Reciprocity and Transitional Licensing of Out-of-State Loan Originators. Ken Markison, MBA Regulatory Counsel AARMR Conference 2012

Transcription

1 Reciprocity and Transitional Licensing of Out-of-State Loan Originators Ken Markison, MBA Regulatory Counsel AARMR Conference 2012

2 Background April 19, 2012, CFPB reiterated that states may recognize licenses of other states (Bulletin ) States may grant transitional licenses to out-of-state licensed originators CFPB indicated grant of transitional license to registered originators would require rule change MBA on behalf of state licensees is seeking recognition or at least transitional licensing of state licensed and registered MLOs by all states 2

3 Concerns Unavailability of reciprocity in state licensing disadvantages state-regulated lenders in recruitment of well-qualified LOs States generally do not allow well-qualified loan originators to operate in a state until they are licensed in that state State-regulated entities may not hire and put to work well-qualified out-of state originators to serve the public until the licensing process is completed Federally regulated entities may hire well-qualified originators of state regulated entities and have them serve consumers immediately in any state 3

4 Why a Solution is Necessary: Competitive issues - state system less attractive Negative effect on State licensed entities(small businesses) Delays in allowing well-qualified licensed individuals to operate are unwarranted assuming proper safeguards Licensed originators of neighboring states should be recognized to facilitate operations of state system Tennessee adjoins 8 other states seamless as possible 4

5 Recognition or Transitional Licensing Recognition of Out-of-State License: State licensed loan originator Moves to new state OR Lends in multiple states State can grant license based on satisfaction of out-ofstate requirements Transitional Licensing: State licensed loan originator Certified and Sponsored by licensed employer Meets transitional qualifications and issued a transitional license Authorized to work as LO for up to 120 days Completes any state specific licensing requirements Issued state license 5

6 Possible Qualifications Per CFPB Bulletin, if additional qualifications needed, limited to originator needing some or all of the following requirements: 1. Be employed for a reasonable period as MLO in a state system; 2. Certify that he/she has not had license revoked, been convicted of a felony in the last 7 years or ever involving fraud, dishonesty, breach of trust, money laundering; 3. Have a unique identifier registered in NMLS with fingerprints on file; 4. Be sponsored by a NMLS-licensed company (sponsor) that covers applicant under surety bond or contribution to a state fund during transitional license; 5. Provide reasonable fee established by State in a reasonable amount [not exceeding $100]; 6. Authorize NMLS to obtain credit report; and, 7. Apply on a standard national form. 6

7 Conditions of Transitional License Transitional License effective for [reasonable amount of time] minimum of 120 days Applicant must complete all other appropriate pre-licensing education and testing requirements during that time Applicant who is rejected during that time or fails requirements and cannot pass test during time, loses transitional license 7

8 Next Steps: Conversation between MBA and regulators led to development of proposal to address concerns and we will do more Some states may do this regulatorily, some may require a statutory change MBA will assist on statutory and regulatory language as needed We have worked hard on this and will continue to do so 8

9 Conclusion This is a relatively small change which can reduce pressures on state regulated entities, further competition while protecting and enhancing service to consumers Our ask is for your support Thank you for your time We appreciate your questions? For Further Information: Ken Markison (202) kmarkison@mortgagebankers.org Willam Kooper (202) wkooper@mortgagebankers.org 9