CSBSAARMR Nationwide Mortgage Licensing System NMLS

1
CSBS/AARMR Nationwide Mortgage Licensing
System(NMLS)

• CSBS Legal Seminar
• August 12, 2008

2
NMLSR and State Supervision

• Uniform data (Consistent, detailed information)
• Single record (MU Forms)
• Call report
• Performance score
• Communication among regulators
• Enforcement actions
• License status
• More efficient use of resources

3
Topics of Discussion

• State Regulatory Framework
• Nationwide Mortgage Licensing System
• SAFE legislation (Title V)

4
State Regulator Framework

• Nontraditional Mortgage Guidance
• Subprime Statement
• MEGS (uniform examinations)
• MINUTES (uniform education and testing)
• Cooperative Agreement
• Nationwide Mortgage Licensing System
• NMLSR

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Who is Involved - Overview

• Conference of State Bank Supervisors (CSBS)
• American Asso. of Res. Mortgage Regulators
• State Regulatory Registry LLC (CSBS subsidiary)
• Financial Industry Regulatory Authority (formerly
  NASD)
• State regulatory taskforce working groups
• Industry advisory groups

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American Association of Residential Mortgage
Regulators

• Professional organization
• Advocate of regulatory information exchange
• Represents state mortgage regulators
• David Bleicken (PA) current president

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Who is Involved - SRR

• State Regulatory Registry LLC
• CSBS is sole member
• 9 Board of Managers
• Gavin Gee (ID), Chairman
• Steve Antonakes (MA), Treasurer
• David Bleicken (PA), AARMR
• Tom Gronstal (IA)
• John Allison (MS)
• Joseph Smith (NC)
• Timothy Karsky, CSBS Chairman (non-voting)
• Neil Milner, Secretary (non-voting)
• Bill Matthews, SRR CEO (non-voting)

8
Nationwide Mortgage Licensing System Organization
Chart
CSBS Board of Directors
AARMR
State Regulatory Registry LLC Board of Managers
Mortgage Licensing Policy Committee
Residential Mortgage Regulatory Taskforce (RMRT)
Regulator Development Working Group
Agency MU Forms Working Group
IT Working Group
Accounting Working Group
Legal Working Group
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Who is Involved - Regulators

• State regulatory taskforce working groups
• Residential Mortgage Regulatory Taskforce (RMRT)
• RMRT working groups (IT, accounting, legal,
  licensing)
• Core development group (MA, NC, NY, TN, TX, WA)
• Mortgage Licensing Policy Committee
• Individual state readiness calls

10
Who is Involved - Industry

• Industry advisory groups
• Industry Development Working Group
• Mortgage Advisory Council
• Consists of brokers and lenders
• Support of NMLS
• Provides policy advise to SRR Board

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NMLS Description

• Nationwide state licensing system
• Similar to other industries
• Securities
• Investment advisors
• Custom for mortgage industry
• Voluntary state participation

12
NMLS Description

• Two primary goals
• Provide uniform mortgage application for every
  agency
• Develop comprehensive licensing and supervisory
  repository

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NMLS Objectives

• Streamline the licensing process
• Efficiency
• Standardization
• Centralize redundant processes
• Enhance supervision
• Increase consumer protection
• Industry accountability
• Reduced fraud
• Access to license and sanction data

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4 Uniform Mortgage Applications

• Company (mortgage lenders and brokers)
• Branch
• Control person
• Individuals (loan officers)
• State retain ability to maintain specific
  requirements

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System Functionality 2008

• Apply for licensure
• Maintain a license (amend, update or renew)
• Process applications amendment requests
• Collect disburse fees
• Regulator work queues

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Transitioning onto System

• States set transition period and method
• 3-6 month period
• Come on when licensee amends or renews license
• Licensees to enter data into system
• Attest to accuracy and completeness
• One system record
• Updating jurisdiction for subsequent states
• States to validate licensee information
• TD

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NMLS DashboardAs of August 2, 2008

• Participating states 14
• Total entities and licenses in NMLS
• Entities Licenses
• Companies 6,657 6,743
• Branches 5,608 4,999
• Individuals 38,602 30,873
• Total 50,864 42,615
• Collection and disbursement of state fees
• 11 million

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NMLS DashboardAs of August 2, 2008

• Call Center
• Year-to-date Last Week
• Avg. weekly calls 1,413 2,688
• Avg. call length 534 seconds
• NMLS Website
• Year-to-date Last Week
• Visitors 253,178 14,047
• Page views 731,774 35,494

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Where we are today States

• NMLS launched
• On January 2, 2008
• On time and on budget
• 7 states participated at launch
• 20 agencies scheduled in 2008
• 44 agencies in 42 states on Statement of Intent

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2008 States

• January (7)
• Idaho
• Iowa
• Kentucky
• Massachusetts
• Nebraska
• New York
• Rhode Island

• July November (13)
• Arkansas
• Connecticut
• Indiana DFI SOS
• Louisiana
• Michigan
• Mississippi
• New Hampshire
• North Carolina
• Pennsylvania
• Vermont
• Washington
• Wyoming

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CSBS/AARMR Nationwide Mortgage Licensing System
Washington
Maine
Montana
Vermont
North Dakota
Minnesota
Oregon
New Hampshire
Idaho
Massachusetts
Wisconsin
South Dakota
New York
Michigan
Rhode Island
Wyoming
Connecticut
Iowa
Pennsylvania
New Jersey
Nebraska
Nevada
Ohio
Indiana (DFI SOS)
Delaware
Utah
Illinois
Maryland
West
(DFI DRE)
Colorado
Virginia
California (DOC DRE)
District of Columbia
Virginia
Kansas
Missouri
Kentucky
North
Carolina
Tennessee
Oklahoma
Arizona
South
Arkansas
New Mexico
Carolina
Mississippi
Georgia
Alabama
Hawaii
Texas (OCCC SML)
Louisiana
Florida
Alaska
Puerto Rico
State Regulatory Registry LLC, August 2008
22
Where we are today Funding

• Goal to raise 10 million
• 5.1 million received for NMLS development
• Sources of funds
• Appropriations
• Settlement agreements

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Where we are today NMLS Costs

• System development costs
• NMLS at launch 4.4 million
• Year-end 2008 4.0 million
• System operating expenses
• Annual cost 10 million

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NMLSDevelopment Funding Obligations
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H.R. 3221

• Housing Economic Recovery Act of 2008
• Signed by President Bush on July 30, 2008
• Reforms GSE (Freddie and Fannie) regulation
• Licensure of all loan originators (Title V)
• Modernizes the Federal Housing Administration
• Promotes private-sector loan workouts to prevent
  foreclosure

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H.R. 3221 Media Coverage

• Significant coverage and debate on
• GSE regulation
• FHA modernization
• Limited press coverage on LO licensing
• Significant learning curve ahead
• States, trade associations, federal agencies

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Title V Provisions

• Establishes coordinated systems for all LOs
• State brokers and lenders licensed
• Depositories (banks, thrifts, CU) registered
• Background checks for all loan originators
• Consumer access

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Title V Systems

• Potential systems NMLS/Federal/HUD
• NMLSR for states
• Federal banking for depository LOs
• Banks, thrifts, credit unions and subsidiaries
• HUD for non-compliant states

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Title V Provisions

• Minimum state license standards
• No felony (last 7 years)
• No license revocations
• Financial responsibility
• Pre-license testing and education
• Continuing education
• Annual license renewals
• Bond, net worth or recovery fund

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NMLSR Responsibilities

• Testing of state LOs
• Education approve pre/CE providers
• Call reports
• Channeling agent for FBI background checks
• Coordinate Unique IDs

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Principles Guiding Implementation

• Do not disrupt mortgage originations
• Build on state experience (testing/ed/background)
• Strengthen and modernize state regulation
• NMLSR takes responsibility for mandates under
  Title V

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Title V Implementation

• State implementation plans
• How does legislation impact a state
• Implementation
• Model law (must, good and nice to have)
• Communication strategy (industry, legislature and
  governors office)
• Transition plan
• NMLSR participation

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HUD Coordination

• HUD determine if states comply with Title V
• State model legislation
• State implementation plans
• HUD to license LOs for non-compliant states

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State Model Legislation

• Each state would have to
• Pass legislation to meet Title V minimum
  standards
• Join NMLSR within 1 year (or 2 years for biennial
  legislative sessions)
• --- OR ---
• HUD would take responsibility to meet Title V
  requirements

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State Model Legislation

• Model implementing legislation
• State working group
• Needs, wants and nice to have
• Unique opportunity for uniformity
• Presentation at AARMR on August 19th
• Will solicit HUDs input/approval

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NMLSR and State Supervision

• Uniform data (Consistent, detailed information)
• Single record (MU Forms)
• Call report
• Performance score
• Communication among regulators
• Enforcement actions
• License status
• More efficient use of resources

37
State Regulatory Registrya CSBS company

• Bill Matthews, bill.matthews_at_csbs.org
• Barbara Michels, barbara.michels_at_csbs.org
• Tim Doyle, tim.doyle_at_csbs.org
• www.csbs.org
• www.stateregulatoryregistry.org/NMLS