Transcript Residential Mortgage Lending Act

Louisiana Office of Financial
Institutions
Louisiana Secure and Fair Enforcement of
Mortgage Licensing Act of 2009
Or
Louisiana S.A.F.E. Residential Mortgage Lending
Act
Federal S.A.F.E. Act





Congress passed federal legislation titled:
Secure and Fair Enforcement for Mortgage
Licensing Act of 2008
Established minimum licensing guidelines for
originators.
Effective July 31, 2008
www.csbs.org –SAFE Mortgage Licensing Act
Louisiana S.A.F.E. Residential
Mortgage Lending Act

HB 810 of 2009 Regular Session of the
Louisiana legislature became Act 522

LSA-R.S. 6:1081 through 6:1099

Enacted effective July 31, 2009

Provides for licensure of mortgage
originators, brokers, and lenders
OFI’s Web Address

Download a copy of the new statute
 www.ofi.louisiana.gov
Definitions
1083

“Mortgage Loan Originator”

means an individual who for
compensation or gain or with the
expectation of compensation or gain
takes a residential mortgage loan
application or offers or negotiates terms
of a residential mortgage loan.
Definitions

Residential Mortgage Loan
–
Any loan primarily for personal, family, or
household use that is secured by a
mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling
as defined in Reg Z or residential
immovable property upon which is
constructed or intended to be constructed
a dwelling as defined in Reg Z
Definitions

Residential Mortgage Loan
Now covers all loans secured by a
persons dwelling including:
–
–
–
–
Mobile home loans without a security interest
in the land
Motor homes used as the person’s dwelling
Boats if used as the person’s dwelling
Vacant land if to be used to construct or move
a person’s residence on it
R.S. 6:1086

The following persons shall have until
July 31, 2010 to obtain a license in
compliance with the Act:
–
–
A person whose activities were not subject to
the licensing provisions of this Act on July 30,
2009
A person engaged in residential mortgage
lending activities which was subject to an
exemption provided by this Chapter on July
30, 2009
Originator Exemptions
Loan Processor or Underwriter


An individual engaging solely in loan processor
or underwriting activities, who does not
represent to the public, through advertising or
other means including the use of business cards,
stationary, brochures, signs, rate lists, or other
promotional items, that such individual can or
will perform any of the activities of a mortgage
originator.
Defined as a person who performs clerical or
support duties as an employee at the
direction of and subject to the supervision of a
person licensed or exempt from the Act.
Originator Exemptions
Loan Processor or Underwriter

Clerical or Support Duties include
subsequent to receipt of an application:
–
–
Receipt, collection, distribution, and analysis or
information common for the processing or
underwriting of a residential mortgage loan
Communicating with a consumer to obtain the
information necessary for the processing or
underwriting of a loan, to the extent that such
communication does not include offering or
negotiating loan rates or terms, or counseling
consumers about residential loan rates or terms
MLO Requirements for a new License


Effective July 31, 2009
Complete 24 hours of pre-licensing education
approved by NMLS&R (4 hours must also be
approved by either NAMB or MBA) also a
minimum of each of the following
– 3 hours of federal law and regulations
– 3 hours of ethics including fraud, consumer
protection, and fair lending
– 2 hours of training relating to non-traditional
mortgage marketplace
– 16 hours of electives
Requirements for Licensing


Pass the NMLS&R approved written
examination with both national and state
components
Obtain and maintain a surety bond or deposit
account pledged to the commissioner
– Originators may be covered by a Surety Bond
obtained by their employer or deposit account
– Obtain documents from NMLS&R
NMLS Resource Center Page
www.nationwidelicensingsystem.org
State Specific Requirements
State Specific Requirements
(cont’d)
Application Checklist
Company New License Check list
Restrictions on granting Licenses
1088(E)




Paid all fees due to OFI
Never had a mortgage related license revoked in
any governmental jurisdiction
Never convicted, pled guilty, or nolo contendere
to a felony involving fraud, dishonesty, breach of
trust, or money laundering
Not convicted, pled guilty, or nolo contendere to
ANY felony within the last seven years
Surety Bond / Deposit

Each applicant for licensure must provide one of
the following in an amount which is determined
by loan volume:
–
Surety Bond based upon loan volume from the
previous year:
 $0 to $99,999,999 bond amount of $25,000
 $100,000,000 or greater bond amount of $50,000
 Employer may obtain coverage for employees
–
Pledged deposit in federally insured
institution located in Louisiana in the amount
of Surety Bond otherwise required
–
For initial license, bond or deposit must be at least
$25,000
Surety Bond / Deposit


