Georgia Regulations

24 Sep Georgia Regulations

Posted at 12:11h in Compliance Alerts by

Georgia Mortgage Division Rules (effective September 7, 2009)

 

The Georgia Department of Banking and Finance Mortgage Division (the “Department”) has recently amended its Mortgage Division Rules related to financial institutions and residential mortgage brokers and lenders and adopted a new rule regulating mortgage loan originator licensure and other requirements to comply with the Federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (the “S.A.F.E. Act”).  If you have an questions concerning this memorandum, please contact Laura LaRaia.

 

FINANCIAL INSTITUTIONS

 

License Renewal Periods and Requirements for Mortgage Brokers, Mortgage Lenders, and Mortgage Originators

The Nationwide Mortgage Licensing System and Registry (“NMLSR”) is the uniform multi-state administration of an automated licensing system for mortgage brokers and mortgage lenders.  All applications for new licenses or registrations must be made through the NMLSR. Fees for new applications include an initial Department investigation fee and the appropriate application fee for the application type.  Applications for new licenses and registrations, which are approved between November 1 and December 31 in any year will not required be to file a renewal application for the next calendar year.  All fees are non-refundable.

 

All licenses and registration issued pursuant to the Georgia Residential Mortgage Act (the “Act”) expire on December 31 of each year, and an application for renewal must be made annually between November 1 and December 31 of each year.  Subsequent renewal applications and/or license fees must be received prior to December 1 of each year, or the applicant will be assessed a late fee as set forth in these rules by license or registration type. A renewal application and/or license fee not received prior to the December 1 renewal application deadline of each year cannot be assured of issuance or renewal prior to January 1, at which time the license or registration will be considered expired.  Any license or registration, which is not renewed prior to December 31, will require the applicant to file a reinstatement application in order to conduct mortgage business in Georgia after that date.

 

RESIDENTIAL MORTGAGE BROKERS AND LENDERS

 

Advertising Requirements

All solicitations or advertisements, including business cards and website, for mortgage loans disseminated in Georgia by persons required to be licensed or registered under the Act must contain the name, license number, valid unique NMLSR identifier, and an office address of the licensee or registrant advertising the mortgage loan, which name, address, and license number must conform with the name, license number, valid unique NMLSR identifier, and office address on record with the Department.

 

Branch Managers

The Department must conduct a background check, obtain a credit report, and require a financial statement, and such other pertinent information as it may require to satisfy itself that the location will be operated by the branch manager responsibly and in compliance with the laws and rules of Georgia.

 

The section requiring the license to conduct an initial Georgia Crime Information Centerbackground check on each branch manager has been deleted from the rule.

 

The applicant must submit two sets of fingerprints, along with a money order or certified check payable to the Department in the appropriate amount set by the Department (previously $30) in or for the Department to cause to be administered the expanded background check.

 

Employee Background Checks; Covered Employees

If the information from the employee background check is unclear or incomplete, appears to address, or makes reference to a felony conviction, or indicates that the employee has a criminal record in any state other than Georgia, the applicant or licensee must immediately submit two sets of fingerprints of the person, along with the applicable processing fee and any additional information the Department may require to complete an expanded background investigation.  A money order or certified check in an amount as directed by the Department (previously $30) made payable to the Department must be submitted with the cards in order to have the cards processed.

 

 

Mortgage Loan Transaction Journal

Any person who is acting as a mortgage broker and who is required to be licensed under the Act, whether as a broker or a lender (“licensee”), must maintain a journal of mortgage loan transactions, which must include, at a minimum, the following information:

  • Full name of proposed borrower and all co-borrowers, and the last 4 digits of their security number(s);
  • Date customer applied for the mortgage loan;
  • Name and NMLSR unique identifier of the loan officer responsible for the loan application whose name also appears on the application;
  • Disposition of the mortgage loan and application and date of disposition.  The journal must indicate the result of the loan transaction.  The disposition of the application must be categorized as one the following: loan closed, loan denied, application withdrawn, application in process, or other (explanation to be provided).

 

Loan processors who are required to be licensed must keep a mortgage loan transaction journal to the extent they receive information that is required by law or rule to be in the journal. The journal at a minimum must include for each loan:

  • The name of the borrower(s);
  • The name and NMLSR unique identifier of the mortgage broker or lender for whom the processing was performed;
  • The name and the NMLSR unique identifier of the mortgage loan originator for whom the processing was performed; and
  • The dates the loan application was received and returned to such lender or broker.

