There are a lot of Americans. Over 325 million, according to the United States Census. And every one needs a place to live. Some choose to rent while others aspire to the American Dream – home ownership. In fact, the home ownership rate in the US was just over 64% for the last quarter of 2017. With the huge number of people who want to buy a home comes a proportionate number of real estate and mortgage professionals who can help them find and afford the right home. But to ensure that the process works both efficiently and appropriately, a system is needed to guide the way. Enter the NMLS state licensing requirements.
About the NMLS
The Nationwide Multi-state Licensing System is also known as the NMLS. It is the system that manages the licensing and registration of non-depository mortgage businesses and loan originators. Their domain covers participating states and territories such as Puerto Rico and Guam. Note that the NMLS does not actually grant or remove the licensing; that is done by the state or territory itself.
The aims of the NMLS include ensuring the regulations of the financial industry, and enhancing consumer protection policies.
Licensing Requirements for Non-depository Loan Officers
In the summer of 2008, the federal law, called the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, was passed. The point of this law was to make sure that mortgage loan originators in each state met the necessary licensing requirements. These requirements included the following:
There is also another reason for the SAFE Act: to make sure that loan officers who worked for non-depository mortgage lenders met the necessary requirements that protect consumers from fraud.
Non-depository mortgage lender: A lender that doesn’t have the ability to make any sort of deposit. This includes offering savings and checking accounts. Non-depository lenders deal only in mortgages.
So what happens with loan officers who work for depository businesses? Well, at the time, they didn’t have to pass all of the NMLS state licensing requirements, but they did need to be listed in the NMLS database.
Depository mortgage lender: A lender who offers a range of financial services, including savings and checking accounts, plus mortgages. Banks and credit unions fall into this category.
Here’s the issue: a loan officer who works for a depository lender just can’t start working for a non-depository lender. They need to meet all of the NMLS state licensing requirements that a loan officer working for a depository lender must meet. That takes time, effort, and money. And when you’re deep in the throes of your career, do you have those resources to make it happen?
Enter the SAFE Mortgage Transitioning Act
To address the disparity between depository and non-depository requirements for loan officers, a new bill, H.R. 2121, has been introduced. Also known as the SAFE Mortgage Transitioning Act, it is an amendment to the SAFE Act of 2008 mentioned above. It lets loan officers who work at depository lenders get a temporary NMLS license while they transition to a non-depository lender.
Specifically, they will:
The Shamrock Financial Connection
It takes many industry professionals and lawmakers to help draft a bill that can be passed. Dean Harrington, President of the Rhode Island Mortgage Bankers’ Association (RIMBA) and the CEO of Shamrock Financial, collaborated with other financial professionals to create the bill and get it passed in Washington.
Harrington stated, “It is a remarkable accomplishment to get this bill passed. Ensuring the quality and professionalism of our loan originators is a success for our industry and for consumers. I am honored of RIMBA’s role in making this happen.”
Buying a home can be a long process, and needs serious financial knowledge and commitment. Having all loan officers meet NMLS state licensing requirements will ensure that clients get the best service. For loan officers, it means professional integrity and mobility.
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