S.A.F.E. requires all originators to be covered by
a surety bond. However, employers may supply
the bond for the originator.
The employer must file with OFI an “Employer
Certification Affidavit” for every originator.
www.stateregulatroyregistry.org/nmls and
click on the state license resource page, LA, new
originator application and scroll down to bond
information.
Application Fees


New Mortgage Broker, Lender
–
Each Branch (other than main office)
$400
$100
–
Renewal Fee (main office only)
$300
New Originators
$100
Renewal Fee
$100
–
RENEWALS

Renewal period in the NMLS&R begins
November 1st each year. Renewal tab appears
and licensee attests that information is correct
and pay fees.

Renewal is late if submitted in NMLS&R after
December 31st but before March 1st.
–
–

Broker/Lender late fee $200
Originator late fee
$ 50
Licenses Expire January 1 unless all
requirements are satisfied before March 1.
Continuing Education
1094 B

Each licensed originator must complete 10 hours of
NMLS&R approved continuing education each year
prior to renewal – 2 hours must be NAMB or MBA
– 3 hours of education pertaining to federal laws and
regulations
– 2 hours of ethics, which shall include instruction on
fraud, consumer protection, and fair lending issues
– 2 hours related to lending standards for the
nontraditional mortgage product marketplace
– 3 hours of electives
Continuing Education for 2009

HOWEVER specific content will not be required
until Commissioner determines that CE through
the NMLS&R is adequately available for all
Louisiana licensees to become compliant
–
Anticipated in early 2010
–
Any 10 hours of education approved by OFI
will be sufficient for renewal of an originator
license for 2010
–
DO NOT GO TO NMLS&R IN 2009 FOR CE !!
Testing Requirements
1094.1



ALL licensed originators must obtain a passing
grade of at least 75% on both the National and
State Components of the S.A.F.E. compliant test
developed by the NMLS&R
All new applicants on or after July 31, 2009 must
obtain a passing grade on both components of the
test before obtaining a license
Originators which were licensed on or before July
30, 2009 must obtain a passing grade on both
components prior to renewal 2010
Testing Requirements
State Component Exemption
Everyone has to pass the National Portion
of the SAFE test prior to renewal 2010.
 Only Originators with a passing grade on
State test between 1/01/04 – 7/30/09 may be
eligible for an exemption from the state test
Take the National & State portions early 
–
A passing score is 75% correct answers
Testing Requirements
Failing Grades


An individual may retake one or both of
the components of the test up to three
consecutive times after waiting at least
thirty days between tests
After failing three consecutive tests the
individual must wait at least six months
before taking a test again
–
[ Don’t wait to take the test. ]
Requirement to
Retake Examinations

An originator who fails to maintain a
license for a period of five years or longer
will be required to obtain a passing grade
on both components prior to obtaining a
license
Requirements for a new applicant
1094 A

Create a base record in the NMLS&R

24 hours of NMLS&R approved Prelicensure
Education taken from a NMLS&R approved
provider. 24 hours must include at least 4
hours of courses approved by either NAMB or
MBA with verification sent to OFI.
Must pass both the Louisiana specific portion
and national portion of the S.A.F.E. test.

NMLS Resource Center Page
www.stateregulatoryregistry.org/nmls
Test & Education Information
Test Button
Find a Test Center
Prohibition on Finance of
Single Premium Insurance


No mortgage lender shall finance or include
in the loan amount any single premium credit
life, dismemberment, health and accident,
mortgage life and disability, involuntary
unemployment, or debt cancellation
insurance sold in connection with a
residential mortgage loan transaction
Financing of Single Premium Private
Mortgage Insurance Not Prohibited
Exceptions To Prohibition on Finance
of Single Premium Insurance

The prohibition on financing of single
premium credit insurance does not apply
to the following:
–
–
Loans with a principal balance of $50,000 or
less
Loans where the portion of the original
principal balance attributable to the insurance
premiums is scheduled to be fully amortized
no later than the coverage expiration date of
the insurance product.
NMLS&R Call Center and Website

If you need assistance or have a question about
how to navigate in the system, make changes
to your record, payment of fees or submit
renewals you should contact the Call Center.
 (240)
386-4444
 www.stateregulatoryregistry.org

View or navigate the site
Please Remember !!!!!!

Keep your company information updated
–
–
–
–
–
Company & Contact person Email
addresses
Officers, Owners, % ownership
Branches
Originators – Relationship & Sponsorship
This is an electronic system utilizing
internet communication. Your license
depends on it.