Conference of State Bank Supervisors (“CSBS”) Media Release and Ohio Legislative Update

Conference of State Bank Supervisors (“CSBS”) Media Release and Ohio Legislative Update

On January 16, 2013, the CSBS issued a media release announcing that a new, national Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the “SAFE Act”) mortgage loan originator test with a uniform state component (the “Test”) will be available on April 1, 2013.  The Ohio legislature recently enacted legislation permitting temporary licensing of mortgage loan originators.  This legislation is effective March 19, 2013.

Conference of State Bank Supervisors (“CSBS”) Media Release

 

 

With the implementation of the Test, twenty state agencies – Delaware, Georgia, Idaho, the Indiana Department of Financial Institutions, Iowa, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, New Hampshire, North Carolina, North Dakota, Pennsylvania, South Dakota, the Texas Office of the Consumer Credit Commissioner, the Utah Department of Financial Institutions, Virginia, Washington, and Wisconsin – will no longer require a state-specific test component as of April 1, 2013.  Additionally, four state agencies – Alaska, Kansas, Nebraska, and Vermont – will remove their requirement for a state-specific component on July 1, 2013.   Remaining state agencies will continue to require state-specific test components, and additional states are eventually expected to adopt the Test.

 

 

The SAFE Act requires mortgage loan originators to pass a SAFE mortgage loan originator test before they can be licensed with a state agency through the Nationwide Mortgage Licensing System and Registry (“NMLS”).  The test was comprised of two parts: a national component and a state component.  In addition to passing the national component, mortgage loan originators seeking to hold licenses in multiple states were required to pass the state component for each state in which they wish to conduct business.  Under the Test, a license applicant who passes the Test need not take any additional state-specific tests to hold a license with the 24 state agencies listed above.

 

 

More information on the Test is available on the NMLS website at:

http://mortgage.nationwidelicensingsystem.org/profreq/testing/Pages/UniformStateTest.aspx.

 

Ohio Senate Bill 333

 

 

An individual who holds a valid temporary mortgage loan originator license may engage in the business of a mortgage loan originator during the term of the temporary license.

 

 

“Out-of-state mortgage loan originator” means an individual to whom both the following apply:

  • The individual holds a valid mortgage loan originator license, or comparable authority, issued pursuant to the law of any other state of the United States.
  • The individual is registered, fingerprinted, and maintains a unique identifier through the NMLS.

 

“Sponsor” means a registrant or entity that employs or is associated with an applicant for a temporary mortgage loan originator license and, during the term of the applicant’s temporary license, covers the applicant under its corporate surety bond or requires the applicant to obtain and maintain a corporate surety bond.

 

 

The Superintendent of Financial Institutions (the “Superintendent”) may issue to an out-of-state mortgage loan originator a temporary mortgage loan originator license that enables the licensee to engage in the business of a mortgage loan originator while the individual completes the requirements necessary for obtaining a mortgage loan originator license.  A temporary mortgage loan originator license will be valid for a term of not more than 120 days from the date of issuance.  A temporary mortgage loan originator license may not be renewed.

 

 

An application for a temporary mortgage loan originator license must be in writing, under oath, and in a form that meets the NMLS requirements.  The application must be accompanied by a nonrefundable application fee, the amount of which will be determined by the Superintendent’s rule, and a certification that, as of the date of the application, the applicant meets the following conditions:

·        The applicant has had at least 2 years of experience in the field of residential mortgage lending in the 5 years immediately preceding the date of application for the temporary mortgage loan originator license.

·        The applicant has not previously applied for a temporary mortgage loan originator license in Ohio.

·        The applicant has not had a mortgage loan originator license, or comparable authority, revoked in any governmental jurisdiction.  A subsequent formal vacation of such a revocation will not be considered a revocation.

·        The applicant has not been convicted of, or pled guilty or no contest to, any of the following in a domestic, foreign, or military court:

o       During the 7-year period immediately preceding the date of application, a misdemeanor involving theft or any felony;

o       At any time prior to the date of application, a felony involving an act of fraud, dishonesty, a breach of trust, theft, or money laundering.

 

 

Any conviction for which the applicant has received a pardon will not be considered a conviction.

 

 

The Superintendent will issue a temporary mortgage loan originator license to the applicant if the Superintendent finds that all of the following conditions are met:

  • The application is accompanied by the application fee and the required certification.
  • The applicant is registered, fingerprinted, and has a valid unique identifier through the NMLS as of the date of application.
  • The applicant has authorized the NMLS to obtain a credit report for submission to the Superintendent.
  • The applicant has a sponsor that certifies employment of, or association with, the applicant, and has signed the application.

 

The sponsor of a temporary licensee will have an affirmative duty to supervise the conduct of each temporary mortgage loan originator in the same manner as is required of its other licensees.  If the temporary licensee’s employment or association with the sponsor is terminated, the sponsor must notify the Division of Financial Institutions (the “Division”) of the termination through the NMLS.  Upon the Division’s receipt of the notice, the sponsor will no longer be held responsible for the conduct of the temporary licensee.

 

 

The Superintendent may adopt rules necessary for the implementation and operation of the above provisions.

 

 

If the federal SAFE Act is modified after March 19, 2013, or any regulation, statement, or position is adopted under the SAFE Act, to permit states to issue a temporary mortgage loan originator license to a registered mortgage loan originator, the Superintendent must adopt rules the Superintendent considers necessary and appropriate to issue a temporary license to a registered mortgage loan originator.