Mortgage Loan Originator Licensing Deadline Has Passed Update
July 09, 2010
Update From Deb Bortner, Director of Consumer Services
Dear Mortgage Industry Stakeholders,
With the passage of the July 1 deadline for all Mortgage Loan Originators to be licensed, I want to acknowledge that there may be confusion about who is authorized to work and who is not. The following Frequently Asked Questions (FAQs) are designed to answer some key issues concerning the status of Mortgage Loan Originators that applied for a license prior to July 1.
I hope this update is of assistance. If you have additional questions you would like to bring to our attention, please e-mail our team at DCS@dfi.wa.gov. I also want to assure you that we are doing all we can to process every application as quickly as possible in accordance with our legal requirements.
Finally, I would like to thank all of our newly licensed Mortgage Loan Originators and their Compliance Officers for their help in supporting our team review over 2500 applications in a timely manner in the last few months.
Deb Bortner, Director
Consumer Services Division
Washington State Department of Financial Institutions
What is the meaning of the following license statuses in NMLS and how do they impact my ability to work in Washington?
This status indicates that the application has not yet been reviewed. As a result you cannot work as a Mortgage Loan Originator (MLO) for a Mortgage Broker or Consumer Loan company until you have an active license issued or written communication from DFI authorizing you to work until the end of July 2010.
This status indicates that the application has deficiencies which need to be satisfied by the MLO (for example: incomplete testing or education, incomplete checklist, or need to resolve issues discovered in background check). As a result you cannot work as a MLO for a Mortgage Broker or Consumer Loan company until you have resolved all deficiencies and have either an active license issued or written communication from DFI authorizing you to work until the end of July 2010.
This status indicates that the preliminary review of the following items has revealed no deficiencies with your application. You must have received written communication from the Department of Financial Institutions to be authorized to work for a Mortgage Broker or Consumer Loan Company until the end of July 2010, during which time we will continue with the full review of applications in the order received. The preliminary check includes the following items:
- Pre-Licensing Education completed
- National Test Passed
- State Test Passed
- Fingerprinting Completed
- Checklist Completed & Provided to DFI
- No DFI Enforcement Actions in Process
If I am not licensed or authorized to work as a MLO in Washington but I had loans started before the law recently went into effect July 1, 2010, what can I do with loans in the pipeline?
You can conduct any activities that do not require a license. If the loan still needs substantive work, it must be reassigned to a licensed MLO.
Why can’t you license me as soon as my federal SAFE requirements are displayed in the NMLS?
A number of people ask us why they can’t get a license the minute their requirements show up in the NMLS. First, the NMLS is not a regulatory system. It is the legal record system for licensing in all participating states. In these states, including Washington, the NMLS is the official and sole system for companies and individuals seeking to apply for, amend, renew and surrender licenses managed in the NMLS on behalf of the jurisdiction’s governmental agencies. NMLS itself does not grant or deny license authority.
Our licensing team is required by federal and state laws to ensure that every applicant meets the national and state standards that are designed to better protect the public and further strengthen confidence in the mortgage industry. Congress wants the states to help ensure that some of the events that led up to the economic collapse in the mortgage market never happen again.
In an effort to address the large volume of applications in a timely manner, we have modified our standard review process to conduct quick preliminary reviews of applications. In addition, our team has been working extra hours in order to license as many Mortgage Loan Originators as quickly as possible. The following is a brief overview of the steps that DFI is currently taking to ensure we are meeting the requirements of the national SAFE Act and Washington laws during this critical time;
Steps to licensing a Mortgage Loan Originator:
First we do a preliminary review to make sure you have met the SAFE requirements including:
- 20 hours of pre-licensing education including 2 hours of Washington law;
- Passage of the national test;
- Passage of the Washington test;
- Receipt of your checklist to determine the year of your high school diploma, whether you are an independent contractor or a W-2 employee, whether you are a U.S. citizen and whether you will be submitting disclosure explanations based on any “yes” answers to the disclosure questions on the MU4 filing;
- Receipt of a fingerprint check with no criminal history. If you have criminal history we have to determine if you are eligible for licensing; and
- Verification that DFI has no complaints or investigations related to you open or pending.
Once you pass those requirements, we complete a full review of your application in the order received, which includes:
- Running an Accurint report to see if you have any current liens or judgments that would disqualify you from working;
- Checking the DFI enforcement database to make sure you don’t have any complaints or you aren’t under investigation;
- Checking the Washington State Patrol’s database to make sure you don’t have any felonies that were not reported to the National Criminal Information database;
- Verifying receipt of disclosure explanations;
- Verifying that answers to disclosure questions in NMLS match the information from our background checks;
- Verifying that the applicant is within reasonable commute of the location they wish to work at; and
- Verifying that the office of employment is a licensed location.
- If this information is all clear, we issue you a license.