Several New States Adopt the National SAFE MLO Test with Uniform State Component

by Ballard Spahr LLP
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New York, Ohio, Oklahoma, and Connecticut are the latest states to announce that they will be adopting the National SAFE Mortgage Loan Originator (MLO) Test with Uniform State Content. The New York Department of Financial Services is adopting the test effective September 2, 2014. The Ohio Division of Financial Institutions is adopting the test effective September 15, 2014. The Connecticut Department of Banking and Oklahoma Department of Consumer Credit are both adopting the test effective October 1, 2014. With these latest developments, 45 states will no longer require a second state-specific test component to be taken by MLOs seeking licensure.

In addition, the Connecticut Department of Banking announced new pre-licensure education requirements that must be met as a condition for obtaining and maintaining a Connecticut MLO license. Effective October 1, 2014, Connecticut will require one hour of state-specific pre-licensure education. Additionally, Connecticut MLOs seeking to maintain licensure will be required to complete one hour of state-specific continuing education as a condition for licensure renewal beginning January 1, 2015. See the Connecticut Department of Banking's notice for further details.

State Agencies Add New Industry Licenses to NMLS

As previously discussed in the Mortgage Banking Update, the NMLS is constantly expanding to administer additional licenses. The financial agencies of Hawaii, Indiana, Montana, Puerto Rico, and West Virginia announced that new applicants and licensees are now able to submit filings through NMLS for the following licenses:

Hawaii Division of Financial Institutions

  • Money Transmitter Licence
  • Money Transmitter Branch Registration

Indiana Department of Financial Institutions

  • Debt Management License

Montana Division of Banking & Financial Institutions

  • Consumer Loan License
  • Consumer Loan Branch License
  • Deferred Deposit Lender License
  • Deferred Deposit Lender Branch License
  • Escrow Business License
  • Sales Finance Company License
  • Sales Finance Branch License

Puerto Rico Bureau of Financial Institutions

  • Money Transmitter License

West Virginia Division of Financial Institutions

  • Money Transmitter License

Rhode Island To Require Licensing of Third-Party Loan Servicers

Rhode Island Governor Lincoln Chafee recently signed House Bill 7997, which will require third-party loan servicers to obtain a state license to service a loan, directly or indirectly. The new law defines a "third-party loan servicer" as a "person who, directly or indirectly, engages in the business of servicing a loan made to a resident of Rhode Island, or a loan secured by residential real estate located in Rhode Island, for a personal, family, or household purpose, owed or due or asserted to be owed or due another."

The new law also prohibits various practices, and requires licensees to:

  • Pay a licensing fee of $1,100
  • Maintain a net worth of at least $100,000
  • Obtain a surety bond in the amount of $50,000
  • Maintain segregated accounts for amounts paid by borrowers
  • Comply with certain bookkeeping and record requirements

The new requirements for third-party servicers take effect July 1, 2015.

Florida Enacts Law Regarding Consumer Collection Practices

Florida recently enacted provisions relating to consumer collection practices in House Bill 413. Under the new law, a person may not engage in business in Florida as a consumer collection agency without first registering in accordance with the law, and thereafter maintaining a valid registration. A consumer collection agency is defined as "any debt collector or business entity engaged in the business of soliciting consumer debts for collection or of collecting consumer debts."

In addition, the law authorizes the Florida Financial Services Commission to adopt rules, such as those regarding fees, charges, and fines, the performance of investigations or examinations to determine violations of certain provisions, the revision of registration procedures and application requirements, and the requirement of applicants and certain registrants to submit fingerprints. The law also requires the Commission to adopt rules establishing disqualifying periods for certain felonies and misdemeanors involving fraud, dishonesty, and other acts of moral turpitude.

The legislation becomes effective on October 1, 2014.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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