The State of Oklahoma provided guidance regarding implementation of a recent amendment to its Secure and Fair Enforcement for Mortgage Licensing Act (Oklahoma SAFE Act). Under the amendment, Oklahoma created a new Mortgage Lender License in addition to its existing Mortgage Broker License, and for the first time required certain servicers to be subject to the licensing and substantive requirements of the Oklahoma SAFE Act.
The amendment defined a mortgage lender as any entity that takes an application for a residential mortgage loan, makes a residential mortgage loan, or services a residential mortgage loan and is an approved or authorized mortgagee with direct endorsement underwriting authority granted by the U.S. Department of Housing and Urban Development (HUD), a seller or servicer of Fannie Mae or Freddie Mac, or an issuer for Ginnie Mae.
Mortgage brokers are defined as those who for compensation or gain, or in the expectation of compensation or gain, take a residential mortgage application or offer, negotiate, or modify the terms of a residential loan.
At the time of the amendment’s passage, it was unclear whether an entity that does not have approval or authorization from HUD, Fannie Mae, Freddie Mac, or Ginnie Mae, but otherwise meets the definition of a mortgage lender, was required to obtain the new license. The amendment also did not specify whether a licensed mortgage lender that engages in activities falling under the definition of a mortgage broker was required to obtain a separate Mortgage Broker License.
On August 6, 2013, the State of Oklahoma Department of Consumer Credit issued guidance clarifying these issues. The guidance reiterates the language from the amendment that the Mortgage Lender License is only required for entities engaged in lending or servicing activities and that are also approved or authorized by HUD (with direct endorsement underwriting authority), Fannie Mae, Freddie Mac, or Ginnie Mae. While this is not clear guidance on the issue, it indicates the regulator’s intent to follow the plain statutory language from the amendment. Accordingly, the new Mortgage Lender License requirement appears to apply only to entities with these authorizations. Based on informal conversations with the Oklahoma Department of Consumer Credit, further information on the licensing requirements will be available on the NMLS Resource Center in the near future.
The guidance does clarify that an entity already licensed as a mortgage broker, but that also meets the new definition of a mortgage lender, is not required to hold both licenses. Instead, such a Mortgage Broker Licensee must transition to a Mortgage Lender License through NMLS by December 31, 2013.
It is important for mortgage companies to review their business activities to determine their qualification for a Mortgage Lender License. Any entity that satisfies the definition of a mortgage lender and does not obtain a Mortgage Lender License will be subject to penalties for unlicensed activity under the Oklahoma SAFE Act. The amendment takes effect on November 1, 2013.