 

Mortgage Loan Files

In addition to the prior required contents, each loan file must contain a copy of the signed mortgage loan application with the NMLSR unique identifier of the mortgage loan originator if the application form is received by the licensee.

 

Initial Experience and Education Requirements; Continuing Education

An applicant for a mortgage broker’s license must complete a minimum of 40 course hours of prescribed courses from a Department or NMLSR approved provider of mortgage training courses.  A mortgage broker that is also required to have a mortgage loan originator’s license may apply the 20 hours of required loan originator pre-licensing education towards its mortgage broker license.

 

Course work must pertain to:

  • Basic technical mortgage terms;
  • Elements of the mortgage brokering process;
  • Federal law; and
  • Applications and required documentation.

 

Course work must include:

  • 4 hours on Georgia law, rules, and regulations;
  • Fraud detection; and
  • The prevention of fraud in the mortgage industry.

 

Applicants for renewal of a broker’s license who are exempt from the mortgage loan originator’s requirements must meet the following continuing education requirements:

  • Applicants must complete on an annual basis and by October 31 of each year a minimum of 8 hours (previously 12 hours) of continuing education dealing with elements of the mortgage brokering process, federal law, federal rules and regulations, Georgia law, Georgia rules and regulations, applications and required documentation, fraud, ethics, or other topics pertinent to the operation of a  mortgage brokering business in Georgia.  At least one hour must be on fraud protection and prevention.  A mortgage broker that is also a mortgage loan originator my apply the 8 hours of annual continuing education required under the Act to the continuing education requirement provided in this rule;
  • Except as provided in this rule, continuing education must be completed with a Department or NMLSR approved provider of mortgage education classes and be timely reported to the NMLSR pursuant to the NMLSR requirements;
  • Seminars, courses, or classes, sponsored and approved by mortgage-related state and federal regulatory agencies, a NMLSR approved provider, the National Association of Mortgage Brokers (“NAMB”), state and federal regulated lenders and their affiliates or professional associations , all of which must be recognized by the Department as proper providers of education requirements (“approved providers”).  Requirements may be satisfied at monthly association meetings, conventions, seminars, or through electronic means provided the subject meets the requirements of this rule;
  • Each licensed mortgage broker must maintain a listing of courses completed or seminars attended, the date attended, the name of the instructor or speaker, the name of the sponsoring association, the course agenda, and the credit hours earned for each course or seminar.  Credit hours may not be earned or approved in less than 1-hour increments.  Such information may be requested as part of the renewal application;
  • The Department need not verify that each applicant has completed the required Department continuing education hours prior to issuance of a renewal license.  However, the Department may at any time and at its discretion select any number of renewal applications to verify that the continuing education requirements have been met. Verification of continuing education hours may be performed as part of the examination process.  Licensees must maintain documentation for 5 years that verifies the continuing education hours attained.  The Department may request proof of attendance or verification from the applicant, sponsor, instructor, or speaker;
  • The Department may at its discretion accept continuing education hours completed between November 1 (previously October 31) and December 31 of each year as part of the license renewal requirement.  However, licensees/applicants that fail to attain at least 8 hours (previously 12 hours) by October 31 of each year will be subject to a $1,000 fine;
  • Upon submitting an application to renew a license, failure to complete 8 hours (previously 12 hours) by October 31 together with failure to complete the hours by December 31 with payment of the $1,000 fine will result in inability to renew the license, or other administrative action;
  • “Applicant” means an individual owner of the licensee, or a person designated and employed by the licensee as the primary supervisor or manager of the licensee’s mortgage business.  The intent of the rule is that the continuing education for a mortgage broker’s license must be obtained by a person who directs the affairs of the mortgage business; and
  • Newly licensed brokers who obtain their license between January 1 and October 31 of any year will be required to have 8 hours (previously 12 hours) of continuing education credits prior to license renewal.  The $1,000 fine for failure to complete the continuing education requirements applies to newly licensed brokers.

 

Mortgage broker/processor licensees who are also required to maintain a mortgage loan originator’s license must meet the continuing education requirements for mortgage loan originators.  These licensees must obtain on an annual basis 8 hours of approved continuing education in mortgage courses from an NMLSR approved provider.  Of these 8 hours, 7 hours must be obtained in course work addressing:

  • 3 hours of federal law and regulations;
  • 2 hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues;
  • 2 hours of training related to lending standards for the nontraditional mortgage product marketplace; and
  • 1 hour of coursework addressing the Act, specifically any changes made to the statute and its corresponding regulations.

