April 2008 Mortgage Licensing Update

The April Mortgage Licensing Update includes the following updates:

o FHA Licensing Bond – Will it ever pass?

o Alaska Mortgage Licensing – July 1, 2008

o New York Mortgage Licensing – change to NMLS

o Surety Bond Issues – Massachusetts, District of Columbia, and New York

o HUD Exempt States – This is really interesting

FHA Licensing Bond

Congress has been working on reconciling the FHA Modernization Act for months now and although it appears every week that they are making progress, it is nevertheless very unclear whether a bond provision will be in the new law. If you are looking to do FHA loans and you don’t meet the $63,000 net worth requirement, I recommend looking into other options. There are many companies out there that will allow you the independence you desire while operating under their HUD approval.

Alaska Mortgage Licensing

Although you won’t find anything on Alaska’s website, mortgage broker and lender licensing are required by July 1, 2008. The contact is Roger Prince at (907) 269-8144. My recommendation is to contact him as soon as possible if you desire to originate in Alaska after July 1, 2008.

New York Mortgage Licensing

The change for New York Mortgage Brokers and Bankers to the NMLS has started. Beginning April 1, 2008 you can now submit your company information into the NMLS. The deadline for change is September 1, 2008. With the complete incompetence of the New York Banking Departments Mortgage Licensing Division, there is great concern that they will be able to manager this in a specialized manner. It could turn out very bad for many companies if this does not go smoothly, but it is possible that the NMLS will ultimately streamline the time of action of getting licensed in New York, which at this time is the most difficult state for licensing in the nation. My hope is that they clean house over there and get rid of the people that are uncooperative and rude.

Surety Bond Issues

Massachusetts, District of Columbia, and New York are becoming very difficult states to place bonds in. Hartford issued a letter that they would not be renewing any Massachusetts bonds. District of Columbia has made some changes to the way they interpret the bond increasing the liability for the carrier, and New York has been making so many claims on the bonds that no surety carrier wants to write them anymore. My recommendation to you is to contact these states if you are licensed in them and complain. They need to make some changes to their surety bonds and the way they use them or the mortgage companies in these states are going to lose their licenses or be forced to pay a lot of money to get the bonds. Let your voices be heard.

HUD Exempt States

HUD approval allows you to do FHA loans, but it also has another additional assistance: HUD exemptions. About 10 years ago, you could be exempt in most states if you were approved to broker FHA loans, but slowly the states have taken away these exemptions. Here is the list of states that nevertheless have some form of exemption in their laws. Keep in mind that some of these exemptions will not apply to you and some lenders do not accept exemptions.

Alabama

Hawaii under Foreign lender exemption (some edges don’t take it though – most do)

Oklahoma if you have a FHA nationwide direct lending branch or a FHA approved branch with a lending area that includes OK.

Ohio if you only originate HUD loans.

Missouri

Indiana if you originate 25 FHA loans per year in IN as of 1/1/08 OR if you have a complete-Eagle.

Kentucky if you originate 12 FHA loans per year in KY.

Tennessee will allow you to register instead of license, which removes the $90,000 bond requirement, however, if you are already licensed, you will be required to keep the bond for 2 years after changing from licensee to registrant.

Texas as a complete-eagle under the mortgage banker registration (Must have DE Underwriter on staff)

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