November...Time for Elections and for State License Renewals

Miles & Stockbridge P.C.

Its Presidential election time, and we strongly encourage you to vote on or before November 3rd. If you have not yet done so, please vote, whoever may be your preference.

Now that we have addressed our civic duty, we also encourage you to elect to renew any state licenses you hold through the Nationwide Multistate Licensing System (“NMLS”). Regardless of whether you hold a mortgage finance, consumer credit, money service business, collection agency, other state license through the NMLS, the renewal period begins on November 1st. The choice to renew your state licenses is simple, no preference needed – elect to renew your state licenses as soon as possible, or there may be no Company parade come Inauguration Day. Therefore, we are reminding you that the polls have shown that just taking the following actions may ensure that your renewal efforts are strongly endorsed by regulators in each state.

1) Review Your Company And Individual Records – Make sure your records are current, accurate and that you have resolved any posted deficiencies prior to filing for a state license renewal. States may challenge a licensee’s attestation and eligibility for renewal if there are inaccuracies in the record or open deficiency items. The renewal season starts November 1st, but the sooner you update your records, the more time you will have to work with regulators to resolve their questions outside of your renewal timeline.

Of note, most state regulators allowed licensed mortgage loan originators to temporarily work remotely during the COVID-19 pandemic. It is our understanding that the NMLS Guidebook will soon be updated to provide guidance related to whether under certain conditions, not limited to emergency stay at home orders due to a pandemic, a remote work location does or does not need to be disclosed as a changed license location.

2) Review Company Renewal Activity Report – Using the resources under the Nationwide Mortgage Licensing System (“NMLS”) renewal tabs, run the Renewal Activity Report to determine whether the status of each license is eligible for renewal or whether a regulator is preventing renewal for a Company, Branch and/or Sponsored Individual license. Early identification of this status will allow you to try to resolve any pre-renewal concerns and ensure that you do not inadvertently miss the renewal deadline.

3) Review Fingerprint Expiration Dates and Criminal Background Check Requirements – Criminal background checks (“CBC”) through the NMLS were introduced in 2016 and electronic fingerprints expire after three years. Work with control persons to re-attest to their records and submit new electronic fingerprints as soon as you can. CBCs require MU2 attestation, an MU1 filing prior to submission of the renewal request, and actions on behalf of the Control Persons (which may necessitate a visit to an outside vendor) to complete the process.

Additionally, some states require new criminal background checks for certain individuals at renewal. While states which require new CBCs have made accommodations due to the COVID-19 pandemic and may allow for the use of CBC results that were returned during a specified extended period, this is not true for all states so individuals may have to go to an outside vendor to complete the process.

4) Review the NMLS Renewal Page and State Renewal Checklists – Prepare any documentation required to be submitted outside of NMLS in advance. In many states, submitting the renewal request online does not complete your renewal filing – you must also provide the documentation outlined in the renewal checklist by a specific due date for renewal approval.

5) Check In With Qualified Individuals And Branch Managers – Make sure they complete any continuing education requirements in a timely manner. Failure to complete the continuing education or to submit an individual renewal request could delay or preclude renewal of the company’s main and/or branch license. As it may take up to seven days for a course provider to report continuing education course completions to NMLS, plan accordingly. Again, while renewals are not available to be filed until November 1st, continuing education may be completed much earlier.

6) Watch Renewal Request Submission Due Dates – While many states will indicate licensees have until December 31st to file renewals, reading the fine print may reveal that some states have an earlier submission deadline to ensure that the state has sufficient time to process your renewal request before license expiration. In fact, some submission deadlines are as early as November 2, 2020. Also, note the states in which your license must be approved before December 31st in order to continue activities past the New Year. In several states, if your renewal is not approved by December 31st, you are not permitted to continue to engage in licensable activities on or after January 1st. See downloadable NMLS Company and Individual renewal charts and checklists.

7) Monitor Deficiency Items And Respond Quickly – With several hundred renewal requests to be processed in a short period of time over the November/December holiday season, state regulators will not send out frequent reminders about outstanding deficiency items. Log onto NMLS daily to review new deficiencies, or manage your notification settings in NMLS to ensure you receive an email when a new deficiency items is posted.

8) Use A Credit Card To Make NMLS-Related State Filings – Submit NMLS renewal fees using a credit card to reduce the likelihood of a delayed ACH transaction.

9) File Early – File on November 1st. Make sure your NMLS record is up-to-date, that you have prepared all necessary documentation for renewal, and submit your renewal request as early as possible, if not on November 1st. The sooner you file a complete renewal application, the faster your renewals are approved.

10) Not Renewing? No Problem – If you elect not to renew one or more of your licenses for 2021 because business is off or a productive and licensed MLO has retired, ask whether the regulators in the state will allow you to keep your license in a “dormant” status for part or all of 2021. This is not an unreasonable request given the business interruption cause by COVID-19. However, if you elect to surrender one or more of your state licenses, be sure to review the state surrender checklist, and submit any required surrender documentation to the state to prevent any delays and/or additional filings or fees.

We trust these tips will make your renewal process smoother and easier, so you can get all of your licenses renewed before a contested election is decided, thereby leaving you more time to attend the Inaugural Parade or an Inaugural Dance. Of course, should you need help in navigating the NMLS, overcoming a deficiency, making sense of an ambiguous state law, or working with a state regulator, please give us a call, as we will be honored to help.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

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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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