The SAFE Act and the Nationwide Mortgage Licensing System & Registry it codified were supposed to result in some consistency, if not standardization, in the way originators are supervised on the state level.
But judging from the annual regulators panel at the New England Mortgage Banking Conference here late last month, that's hardly the case.
Of six Northeastern states, for example, only Connecticut and Massachusetts require criminal background checks—or more precisely, individual mortgage loan originators must authorize such a investigation—in order to renew their licenses. Maine, New Hampshire, Rhode Island and Vermont do not.
Also, Connecticut is the only state in the region that requires licensees to grant the authorities permission to pull their credit reports to renew their shingles. Of the other five, only the Bay State requires a credit report, but then only on a biennial basis. And not until 2013.
Vermont will ask for a credit report only in those cases where a previous credit report has raised a red flag or two or three.
Fees vary all over the ballpark, too. All six charge a $30 processing fee. But Massachusetts charges a whopping $500 renewal fee. Licensees catch a break in Connecticut, where the fee is $300. But if originators really want to save some money, they might want to move to New Hampshire or Vermont, each of which charges only $100.
Or maybe Maine, where the toll is a mere $20.
“Connecticut is a little bit different from other states,” said Marlene Mannix, director of the state's Consumer Credit Division. The division is housed within the Department of Banking.
Maine, on the other hand, “is more moderate than some of the more careful states,” according to William Lund, superintendent of the Bureau of Consumer Credit Protection, largely because it is “just finishing” its first year under the NMLS and approaching its first round of license renewals. Lund's agency also regulates self-storage facilities.
In their presentations to the conference, the state regulators also reported some interesting facts.
Mannix from Connecticut, for example, said her agency continues to find unlicensed loan originator activity and fines will be increasing. Moreover, she added, the state will hold the individual licensee “more accountable” for dubious acts, not just the company for which he or she works.
New Hampshire will go after unlicensed originators, too, according to Michael Poulios, an examiner in the state's banking department. Fines for unlicensed activity could be as much as $25,000, he said, and individuals could be required to “disgorge” their profits.
Gregory Short of the Massachusetts Division of Banks spoke about the slowing rate of attrition in his state due to tougher licensing laws and the melt down in housing market.
Between 2008 and 2009, Short reported, the ranks of loan originators fell by 20%. But now, the attrition rate is 2.5%. Still, the Bay State now has 3,700 individual loan officers, which is 20% fewer than a year ago.
By contrast, New Hampshire has but a scant 200 or so loan originators, as well as just under 100 mortgage brokers and 200 mortgage bankers.
Judging from the fact that 200 or so companies have yet to submit the bond calculation sheets that were due Sept. 1, Connecticut is probably seeing continued attrition, too.
The Nutmeg State, which has expanded its definition of fraud to include “coercion” and “misrepresentation,” currently has 4,620 loan originator licensees, 284 mortgage brokers, 230 correspondent lenders and 427 mortgage lenders on its rolls.
Massachusetts, meanwhile, has changed its rules with regard to reverse mortgages by requiring that applicant counseling must be done in person, face-to-face, rather than via telephone.
And the beat goes on.
