Tag Archives: loan originator

NMLS Smart Deadlines for 2014 License Renewal

(OnlineEd – Jeff Sorg) – The deadline to complete NMLS CE for MLO license renewal is December 31, 2014. However, NMLS Rules allow course providers seven days to report their course completions to NMLS. This means licensees will not want to wait until the last minute before completing their education requirement. If the licensee completes before the deadline, but the provider does not submit until after the deadline, the licensee is prevented from submitting for renewal on time.

In order to allow enough time for CE to be reported into the system and for the MLO to file for renewal, NMLS sets Smart Deadlines each year. These 2014 Smart Deadlines are:

SMART: Course(s) reported by your provider to NMLS by Friday, December 19
AT RISK TO MISS: Course(s) reported by your provider to NMLS by Friday, December 26
GUARANTEED TO MISS: Course(s) reported by your provider to NMLS on Wednesday, December 31

At OnlineEd®, we report your course completions just as fast as we possibly can! This means completions are usually reported to NMLS not later than the next business day from completion (weekends, holidays, and NMLS closures excluded). For completions during the At Risk to Miss and Guaranteed To Miss, we upload completions several times daily. While we do as much as we possibly can to upload in a timely manner, it remains the licensee’s responsibility to know the rules and complete in time for provider reporting to take place before the deadline.



This article was published on July 31, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

For more information about OnlineEd and their education for real estate and mortgage brokers, visit www.OnlineEd.com. OnlineEd is NMLS Sponsor: 1400327

CFPB Seeks Constent Order Against Castle & Cooke for $13 Million

(CFPB – WASHINGTON, D.C.)  The Consumer Financial Protection Bureau (CFPB) today announced a proposed consent order in its enforcement action against Castle & Cooke Mortgage, LLC, for allegedly steering consumers into costlier mortgages. The Bureau has asked a federal district court to approve a consent order that would provide more than $9 million in restitution for consumers and obtain $4 million in civil money penalties against Castle & Cooke and two of its officers for allegedly paying loan officers illegal bonuses.

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Mortgage Loan Originators were allegedly paid illegal bonuses for steering consumers into mortgages with higher interest rates.

“Our action has put an end to illegal steering of consumers and has put more than $9 million back in their pockets,” said CFPB Director Richard Cordray. “This outcome embodies our mission—to root out bad practices from the marketplace and ensure consumers are being treated fairly.”

Castle & Cooke is a  Utah-based mortgage company that originated about $1.3 billion in loans in 2012. The company maintains 45 branches and does business in 22 states, including Arizona, California, Colorado, Florida, Hawaii, Iowa, Idaho, Nebraska, New Mexico, Nevada, Texas, and Utah. On July 23, 2013, the CFPB filed a complaint in federal district court against the mortgage company and two of its officers for allegedly paying illegal bonuses to loan officers who steered consumers into mortgages with higher interest rates.

The complaint alleged that Castle & Cooke, through actions taken by its president, Matthew A. Pineda, and senior vice-president of capital markets, Buck L. Hawkins, violated the Federal Reserve Board’s Loan Originator Compensation Rule by paying loan officers quarterly bonuses that varied based on the interest rate of the loans they offered to borrowers. That rule banned compensation based on loan terms such as the interest rate of the loan. The rule had a mandatory compliance date of April 6, 2011, and authority over that rule transferred to the CFPB on July 21, 2011. The CFPB estimates that more than 1,100 quarterly bonuses were paid to over 215 Castle & Cooke loan officers.

Enforcement Action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions for violations of federal consumer financial protection laws. To ensure that all impacted consumers are repaid and that consumers are no longer subject to these illegal practices, the defendants have agreed to:

  • End unlawful compensation practices: Castle & Cooke must end compensation practices, such as giving loan officers bonuses that vary based on the interest rate of the loans they offered to consumers, that violate the Loan Originator Compensation Rule.
  • Pay $9,232,896 toward consumer redress: The defendants will pay $9,232,896 to administer redress to consumers for their actions. Any borrower who has obtained a home loan from a Castle & Cooke loan officer since April 6, 2011, and whose loan officer received a quarterly bonus from Castle & Cooke for that loan, will receive a check as a result of today’s action. The Bureau estimates that more than 9,400 consumers will receive checks.
  • Pay a $4 million civil money penalty: The defendants – Castle & Cooke, Pineda, and Hawkins – will pay $4 million to the CFPB’s Civil Penalty Fund for their alleged violations.
  • Ensure that Castle & Cooke retain records of compensation: Castle & Cooke will abide by federal law that requires creditors to retain evidence of compliance, such as payroll records.

