the loans, and sells them to investors.

In January 2014, new CFPB mortgage rules took effect protecting home buyers from risky lending practices. Building upon regulations issued by the Federal Reserve Board in 2010, the rules provide important consumer protections by prohibiting financial incentives for brokers to push borrowers toward risky loans. They also require lenders to include mortgage broker compensation in calculations determining whether a loan meets certain consumer protection standards.

The CFPB is concerned that some mortgage brokers may be setting up arrangements with investors in which the broker claims to be a “mini-correspondent lender,” when in fact the broker is still essentially just facilitating a transaction between a borrower and a lender. While some brokers may be setting up such arrangements because they intend to grow into full correspondent lenders, the Bureau is concerned that other brokers may simply be attempting to evade consumer protection rules. Today’s guidance confirms that mortgage brokers who merely choose to describe themselves as mini-correspondent lenders are not automatically exempt from applicable consumer protection requirements.

The guidance sets out some of the questions the CFPB may consider in evaluating mortgage transactions involving mini-correspondent lenders in order to understand their true nature. This evaluation involves examining how the mini-correspondent lender is structured and operating, for example: whether it is continuing to broker loans; its sources of funding; whether it funds its loans through a bona fide warehouse line of credit; its relationship with its investors; and its involvement in mortgage origination activities such as loan processing, underwriting, and making the final credit approval decision.

The guidance makes clear that no single question necessarily determines how the CFPB may exercise its supervisory and enforcement authorities, and that the facts and circumstances of the particular mortgage transaction being reviewed would be relevant to how the Bureau exercises these authorities.

CFPB Issues Memorandum on Ensuring Equal Treatment for Same-Sex Married Couples

Course providers are advised that on June 25, 2014, the CFPB issued guidance on equal treatment for legally married same-sex couples.  According to the memorandum, the CFPB will use and interpret the terms “spouse,” “marriage,” “married,” “husband,” “wife,” and other similar terms related to family or marital status in statutes, regulations, and policies administered, enforced, or interpreted by the Bureau to include same-sex marriages and married same-sex spouses. The Bureau applies this policy to:

1) Equal Credit Opportunity Act (ECOA) and Regulation B
2) Fair Debt Collection Practices Act (FDCPA)
3) Interstate Land Sales Disclosure Act (ILSA) and Regulation J
4) Truth in Lending Act (TILA) and Regulation Z

Essentially, same-sex couples who married in states where such marriages are legal, but live in or moved to a state that does not recognize these marriages are considered “married” for the purposes of the statutes and regulations administered and enforced by the CFPB.  The complete memorandum is available on the CFPB’s web site.

New Education Notice for CT Posted; HI Notice Revised

The Connecticut Department of Banking (CT-DOB) has informed NMLS that in accordance with recently enacted Connecticut legislation, individuals seeking to obtain a MLO license with the CT-DOB will be required to complete one (1) hour of Connecticut state-specific PE as of October 1, 2014. This requirement is in addition to the existing PE requirements in Connecticut; thus, the total number of required PE hours has increased by one (1) hour to 21. Additionally, MLOs seeking to maintain an MLO license will be required to complete one (1) hour of Connecticut state-specific CE as a condition for licensure renewal beginning January 1, 2015.

The Hawaii Division of Financial Institutions (HI-DFI) has updated its Education Notice. The notice advises that upon completion of the pre-licensing education, an individual has up to twelve (12) months to submit an application for licensure as a mortgage loan originator. An individual who submits an application after the twelve months have expired will be required to repeat the 20hrs pre-licensing education requirements.

NMLS has posted a new CT Education Notice and the updated HI Education Notice explaining in detail the new education requirements. Course providers intending to offer courses to meet the new requirements need to pay close attention to the details contained in the notice. The notice may be found on the course provider section of the NMLS Resource Center under the section Important Policy Information.