Washington State Department of Financial Institutions

FAQs Regarding the Licensing of Depository Institution Subsidiaries and their Employees

Terminology

SAFE Act- Secure and Fair Enforcement for Mortgage Licensing Act of 2008
CLA - Consumer Loan Act RCW 31.04


1. Must a company that is an operating subsidiary of a state or nationally chartered bank obtain a license under the Consumer Loan Act in order to make, broker or service residential mortgage loans?

Yes. Pursuant to the Consumer Loan Act, chapter 31.04 RCW, there is no exemption from licensing at the company level for the subsidiaries of state chartered non-depository financial institutions. See RCW 31.04.025(1)(a). The effective date of licensing is July 21, 2011. Licensing is accomplished through the NMLS.

Additionally, pursuant to Dodd-Frank (the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (July 21, 2010)), state consumer financial laws apply to subsidiaries or affiliates of national banks to the same extent they apply to any person, corporation, or other entity subject to the law. See Dodd-Frank Section 1044 amending 12 U.S.C. Chapter 21 et seq.

The effective date of licensing is July 21, 2011. Licensing is accomplished through the NMLS.


2. If the loan originators employed by the company described in question No. 1 are registered under the federal SAFE registration program, must they also license at the state level?

No. If the loan originator employees of the subsidiary meet the definition of a registered loan originator and are registered, they do not have to license with Washington state. They must maintain their registration status in the NMLS.

Pursuant to the SAFE Act, (the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, 12 U.S.C. 5101 et seq. (24 C.F.R. Sec. 3400)), an individual engaged in the business of a loan originator must first obtain and maintain either: registration as a registered loan originator or a license as a state-licensed loan originator. The individual must also obtain a unique identifier from the NMLS. See 12 U.S.C. Sec. 5103.

A registered loan originator means any individual who meets the definition of loan originator and is an employee of a depository institution; a subsidiary owned and controlled by a depository institution and regulated by a Federal banking agency; or an institution regulated by the Farm Credit Administration. A registered loan originator is registered with and maintains a unique identifier through the NMLS. See 12 U.S.C. Sec. 5102(7).

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