This case was originally referred to the CFPB by investigators with the Utah Department of Commerce, Division of Real Estate. The complaint was filed in the United States District Court for the District of Utah, where the company is located and where the individual defendants reside.

A copy of the proposed consent order, which will not be final until approved by the court, can be found at:http://files.consumerfinance.gov/f/201311_cfpb_proposed-final-order_castle-cooke.pdf

A copy of the complaint filed in July can be found at: http://www.consumerfinance.gov/f/201307_cfpb_complaint_Castle-and-Cooke-Complaint.pdf


For more information about OnlineEd, their mortgage loan originator compliance training program and education compliance management system, please visit www.InlineEd.comwww.onlineed.com,  or contact Joseph Mikkelson at 1.866.519.9597.

This article was published on November 7, 2013. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and was obtained by third party sources. Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

CFPB Releases Second Update Of Exam Procedures For Mortgage Rules

(CFPB – WASHINGTON, D.C.) On August 15, 2013 the Consumer Financial Protection Bureau (CFPB) released a second update to its exam procedures in connection with the new mortgage regulations issued in January 2013. The interim exam procedures offer valuable guidance to financial institutions and mortgage companies on what the CFPB will be looking for as the rules become effective.

“We are committed to transparency around our examination process,” said CFPB Director Richard Cordray. “So we have worked hard to provide industry with advance notice of what we will be expecting. That, in turn, will improve compliance and benefit consumers.”

The CFPB issued several new regulations reforming the mortgage market in January 2013. Many of the new rules were directed by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules cover the various stages of a consumer’s mortgage experience, from shopping for a loan to paying it off. Most of the CFPB’s new rules go into effect in January 2014.

Today’s updates cover the Ability-to-Repay/Qualified Mortgages, high-cost mortgages, and appraisals for higher-priced mortgage loans, as well as new amendments related to the escrows rule. The updates also cover recent changes to credit card rules. With today’s release, the exam procedures now cover the Bureau’s mortgage origination rules issued through May 29, 2013, and mortgage servicing rules issued through July 10, 2013.

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Are you prepared for your CFPB exam?

Today’s release of exam procedures will help financial institutions and mortgage companies understand and prepare for how they will be examined for CFPB rules that, among other things:

  • Require lenders to evaluate a borrower’s ability to pay back the loan: Under the Ability-to-Repay rule, lenders must look at a consumer’s financial information and verify its accuracy. Lenders then must evaluate the information and conclude that the borrower can repay the loan. Lenders may not base their evaluation of a consumer’s ability to repay on teaser rates. They must determine the consumer’s ability to repay both the principal and the interest over the long term − not just during an introductory period when the rate may be lower.
  • Ban or limit certain points, fees, and risky features: Both the rule on Ability-to-Repay and the rule on high-cost mortgages ban or limit certain points, fees, and risky features. Under the Ability-to-Repay rule, a Qualified Mortgage is subject to limitations on points and fees and cannot have loan features such as terms that exceed 30 years or interest-only payments. Under the high-cost mortgages rule, balloon payments and fees for modifying loans are generally banned.
  • Require servicers to provide monthly statements and disclosures: Mortgage servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity. For most adjustable-rate mortgages, they must also provide disclosures before the first interest rate adjustment, and before interest rate adjustments alter the payment amount.
  • Restrict dual-tracking: Under the Bureau’s rule on mortgage servicing, dual-tracking – when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure – is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure and that application is still pending review.
  • Require access to servicing personnel and a fair review process: Mortgage servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. If a foreclosure seems likely, the servicer must consider all alternatives available from the mortgage owners or investors to help the borrower retain the home.
  • Require creditors use a licensed or certified appraiser: The interagency rule from January 2013 on appraisal requirements for higher-priced mortgage loans requires that creditors use a licensed or certified appraiser to prepare a written appraisal report based on a physical inspection of the interior of the property. The rule also requires creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

The CFPB is sharing with industry what it will be looking for in its examinations under the new rules by updating the applicable sections of the exam procedure manuals for the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). These documents are intended for use by CFPB examiners in examining the mortgage companies and other financial institutions subject to the new regulations.

The CFPB is committed to ensuring that the mortgage industry complies with the new consumer protections. Throughout 2013, the CFPB has been working for a smooth transition. It has published plain-language guides. It plans to educate the public about their protections under the new rules. The CFPB is also coordinating with other federal government regulators that also conduct examinations of mortgage companies and financial institutions to ensure all regulators have a shared understanding of the CFPB’s new rules.

 The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.

OnlineEd is a provider of mortgage and real estate continuing and pre-license education and developer of InlineEd a compliance and learning management tracking system for the mortgage industry.

The CFPB Issues Procedural Rule on Supervising Nonbanks That Pose Risks to Consumers

(CFPB -WASHINGTON, D.C.) —The Consumer Financial Protection Bureau (CFPB) issued a rule that establishes procedures to bring under its supervisory authority certain nonbanks whose activities it has reasonable cause to determine pose risks to consumers. Nonbanks subject to the rule are companies that offer or provide consumer financial products or services but do not have a bank, thrift, or credit union charter.

“This is an important step in our effort to continue building a strong supervision program,” said CFPB Director Richard Cordray. “This rule clearly lays out how we plan to implement our supervisory authority over nonbanks that we determine pose risk to consumers. We are also providing industry with a streamlined process that is fair and efficient.”

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the CFPB has the authority to supervise, after following certain procedures, any nonbank that it has reasonable cause to determine has engaged or is engaging in conduct that poses risks to consumers with regard to consumer financial products or services. Such conduct may involve, for example, potentially unfair, deceptive, or abusive acts or practices, or other acts or practices that potentially violate federal consumer financial law. The Bureau must base such reasonable cause determinations on complaints collected by the Bureau, or on information from other sources, such as judicial opinions and administrative decisions.

This rule outlines procedures to notify a nonbank that it is being considered for supervision because the CFPB may have reasonable cause to determine that it poses a risk to consumers. The rule also sets out the procedures that the CFPB will follow to give the nonbank in question a reasonable opportunity to respond to such notice. For example, the rule dictates what the CFPB requires in both the notice and the response. And, the rule creates a mechanism for nonbanks to file a petition to terminate the CFPB’s supervisory authority after two years.

Importantly, notifying a nonbank under this rule simply means that the CFPB may be supervising it. The Bureau is authorized to require reports from and conduct examinations of nonbanks subject to its supervision.

In addition to the authority to bring nonbanks under the CFPB’s supervisory authority based on risk determinations, the Bureau also has authority under the Dodd-Frank Act to supervise nonbanks, regardless of size, in certain specific markets: mortgage companies (originators, brokers, and servicers including loan modification or foreclosure relief services); payday lenders; and private education lenders. The CFPB can also supervise the “larger participants” in other nonbank markets as the Bureau defines by rule. The Bureau has issued two rules defining larger participants: one rule for the consumer reporting market that went into effect in September 2012, and the other for the debt collection market that went into effect in January 2013. A proposed larger-participant rule for the student loan servicing market was issued in March 2013.

Although the Dodd-Frank Act does not require that the CFPB issue this rule, the CFPB is issuing it to be transparent in the procedures it intends to use to implement its authority under the Dodd-Frank Act. In May 2012 the CFPB issued a notice of proposed rulemaking for public comment. Based on feedback received from the public and stakeholders, the CFPB is issuing the final rule today. The rule is effective 30 days after publication in the Federal Register.

The rule is available online at http://files.consumerfinance.gov/f/201206_cfpb_final-rule_certain-nonbank-covered-persons-risk-determination.pdf


  The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov. For more information about OnlineEd, visit www.OnlineEd.com. For more information about mortgage compliance, visit www.InlineEd.com.

CFPB Issues Proposed Modifications to Mortgage Rules


Proposal Would Resolve Implementation Issues and Clear Way for Better Consumer Protections

 (CFPB, WASHINGTON, D.C.)  Today the Consumer Financial Protection Bureau (CFPB) proposed clarifications and some narrow revisions to its January 2013 mortgage rules. The proposal issued today would resolve questions that have been identified during the implementation process and would help the rules deliver their intended value for consumers.

“When we published our mortgage rules, we pledged to be attentive to issues that arose through the implementation process,” said CFPB Director Richard Cordray. “Today’s proposal revises and clarifies certain aspects of our rules to ease implementation and to pave the way for more effective consumer protections in the marketplace.”

The CFPB finalized several mortgage rules in January 2013 that are addressed by today’s proposal. The Ability-to-Repay rule protects consumers from irresponsible mortgage lending by requiring that lenders make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans. The mortgage servicing rules established strong protections for homeowners facing foreclosure, and the loan originator compensation rules address certain practices that incentivized steering borrowers into risky and/or high-cost loans. The CFPB also finalized rules that strengthened consumer protections for high-cost mortgages, and instituted a requirement that escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.

The proposal issued today involves clarifications and some narrow revisions to those mortgage rules. Among other things, today’s proposal would:

  • Outline procedures for obtaining follow-up information on loss-mitigation applications: According to the CFPB’s servicing rule, within five days of receipt of a loss mitigation application, a servicer must acknowledge receipt of the application and inform the borrower whether it deems the application complete or incomplete. If incomplete, the servicer must identify for the borrower what is needed to complete it. The proposal would outline procedures for servicers to follow, if, after conducting an initial review and sending the notice to the borrower, they discover that they do not have the information needed to complete an assessment.

o   The proposal clarifies that servicers are required to seek the additional information from the borrower if they cannot complete the assessment without it.

o   The proposal also requires that servicers ensure that the borrower does not lose certain protections under the rule, such as a foreclosure ban during the first 120 days of delinquency, until the borrower has had a reasonable time to supply the needed documents or information.

  • Facilitate servicers’ offering of short-term forbearance plans: The proposal would make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. For example, under the proposal, a servicer could provide a two-month forbearance to a borrower who is suffering a short-term hardship.
  • Facilitate lending in rural or underserved areas: Some of the Bureau’s mortgage rules contain provisions applicable to certain small creditors that operate predominantly in “rural” or “underserved” areas. The Bureau recently announced that it would reexamine the definitions of rural or underserved over the next two years. Today’s proposal would clarify how existing definitions may apply while that reexamination process is underway for purposes of two exceptions under the existing rules.

o   The proposal would extend an exception to a ban on high-cost mortgages featuring balloon payments – large, lump sum payments usually due at the end of the loan – to small creditors that do not operate predominantly in rural or underserved counties so long as the loans meet certain restrictions.

o   The proposal would revise an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans for small creditors who operate predominantly in rural or underserved areas and that also meet other criteria. To prevent creditors from losing eligibility for the exemption in 2014 due to changes in which counties are defined as rural, the proposal would extend availability to small creditors that qualified in any of the previous three calendar years.

  • Make clarifications about financing of credit insurance premiums: The Dodd-Frank Act prohibition on creditors financing credit insurance premiums in connection with certain mortgage transactions was adopted in the Bureau’s loan originator compensation rule. Questions have arisen during the regulatory implementation process concerning the application of that prohibition. Today’s proposal seeks to answer those questions.

o   The proposal would clarify what constitutes financing of credit insurance premiums by a creditor – particularly as the rule applies to “level” or “levelized” premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance.

o   The proposal would provide guidance on when credit insurance premiums are considered to be calculated and paid on a monthly basis for purposes of an exclusion from the statutory prohibition.

  •  Clarify the definition of a loan originator: Under the CFPB’s new rules, persons classified as loan originators are required to meet qualification requirements, and are also subject to certain restrictions on compensation practices. Creditors and loan originators have expressed concern that tellers or other administrative staff could be unintentionally classified as loan originators for engaging in routine customer service activities. Today’s proposal would clarify the circumstances under which a loan originator’s or creditor’s administrative staff acts as loan originators.
  • Clarify the points and fees thresholds for manufactured housing employees:  For retailers of manufactured homes and their employees, the proposal would clarify what compensation must be counted toward certain thresholds for points and fees under the ability-to-repay and high-cost mortgage rules.
  • Revise effective dates of Loan Originator rule and ban on financing of credit insurance: Currently, the 2013 Loan Originator Compensation Final Rule is scheduled to take effect on January 10, 2014.

o   The CFPB is seeking comment on whether to change the effective date to January 1, 2014 for portions of the loan originator rule. The Bureau believes that having the rule take effect at the beginning of a calendar year may help compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.

o   The Bureau is also seeking comment on whether to adjust the effective date for the ban on financing credit insurance. The Bureau had previously delayed that date in order to provide additional guidance on the issues discussed above, and is now seeking comment on whether the rule should take effect on January 10, 2014, or earlier in light of how much time creditors would need to adjust billing practices.

 The CFPB is committed to assisting with the mortgage industry’s compliance with the new consumer protections. Throughout 2013, the CFPB has been working for a smooth transition. In addition to clarifying critical questions about the new mortgage rules, the Bureau has also published plain-language guides for each rule and some interim examination procedures. The CFPB also plans to educate the public about their protections under the rules.

The Bureau recently published a new Regulatory Implementation web page, which consolidates all of the new 2013 mortgage rules and related implementation materials, and can be found here:http://www.consumerfinance.gov/regulatory-implementation

 Comments on today’s proposal must be received on or before July 22, 2013.

A copy of today’s proposal can be found at: http://files.consumerfinance.gov/f/201306_cfpb_proposed-modifications_mortgage-rules.pdf


 The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.ConsumerFinance.gov. For more information about OnlineEd, visit www.OnlineEd.com. For more information about mortgage compliance, visit www.InlineEd.com.

CFPB Releases Informative Videos on YouTube


CFPB rules hit the “big screen!”

Confused about the CFPB’s January 2013 new mortgage rules? Don’t have an afternoon to read a series of .pdf files? Check out the new videos that the CFPB just posted on YouTube.

We’re trying to make our rules more understandable and more user-friendly, setting out as clearly as we can what you need to know, and what you need to do, in order to comply with the rules.” – Richard Cordray, CFPB Director.

Following up to their March 2013 promise of publishing plain-language guides to January 2013 mortgage regulations in both written and video form, the CFPB has posted several videos on YouTube explaining these recently published regulations. The overview takes a little over one hour to watch, and is available to watch in one movie-like chunk, or in smaller segments concerned with each specific January 2013 rule. If you are looking for information without having to sift through pages and pages of online documents, OnlineEd highly recommends brewing yourself a cup of coffee and devoting an hour of your workday to familiarize yourself with these regulations.

The CFPB is actively looking for ways that they can make these new rules more accessible to every mortgage professional, and is taking comments and criticism. Richard Cordray has this to say:

We’re currently taking feedback on the guides, so please let us know what you think.”

Information on how to submit feeback is contained with each of the guides.

MLOs Not to Take The Same NMLS Approved CE Courses in Successive Years


(OnlineEd – Portland, OR) Mortgage Loan Originators (MLOs) cannot complete the same approved continuing education courses in the same or successive years to meet their annual requirements for continuing education credit. “Successive years” as interpreted by the NMLS means two years in a row. The SAFE Act of 2008 requires MLOs to complete 8 hours of NMLS approved CE annually.

The NMLS system for validating CE credits is programmed not to count the same course number twice. To avoid making this mistake, MLOs should make sure their preferred provider is offering courses with different titles than the year prior.

NMLS information about the “Successive Year” rule can be found in the NMLS Resource Center at http://mortgage.nationwidelicensingsystem.org/courseprovider/Documents/Successive%20Years%20Rule.pdf


OnlineEd® is NMLS approved course provider number 1400327 . To learn more about OnlineEd, visit us at www.OnlineEd.com

Which OnlineEd Approved NMLS Continuing Education Course Should I Take? (California)

The SAFE Act requires all mortgage loan originators to complete a minimum of 8 hours of NMLS approved continuing education once a year before December 31. OnlineEd® likes to help you out whenever we can! We have three different options, each one slightly different, to make sure you get the exact education you need, in the simplest possible way. Below are our NMLS approved courses along with a few sentences about which one would work best for your situation.


EdPak S.A.F.E. – 2011 California DRE / NMLS Renewal Package (Complete Renewal Package) – 46 HOURS

If you are a licensed real estate salesperson or broker in the state of California, then this is the course you want. It includes the required 8-hours of NMLS approved education for mortgage loan originators, which is also approved for DRE credit, as well as the remaining required hours for your real estate salesperson or broker renewal. Licensees are able to complete the NMLS continuing education before the deadline at the end of 2011. Once that is complete, the licensee can choose to complete the remaining courses for DRE credit at their convenience, any time within two years of the enrollment date (Courses must be completed before your DRE license expires.)

Click HERE to learn more about EdPak S.A.F.E.

8-Hour SAFE Comprehensive Continuing Education Course – 8 HOURS

This course satisfies 8 hours of required continuing education for mortgage loan originators. This course is approved by the NMLS. A valid NMLS ID number is required to receive credit for this course. Certain states may require additional credits, but this basic 8-hour course is required in all 50 states.

Click HERE to learn more about this course.

8-Hour SAFE Comprehensive Continuing Education Course (For California Real Estate Licensees) – 8 HOURS

This course satisfies 8 hours of required continuing education for mortage loan originators and real estate agents in California. Students who pass this course will receive credit for both the NMLS and the California DRE. This course is approved by the NMLS and the California DRE.

Click HERE to learn more about this course.


NMLS Provider ID: 1400327
NMLS Course ID: 1888

NMLS Proposals Are Open for Comment

(OnlineEd® – Portland, OR) – You probably already know that the National Mortgage Licensing System (NMLS) makes changes to their policy on a fairly regular basis. What you may not know is that anyone can comment on proposals before they take effect. You can even view comments on proposals from as far back as 2009. The NMLS makes it extremely easy to submit your own comment or view comments already made by other interested parties. If you would like to view comments that have been submitted on current or past proposals please visit the “Proposals for Comment” section of the  NMLS website. If you have a comment of your own, you can send it via email to comments@stateregulatoryregistry.org.


OnlineEd® is an online vocational school offering training and continuing education courses for mortgage loan originator, real estate, insurance, and other vocations.
For more information about OnlineEd please visit www.OnlineEd.com.

Consumer Protections Bolstered with CA’s Department of Real Estate New Licensing Law for Mortgage Loan Originators


(SACRAMENTO, Ca. Dept. of Real Estate) – Oversight of residential mortgage loan originators has been vastly improved with the implementation of new licensing requirements for mortgage originators in California. These new licensing requirements place stricter standards on individuals who originate residential mortgage loans. These standards are intended to keep unscrupulous operators out of the business while ensuring those in the business have demonstrated an understanding of the laws and regulations regarding mortgage lending. And for the first time, all residential mortgage loan originators will have to register with a national database allowing consumers to check with a single source to make certain they are doing business with a properly licensed mortgage loan originator.

As of January 1st, the California Department of Real Estate (DRE), the state agency that licenses and regulates a majority of mortgage brokers in California, successfully implemented new licensing requirements for mortgage loan originators who also hold a real estate license. The DRE follows the California Department of Corporations who implemented the new requirements for its registrants in July 2010.

“Part of the financial meltdown can be attributed to unscrupulous mortgage brokers who placed unsophisticated borrowers into complicated loan products that the borrower did not fully understand,” stated Real Estate Commissioner Jeff Davi. “The new standards will go a long way to ensure unsavory characters are not allowed into the business and the national registry gives consumers more complete information on their originator before signing any loan application,” added Davi.

The new requirements are a result of the passage of federal law that required states to adopt uniform standards for those wanting to originate residential home loans.  In 2008,  the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”) was signed into law and California subsequently passed conforming legislation that gave real estate licensees until January 1, 2011 to obtain a mortgage loan originator (MLO) license endorsement. Without a MLO license endorsement, a real estate licensee can no longer legally originate or broker residential mortgage loans.

Under the SAFE Act, mortgage loan originators must meet numerous professional requirements including the completion of 20 hours of pre-licensure education, they must pass an examination covering federal law, state law, and ethics, clear a federal and state criminal background check, and MLOs must complete annual continuing education in order to renew their MLO license endorsement.

The SAFE Act also requires all mortgage loan originators to register with the National Mortgage Licensing System and Registry (NMLS) where consumers can check the license status of a loan originator by viewing the NMLS Consumer Access (http://www.nmlsconsumeraccess.org/).  The consumer then can confirm, free of charge, that any mortgage company or mortgage professional with whom they wish to conduct business is licensed in the state. Originators who work at depository institutions, like banks and credit unions will have to register with the system later this year. The database also allows regulators to determine if a MLO has been disciplined or revoked by another jurisdiction which will prevent dishonest originators from closing shop and opening a new business in a different state or location.

Prior to the deadline, the DRE was able to process all of the MLO license endorsement applications that were qualified.  As of January 1, the DRE issued over 22,000 MLO license endorsements.  MLO license endorsements applications continue to flood in and the DRE expects to eventually issue over 30,000 endorsements.

For information about DRE and its programs visit www.dre.ca.gov. While on the DRE’s web site, be sure to subscribe to the DRE’s RSS feed and you will be notified when the DRE issues alerts, bulletins, news releases or other important information.

DRE Provider # 4056