 

Term for Surety Bond

In addition to the requirements under the Act for a bond, the bond requirement for a lender or broker license must have a stated term of one year or more, and will expire a minimum of 12 months from the date of issuance, or such longer period as needed to reflect the term of the bond (previously expired on June 30).  The bond requirement is continuous in nature.  A corporate surety or licensee that does not intend to renew a bond for a subsequent term must notify the Department of the cancellation no later than 30 days prior to the expiration or cancellation date of the bond (previously no later than June 1).  Surety bonds provided to the Department are deemed to be records of the Department and will not be returned to licensees or to the entities by which they were issued.

 

Knowing Purchase, Sale or Transfer of Loan or Loan Application from Unlicensed Entity

A person may not knowingly purchase, sell, or transfer a mortgage loan or loan application to or from an unlicensed mortgage loan originator, mortgage lender or broker, unless the entity is exempt from licensing.

 

A list of current licensees is provided on the Department’s Internet website.  The list is updated nightly with the exception of weekends and holidays (previously updated weekly).

 

The section of the Georgia rules addressing wholly owned subsidiaries of lenders, notification statement, and when registration is required has been repealed.

 

Challenges to Information Entered into the NMLSR

A mortgage broker or lender licensee or registrant may challenge information entered by the Department into the NMLSR.  All challenges must be sent to the Department in writing addressed to the attention of the Deputy Commissioner of Non-Depository Financial Institutions.  Once received, the Department will consider the merits of the challenge raised and provide the licensee or registrant with a written reply that will be the agency’s final decision in response to the challenge.

 

MORTGAGE LOAN ORIGINATOR LICENSURE AND OTHER REQUIREMENTS

 

Mortgage Loan Originator Licensure Requirements

Unless exempt from licensure under the Act, a mortgage loan originator may not engage in the business of mortgage loan origination without obtaining and maintaining a currentGeorgia mortgage loan originator’s license issued through the NMLSR.

 

Unless a mortgage loan originator is employed by an exempt entity, a mortgage loan originator may not work in Georgia without having proper sponsorship on record with the NMLSR by a licensed or registered Georgia mortgage broker or mortgage lender. “Sponsorship” means the authorization for a mortgage loan originator to conduct business as an employee under and on behalf of a specific mortgage broker or mortgage lender’s license or registration.  Sponsorship must be initiated and maintained by the licensed or registered mortgage broker or mortgage lender employing a mortgage loan originator.

 

The Department must accept a sponsorship.  Once established, a sponsorship can be removed by either the employing licensee or registrant or by the mortgage loan originator.  It is the responsibility of every licensee or registrant to ensure that the status of a mortgage loan originator is correctly reflected at all times on the NMLSR.

 

A mortgage loan originator must have coverage under the surety bond of his or her licensed or registered mortgage broker or mortgage lender employer, or under a surety bond maintained by the loan originator.  A surety bond covering the mortgage loan originator must have a stated term of one year or more and will expire a minimum of 12 months from the date of issuance.  The bond requirement is continuous in nature.

 

A mortgage loan originator operating under the bond of his or her mortgage licensee or registrant employer must be covered continuously under his or her employer’s bond under his or her name of record under the NMLSR and ensure the coverage is in effect during the time that the mortgage loan originator is engaged in making Georgia mortgage loans for that employer.  A mortgage loan originator required to obtain his or her own surety bond coverage must obtain a bond in the amount of at least $10,000 for mortgage loan originators that originate up to $10 million annually, or a bond in the amount of at least $15,000 for mortgage loan originators that originate greater than $10 million annually.  The bond obtained by a mortgage loan originator must be provided to the Department in a form acceptable to the agency.  All other provisions concerning surety bond coverage maintained by a mortgage loan originator’s employer must be met by mortgage loan originators maintaining their own coverage.

 

Surety bonds provided to the Department are deemed to be records of the Department and will not be released or returned to the licensees or to entities by which they were issued. Mortgage loan originator bond coverage must not be canceled by either the employing licensed or registered mortgage broker or mortgage lender, the mortgage loan originator licensee, or the corporate surety except upon notice to the Department by registered or certified mail or statutory overnight delivery with return receipt requested.  The cancellation will not be effective less than 30 days after the Department receives the notice.

 

Books and Records Requirements; Examinations

The Department may examine the mortgage related books and records of any licensed mortgage loan originator.  Any person who acts as a mortgage loan originator and is required to be licensed must maintain a journal of mortgage loan transactions, which must include, at a minimum, the following information:

  • Full name of proposed borrower and all co-borrowers;
  • Date the mortgage loan originator took application for the mortgage loan;
  • Name and the unique identifier or Federal Regulatory Number of the mortgage licensee or registrant sponsoring the loan originator; and
  • Disposition of the mortgage loan and application and date of disposition.  The journal must indicate the result of the loan transaction.  The disposition of the application must be categorized as one the following: loan closed, loan denied, application withdrawn, application in process, or other (explanation to be provided).

