CSBS seeks comments on uniform mortgage licensing standards

Orrick, Herrington & Sutcliffe LLP
Contact

Orrick, Herrington & Sutcliffe LLP

On March 16, the Conference of State Bank Supervisors (CSBS), on behalf of the NMLS Policy Committee, issued a request for public comments on proposed uniform state licensing standards for mortgage companies. The Proposal: Mortgage Business-Specific Requirements would create a national standard for mortgage industry licensing to help improve uniformity within the state system and streamline the licensing process for mortgagees seeking licensure in multiple states.

The proposal is broken down into eight components:

  • Contacts. All licensees will be required to provide contacts within the company for accounting, legal, licensing, data breach/cybersecurity, exam billing, exam delivery, and mortgage call reports, in addition to a primary company contact and a primary consumer complaint contact. If a licensee chooses to list a third-party contact, “the company will be deemed to have expressly authorized a state agency to contact the third party without further approval from the company” and “the company is ultimately responsible for the area of responsibility.”
  • Periodic reporting. All licensees will be required to complete periodic reports covering mortgage call reports, audited financial statements, and reportable incidents.
  • Data requirements. All licensees will be required to “provide numbers for any approvals or designations the company holds[,]” as well as business bank account information for accounts held in the name of the applicant and used for mortgage activities.
  • Document requirements. Required documentation includes financial statements; policies and certifications; current Bank Secrecy Act/anti-money laundering and Gramm-Leach Bliley Privacy Act policies; current disaster recovery or business continuity plans; a current consumer grievance/complaint policy (as well as the required certification); and documents used in the regular course of business such as operating agreements, consumer complaint notices, customer agreements, and third-party contracts.
  • Required functionality. All licensees must abide by a three-party electronic surety bond agreement in order to guarantee “the surety’s performance or monetary compensation to the obligee should there be a failure by the principal to perform specified acts within a stated time period.” The surety bond will be electronically managed by NMLS.
  • Location reporting. All licenses will be required to provide locations where licensed activity will be performed, where records will be stored, or where support staff for licensed activities will be located. Licensees must also provide the primary location for accounting services, regardless of whether they are provided in house or by a third-party accounting firm, cloud storage services (including services used to collect data from customers), and the primary location for legal services, regardless of whether they are provided in house or by a third-party law firm.
  • Company operated work locations’ information. The proposal outlines information required for each company operated work location, including business activities, licensing authorities, addresses, books and records information, and “doing business as” names.
  • Key individual requirements. Licensees will be required to identify key individuals in the areas of management, ownership, functional risk areas, and industry specific roles. The proposal explains that the key individual inquiry focuses on key risk and functional areas (operations, finance, compliance, and information security), rather than titles. Key individuals for mortgages must also submit credit reports and complete an FBI criminal background check. Key individuals who have lived outside the United States at any time in the past 10 years must also provide an investigative background report.

Comments on the proposal are due May 15.

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.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP
Contact
more
less

Orrick, Herrington & Sutcliffe LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide