Georgia and Wisconsin recently amended their state licensing regimes to create exemptions for nonprofits and their MLOs. Exemptions from these licensing requirements will ease the entry of many nonprofit lenders into these states and provide relief from certain ongoing compliance requirements.
In Wisconsin, the 2013 Wisconsin Act 360 (Act 360) provides that bona fide nonprofit organizations that do not operate in a commercial context and their MLOs are no longer required to be licensed under the Mortgage Bankers, Loan Originators, and Mortgage Brokers Act. Similarly, Georgia's House Bill 750 modifies the Residential Mortgage Act (RMA) to create an exemption to MLO licensing requirements for employees of nonprofits that make mortgage loans to promote homeownership or improvements for the disadvantaged. The Georgia RMA already contained an exemption for nonprofits that promote affordable housing.
Both states changed their state law to match an exemption for MLOs in Regulation H (CFPB Safe Act Rule). Under this regulation, a state MLO license is not required for an employee of a bona fide nonprofit organization who engages in the business of an MLO in the course of his or her work and who acts as a loan originator only in the origination of residential mortgage loans with terms that are favorable to the borrower. Regulation H also outlines a set of criteria an organization must meet to be defined as a "bona fide nonprofit organization." In particular, the Georgia RMA relies heavily on the language of Regulation H to define its exemption for MLOs.
In addition to nonprofits and their MLOs, the Wisconsin Act 360 includes new licensing exemptions for the following entities and individuals:
Federal, state, and local government agencies and their MLOs
Housing finance agencies and their MLOs
Mortgage bankers that meet the described "de minimus" exemption
MLOs that are not regularly engaged in the business of an MLO
Real estate brokers in certain circumstances
The amendments are effective immediately.