 

The journal must be kept current, updated, no less frequently than every 7 days.  The failure to initiate an entry to the journal within 7 business days from the date of the occurrence of the event required to be recorded is deemed a failure to keep the journal current.  Failure to maintain the mortgage loan journal or to keep the journal current (incidental and isolated clerical errors or omissions is not considered a violation) may be grounds for suspension or revocation of the license or other appropriate administrative action and will subject the licensee to fines in accordance with regulations prescribed by the Department.

 

All mortgage loan originators who are required to be licensed under the Act and maintain their own surety bond coverage must keep copies of their bonds and also provide copies to their sponsoring/employing mortgage brokers or mortgage lenders.  All books and records and accounts must be maintained by a mortgage loan originator for 5 years.

 

Licensed Location

All licensed mortgage loan originators must maintain an office of record with the Department.  If the mortgage loan originator is not domiciled in Georgia, then the main office location of the sponsoring/employing licensee or registrant must serve as the official employment address of the loan originator.  Those licensed mortgage loan originators domiciled within Georgia must indicate the office from which they are supervised by their employer, either the main office or an approved branch location.

 

Renewals

Mortgage loan originator licenses expire on December 31 of each calendar year.  A mortgage loan originator must meet the following requirements to have his or her licensed renewed:

  • Continue to meet the minimum standards for license issuance; and
  • Satisfy the continuing education requirements of the Act.

 

The applicant must obtain on an annual basis 8 hours of approved continuing education in mortgage courses from an NMLSR approved provider.  Of these 8 hours, 7 hours must be obtained in course work addressing:

  • 3 hours of federal law and regulations;
  • 2 hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues;
  • 2 hours of training related to lending standards for the nontraditional mortgage product marketplace; and
  • 1 hour of coursework addressing the Act, specifically any changes made to the statute and its corresponding regulations.

 

Courses taken to meet the approved continuing education requirements of the NMLSR for any state will be accepted as credit towards continuing education requirements in Georgia, with the exception that 1 hour of the required courses must cover laws and regulations related toGeorgia mortgage licensure.  Continuing education credit hours must be obtained annually between November 1 and October 31 prior to the next November 1 license renewal date.  The Department, in its discretion, may accept continuing education hours completed between November 1 and December 31 of a year as part of the license renewal requirement for the then current license renewal.  Licensees/applicants that fail to obtain by October 31 of a year at least 8 continuing education hours will be subject to a $1,000 fine.

 

Upon submitting an application to renew a license, failure to document to the Department’s satisfaction proof of completion of 8 continuing education hours by October 31 along with the failure to obtain and document proof completion of these hours by December 31 with payment of the $1,000 fine will result in the expiration of the mortgage loan originator’s license.

 

Continuing education credits are only valid in the year in which the courses are taken. Credits earned during November 1 through December 31 will be excluded from consideration for continuing education credit hours earned for the subsequent renewal period.  When continuing education hours are obtained by a mortgage loan originator, only credit hours obtained from January 1 to October 31 will be considered for purposes of meeting the 8 hours of continuing education required in the subsequent renewal period.

 

A mortgage loan originator licensed on or after January 1, 2010, whose license has not been maintained for a period of up to 5 years must provide proof of completion of the continuing education requirements for the last year in which the license was held in order to reinstate it. Should reinstatement of an expired license be sought for a license that has not been maintained for a period of 5 years or more, the reinstatement application will require that the applicant again meet the testing requirements set forth in the Act.  If a person has worked as a registered loan originator at any time during the lapsed license period, the period of time the registered mortgage loan officer was employed in this capacity does not count toward the calculation of the time period for the continuing education and testing requirements.

 

Administrative Fines

The Department establishes the following fines and penalties for violation by mortgage loan originators of the Act or its rules.  The Department, in its sole discretion, may waive or modify any fine based upon the severity of the violation, history of previous violations, and such other facts and circumstances that have contributed to the violation.  All fines levied by the Department are due within 30 days from date of assessment and must be paid prior to renewal of the annual license or registration, reinstatement of a license or registration, or reapplication for a license or registration, or any other activity requiring Departmental approval.  All fines collected by the Department will be paid into the State Treasury to the credit of the general fund.

 

The following fines will be assessed for violation of the Act and Department rules: