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					      Maryland’s SAFE Act Conforming
       Legislation and the Transition
                  to NMLS



This presentation contains currently-available information regarding the Commissioner's transition
to the NMLS. It may be updated as necessary and should not be relied upon as legal advice.


  1
              Topics of Discussion

•   Nationwide Mortgage Licensing System
•   SAFE Legislative Framework
•   NMLS Demonstration
•   Maryland Process - Transitioning to NMLS




2
                 Section 1

    Nationwide Mortgage Licensing System




3
                  NMLS Description

    • Nationwide state-supervised licensing system
    • Similar to other industries -
       Securities
       Investment advisors
    • Custom for mortgage industry
    • Two primary goals:
      – Uniform mortgage application for every agency
      – Comprehensive licensing and supervisory repository



4
                   NMLS Description

    •   NMLS launched on 1/2/2008 with 7 states
    •   26 state agencies as of March 2008
    •   9 more scheduled in 2009 including MD
    •   NMLS currently tracking:
        – Over 12,000 companies
        – Over 11,000 branches
        – Over 55,000 loan originators


5
                           CSBS/AARMR Nationwide Mortgage Licensing System
                                                                         States currently using NMLS
                                                                         States to join NMLS in 2009
                                                                         States to join NMLS in 2010



                    Washington
                                                                                                                                                                                             Maine
                                                         Montana         North Dakota                                                                                         Vermont
                  Oregon                                                                    Minnesota
                                                                                                                                                                                              New Hampshire
                                     Idaho                                                                                                                                                           Massachusetts
                                                                         South Dakota                       Wisconsin                                                   New York
                                                          Wyoming                                                                    Michigan                                                 Rhode Island
                                                                                                                                                                                            Connecticut
                                                                                                 Iowa                                                         Pennsylvania
                                                                            Nebraska                                                                                                    New Jersey
                           Nevada
                                                                                                                                   Indiana      Ohio                                Delaware
                                             Utah                                                                   Illinois       (DFI &
                                                                                                                                                        West                        Maryland
                                           (DFI & DRE)        Colorado                                                             SOS)                Virginia
              California                                                                                                                                                           District of Columbia
             (DFI, DOC                                                            Kansas                                                                           Virginia
                                                                                                   Missouri
               & DRE)                                                                                                                Kentucky
                                                                                                                                                                   North
                                                                                                                                                                  Carolina
                                                                                                                               Tennessee
                                         Arizona                                    Oklahoma                                                                South
                                                                                                   Arkansas
                                                         New Mexico                                                                                        Carolina

                                                                                                                     Mississippi
                                                                                                                                   Alabama       Georgia
    Hawaii
                                                                                Texas
                                                                             (OCCC & SML)
                                                                                                        Louisiana

                                                                                                                                                             Florida
                                Alaska




                                                                                                                                                                                                Puerto Rico


6
                    NMLS Objectives

• Streamline the licensing process
    – Efficient and standardized process leveraging technology
    – Centralized record for multi-jurisdictional entities
• Enhance supervision
    – Uniform loan originator and lender records
    – Seamless visibility / coordination among states
• Increase consumer protection
    – Industry accountability
    – Reduced fraud
    – Access to license and sanction data

7
      Significant Infrastructure Commitment

    • NMLS at launch: $4.4 million
    • 2008: $4.0 million
    • 2009 $6.8 million
      – Testing
      – Education
      – Criminal Background Checks
      – Credit reports
      – Consumer access

8
     System Overview




    www.stateregulatoryregistry.org/nmls

9
     Single License File




10
                   Individual State Licensing

                                              FORM MU1


                                  1. Company Identifying Information
                                      (Name, Address, Contacts)

                                                                           MA
                                                                         Approved
                                                2. License
                                              Jurisdiction(s)




                                            3. Legal Status


                                         4. Control Information


                                        5.-7. Business Activities


                                        8. Disclosure Questions
                                                                             NY
                                                Schedule A
                                  Direct Owners and Executive Officers
                                                                         Approved -
                                           (ties to Question 4)           Deficient
• All regulators share the same                Schedule B
                                             Indirect Owners
  electronic MU filing                    (ties to Question 4)



• Each regulator makes their
  own licensing decisions and
  controls their own license                                                 RI
                                                                                      X
                                                                           Denied
  information.


11
            Section 2


     SAFE Legislative Framework




12
           Federal SAFE Legislation

• Housing & Economic Recovery Act of 2008
     – Signed by President Bush on July 30, 2008
     – Reforms GSE (Freddie and Fannie) regulation
     – Modernizes the Federal Housing Administration
     – Promotes private-sector loan workouts to
       prevent foreclosure
     – Licensure of all loan originators (Title V)


13
                Federal SAFE Legislation

 • All mortgage loan originators must be
       – Meet minimum standards
       – Be licensed or registered
       Financial institutions   Registration through bank regulatory
                                agencies
       Non banks                Licensing through states on NMLS


     • Extended to mortgage lenders outside
       federal law

14
                        Key SAFE Participants


                                      SAFE Mortgage
                                        Licensing
                                           Act




                           US DEPARTMENT OF   NATIONWIDE MORTGAGE    MORTGAGE LOAN
     STATE REGULATORY
                              HOUSING AND       LICENSING SYSTEM    ORIGINATORS AND
          AGENCY
                          URBAN DEVELOPMENT         & REGISTRY          LENDERS




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                 Federal Mandate for States

• All states must have a system of licensing for loan
  originators by July 31, 2009
• System must meet SAFE definitions and minimum
  standards, that include:
     –   Licensing loan originators through NMLS
     –   Criminal and credit background check
     –   Education
     –   Testing

                        Maryland Legislation – SB 269
                          Meets SAFE requirements*
                 Includes several provisions to facilitate transition

         * Clarifying guidance from HUD is being obtained regarding (1) individual servicer
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          licensing; (2) testing for current licensees; and applicability to manufactured housing
           Federal Mandates for NMLS

 • Establish protocols for issuing unique ID #

 • Process criminal background checks

 • Approve pre-licensure and continuing education courses

 • Develop national test for loan originators

 • Develop mortgage call report

 • Provide public access to licensing data

 • Process consumer complaints

17
               Maryland SAFE Act Legislation
                      Senate Bill 269
• On April 14, 2009, Governor O’Malley signed SB 269 into law
  bringing Maryland into compliance with SAFE
• Legislation will become effective July 1, 2009
• From a structural perspective, SB 269 seeks to
      – Maintain underlying structure and elements of MD mortgage licensing laws to
        retain integrity of features that do not conflict with the Federal SAFE Act
      – Integrate key elements necessary to meet SAFE Act requirements
      – Minimize disruption to mortgage industry in the transitional period




 18
               Key Elements for Originators

Terms         - 1 term                             - Shift from staggered, 2 year licensing
              - December 31st Expiration             in process

Definitions   - Residential Real Estate            - Retains “owner occupied” residential
              - Mortgage Loan                        1-4 focus / NOT investment properties
              - Registered Loan Originator         - LOs with depositories participate
                                                     through federal agencies
Criminal      - Total prohibition for conviction   - Current prohibition for felony
Background      involving fraud, dishonesty,         conviction for fraud, theft of forgery
Check           breach of trust, money               only if WITHIN 10 years
                laundering
              - Prohibition for other felony       - Currently, Commissioner discretion for
                conviction within 7 years            other felonies
              - Total prohibition for prior        - Currently evaluation of revocations
                revocation (inc. other state)        within discretion of Commissioner

19
                             Key Elements For
                                Originators
Education        - 20 hours of pre-licensing education     - Current law allows 3 years of
                                                             experience OR 40 hours of pre-
                                                             licensing education
                 - 8 hours of continuing ed                - Currently 20 hours every 2
                                                             years
Testing          - NMLS approved testing                   - As available (likely 1/10)


Financial        - Financial responsibility must be        - Currently, no explicit
Responsibility     demonstrated and new credit report        qualification in law previously –
                   submitted with NMLS application           “good moral character and
                 - Denial may not be based solely on any     general fitness” for originators
                   one of credit score, bankruptcy,
                   foreclosure, debt from divorce or
                   medical expenses


20
                      Key Elements For
                         Originators

Surety Bond   - SAFE creates requirement for            - Functionally parallel to current
                originators                               MD law
              - Can be met at employer (lender) level
Other         - Non-active status for LO between        - Non-SAFE element
                employers (notice requirement)          - Frequent issue in current
                                                          market




21
                 Transition Timeline NMLS

 – 1/1/09      - New / renewal license expiration shifts to 12/31/09
                                                                       Pre-Transition
 – 5/11/09     - NMLS Portal opens for MD licensees
                                                                         Licensing
 – 6/30/09     - Last day for using MD system alone for MO and         Solely through
               ML licenses (applications received well prior)           MD System

 – 7/1/09      - New / renewal license applications approved
                through NMLS by MD                                      18 Month
              - New / renewal licenses expire on 12/31/10               Transition
 – 1/1/10      - NMLS Federal / MD test and fingerprinting open           Licensing
 – 12/31/10    - License transition complete
                                                                       through NMLS


22
           Section 3



     Transitioning to NMLS




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                 Transition Timeline NMLS

 – 1/1/09      - New / renewal license expiration shifts to 12/31/09
                                                                       Pre-Transition
 – 5/11/09     - NMLS Portal opens for MD licensees
                                                                         Licensing
 – 6/30/09     - Last day for using MD system alone for MO and         Solely through
               ML licenses (applications received well prior)           MD System

 – 7/1/09      - New / renewal license applications approved
                through NMLS by MD                                      18 Month
              - New / renewal licenses expire on 12/31/10               Transition
 – 1/1/10      - NMLS Federal / MD test and fingerprinting open           Licensing
 – 12/31/10    - License transition complete
                                                                       through NMLS


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              What Does This Mean for You?

                         Current Mortgage Loan
                     Origination Professionals in MD



               NOT an employee of bank or subsidiary?




 Current Licensees          New Licensees         New Licensees
(Expiration After 6/30/09   (Exempt at 6/30/09)        (De Novo)



 25
      What Does This Mean for Originators?

 •   Current originator licensees
      –   NMLS entry at renewal – 18 month transition (you may transition early)
      –   Education / bonding / background check requirements met by 12/31/10
      –   Testing subject to HUD guidance
      –   Continuing education within past 5 years will meet NMLS pre-licensing requirement

 •   New originator licensees - previously exempt mortgage originators
      –   Interim license allows current activities
      –   Interim license application must be received by 7/31/09 or full de-novo licensing
      –   Key requirements (education, background check, bonding, testing) must be satisfied to lift
          restrictions and must be obtained by 7/31/10

 •   New originator licensees – de-novo
      –   NMLS entry at initial licensing
      –   Full compliance required at outset
      –   Testing deferred until NMLS test is available




26
                Current Originator Licensees

•    Licenses with expiration dates on or after July 1, 2009
•    Transition AT EXPIRATION (you may transition early)
•    New license will expire Dec. 31, 2010 (up to 18 months)
•    Key requirements -
    Education        20 hrs of pre-licensing education may be
                     satisfied with 20 hrs of continuing ed.
                     within past 5 years
    Bonding          Employee of licensed mortgage lender       LO holding a MD
                     may satisfy with employer bond             Mortgage Originator
                                                                license on 7/1/09 must
    Fingerprinting   FBI / state – NMLS not yet operational     comply with these
                     Implementation delayed to 1/1/10           requirements for NMLS
                                                                licensing by 12/31/10
    Testing          Federal / MD test not yet available
                     Implementation delayed to 1/1/10
                     Not required until HUD provides guidance

                                                                             Current
    27                                                                     Licensees
           Current Originator Licensees

1) Initiate MU4 on NMLS (after consultation with employer)

     2) Complete MU4 and related tasks on NMLS

        3) Pay NMLS processing fee - $30 annually / $60 if prior to 12/31/09


           4) Proceed to MD website for -
                 (i) Association with lender done on MD website (all
                      lenders not on NMLS until end of transition (12/31/10)
                 (ii) Payment of MD license fee - $225 annually - pro-rated
                      for duration by MD


                                                                    Current
28                                                                Licensees
                        What Happens When on MD Website – Current MLO




                                  NMLS Transitioning / Sponsorship Application

NMLS Transitioning / New License Checklist Requirements

  1. This application process is for

           Renewing mortgage lenders - who are currently licensed by the State of Maryland and who are transitioning to NMLS AT
            RENEWAL.
                Fees – Renewing licensees will need to pay the Maryland license fee through this website. Your license will expire on
                  12/31/2010 and you will be charged a pro                                                                       -
                                                             -rated fee for this period. As the NMLS system cannot accommodate prorated
                  fees, Maryland will process your payment through this website. If you are a new mortgage lender licensee, all fees are
                  assessed directly through the NMLS.
           ALL mortgage loan originators (new and renewing) – who are transitioning to NMLS at renewal OR obtaining a new
            license.
                Sponsorship- All mortgage loan originators will use this application to complete their sponsorship requirement by
                                                                        s
                  identifying their employer or certifying the employer’ exempt status.
                Fees – Renewing licensees will need to pay the Maryland license fee through this website. Your license will expire on
                  12/31/2010 and you will be charged a pro                                                                       -rated
                                                             -rated fee for this period. As the NMLS system cannot accommodate pro
                  fees, Maryland will process your payment through this website. If you are a new mortgage originator licensee, all fees are
                  assessed directly through the NMLS.

                                                                                                 ensed mortgage lender or mortgage
  2. You should begin this Application AFTER you have completed the process for new or currently lic
     loan originators on the NMLS and have obtained an NMLS Identification Number (“NMLS ID”).
  3. Please be aware that NMLS information is downloaded to Maryland on the next business day.          Please allow 1-2
     business days after the submission of your NMLS application before proceeding       .

Note:

       Please be sure to have a valid MasterCard/Visa/Discover credit card before proceeding if you are transitioning at renewal.
       Please be sure to have your assigned NMLS ID to login.
                                                                                                                                     29
                                                      Begin Transition / Sponsorship Application
What Happens When on MD Website – Current MLO




                                                30
                   What Happens When on MD Website – Current MLO




                                  NMLS Transitioning / Sponsorship Application

                                                  Mortgage Loan Originator

Step 3: Applicant Information Review
Personal Information
Name:                                      ERIC JOSEPH BRANHAM
Address:                                   111 CHARLESBROOKE RD.
City, State Zip:                           BALTIMORE, MD 21212-0000

Home Phone Number:                         410-377-8519
Cell Phone Number:                         410-409-1057
                                           EBRANHAM@PRIMERES.COM
Business Information Office Location
You must provide your employment statement (PDF) reflecting the new information before your new license will be approved.

                                         e
Note: If you are applying as a new Mortgag Loan Originator and your employer is exempt from the Maryland Mortgage Lender license, please
enter Registration Number 979797 as your office location.

Registration Number:                        979797 EXEMPT
Business Location:                           EXEMPT MORTGAGE LENDER

                                             00000-0000

Expiration Date:                            01-01-9999
Work Phone Number:                          000-000-0000
Work Fax Number:                            000-000-0000
                                                                                                                                 31
Employer/Location Change Effective          07-20-2009
                  New Originator Licensees
                    Previously Exempt
• Interim Mortgage Loan Originator license if AS OF 6/30/09
     – Employed by licensed mortgage lender that makes loans and doesn’t broker
     – Owns 25% or more interest in mortgage lender
• Application for interim license MUST be received by July 31, 2009
• License will expire Dec. 31, 2010 (up to 18 months) BUT “Interim” status
  must be cleared by 7/31/10 (within 12 months)
• Key requirements -
 Education          20 hrs of pre-licensing education
                                                              1 Year to Clear
 Bonding            Employee of licensed mortgage lender      Under Interim
                     may satisfy with employer bond           Status, licensee
                                                              under same
 Fingerprinting     FBI / state – NMLS not yet operational    restrictions as
                    Implementation delayed to 1/1/10          under previous
 Testing            Federal / MD test not yet available       exemption
                    Implementation delayed to 1/1/10

                                                                     New Licensees
32                                                                 Previously Exempt
               New Originator Licensees
                 Previously Exempt
1) Initiate MU4 on NMLS (after consultation with employer)

   2) Complete MU4 and related tasks on NMLS (by 7/31/09 for interim)

       3) Pay ALL NMLS and MD fees on NMLS
               - NMLS - $30 annually / $60 if prior to 12/31/09
               - MD - $225 annually / $550 if prior to 12/31/09 and $100
                        investigation fee

           4) Proceed to MD website for association with lender only (all
              lenders not on NMLS until end of transition (12/31/10)

               5) Identify prior exemption on Affidavit of Md MLO Activity

                   6) Clear background, bonding, education, testing by 7/31/10

                                                                    New Licensees
  33                                                              Previously Exempt
                  New Originator Licensees
                         De Novo
• Application any time after May 1, 2009 for approval after July 1, 2009
• License will expire Dec. 31, 2010 (up to 18 months)
• Key requirements -

 Education          20 hrs of pre-licensing education


 Fingerprinting     FBI and state fingerprint check thru MD
                                                              NO INTERIM STATUS
                    NMLS portal not operational yet
                                                              All requirements are
                                                              effective with testing
 Bonding            Employee of licensed mortgage lender
                                                              subject to availability
                    may satisfy with employer bond

 Testing            Federal / MD test not yet available
                    Implementation as available


                                                                       New Licensees
34                                                                       De Novo
             New Originator Licensees
                    De Novo

1) Initiate MU4 on NMLS (after consultation with employer)


     2) Complete MU4 and related tasks on NMLS


        3) Pay ALL NMLS and MD fees on ON NMLS
                - NMLS - $30 annually / $60 if prior to 12/31/09
                - MD - $225 annually / $550 if prior to 12/31/09 and $100
                        investigation fee

           4) Proceed to MD website for association with lender only (all
              lenders not on NMLS until end of transition (12/31/10)

                                                                New Licensees
35                                                                De Novo
        What Does This Mean for Lenders?

 • Current lender licensees
     – NMLS entry at renewal – 18 month transition (you may transition early)
     – Original / main office MUST be on NMLS for branch to transition – so Original /
       main office may need to transition early if existing branch expires or new branch is
       to be licensed prior to expiration of original / main office license
     – Surety bond and net worth requirements as current

 • New lender licensees
     – NMLS entry at renewal – 18 month transition (you may transition early)
     – Original / main office MUST be on NMLS for new branch to be licensed through
       NMLS – original / main office may need to transition early for new branch to be
       licensed
     – Surety bond and net worth requirements as current




36
                  Current Lender Licensees

1) Initiate MU1 on NMLS

     2) Initiate MU3 on NMLS – only after MU1 licensing completed*

          3) Pay NMLS processing fee only ON NMLS Site
                  - NMLS – Main - $100 annually / $200 if prior to 12/31/09
                  - NMLS - Branch - $20 annually / $40 if prior to 12/31/09


                4) Pay MD license fee on MD website - $1,000 annually - pro-
                   rated for duration

*No branch office may be licensed through NMLS until the home/main office has transitioned.
                                                                                         New Licensees
37                                                                                         De Novo
               New Lender Licensees

1) Initiate MU1 on NMLS

     2) Initiate MU3 on NMLS – only after MU1 licensing completed*

        3) Pay ALL NMLS and MD fees on NMLS
                - NMLS – Main - $100 annually / $200 if prior to 12/31/09
                - NMLS - Branch - $20 annually / $40 if prior to 12/31/09
                - MD - $1,000 annually / $2,000 if prior to 12/31/09

           No branch office may be licensed through NMLS until
                  the home/main office has transitioned.


                                                                 New Licensees
38                                                                 De Novo
                    Interim Changes

 • Do NOT make changes to your license while completing
   the transition / renewal process
 • If you need to make a change, transition / renew through
   the NMLS immediately and prior to expiration date
 • The license expiration will be extended to December 31,
   2010 expiration pursuant to the normal renewal process
   and a pro-rated fee will be charged
 • Upon approval, you can implement the change through
   the NMLS directly
         No interim changes may be processed through MD
         Use NMLS AFTER license has transition / renewed


39
             More Information to Follow

• Communication has been and
  will be ongoing
  – Electronic newsletter
  – Webinars
• Emergency regulations in
  process to support
  implementation


                             http://www.dllr.state.md.us/finance/frnews/


 40
             Advantages of NMLS

 Single record for each company / originator
 More efficient simpler multi-state licensing
 Greater consistency in standards
 Better technology and support–
 Superior regulatory oversight
     - Unified, multi-state access
     - Enhanced originator tracking
     - More information – call reports etc.
41

				
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