Pennsylvania will soon start accepting applications for new servicing licensing requirements added to address the growth of nondepositories.
The Pennsylvania Department of Banking and Securities plans to start accepting new applications for nonbank servicing licenses through the Nationwide Multistate Licensing System starting April 1. The deadline for the receipt of applications is June 30.
The amendments to the state's Mortgage Licensing Act address national growth in the market share of nonbank servicers and give Pennsylvania a similar authority as 36 other states, according to a press release issued by the department Tuesday.
Nonbank servicers previously have not been licensed in the state, and servicing issues have been one of the top types of complaints the department has received in recent years.
Licensed servicers must have and maintain the following: a minimum net worth of $250,000, fidelity bond coverage with accordance with Fannie Mae or Freddie Mac's guidelines, and a $500,000 surety bond, according to Pennsylvania's Senate Bill 751, which Gov. Tom Wolf signed into law last month.
Servicers are defined as "a person who engages in the mortgage loan business by directly or indirectly servicing a mortgage loan" in the bill.
Mortgage lenders that are also servicers don't need a separate license, but companies that aren't lenders and service loans for others do, according to a report on the amendment by Leonard Bernstein and Robert Jaworski, attorneys at law firm Reed Smith.
Bank affiliates have some exemption from licensing but have to comply with other MLA requirements. While Pennsylvania exempts originators with offices in the state that don't conduct transactions there from the MLA, the amendment doesn't exempt servicers.
The department is open to industry inquiries about the new rules.
"We believe in smart regulation, not regulation for the sake of regulation," Department Secretary Robin Wiessmann said in the press release. "At the Department of Banking and Securities, we welcome questions and discussions."