Housing News

Will the NMLS Be Effective?

It’s been a year since it was signed.

We’ve never heard of something that the industry has been waiting for so long to happen but the “real” start of the Nationwide Mortgage Licensing System. The official resource center states, “… The Nationwide Mortgage Licensing System will streamline the licensing process for both regulatory agencies and the mortgage industry by providing a centralized and standardized system for mortgage licensing. The NMLS initiative was begun by state mortgage regulators in 2004 in response to the increased volume and variety of residential mortgage originators and the need to address these changes with modern tools and authorities.”

In other words, it’s the solution that the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) could think of after the surge in cases involving mortgage originator scams nationwide. The S.A.F.E Mortgage Licensing Act of 2008 (Secure and Fair Enforcement for Mortgage Licensing Act of 2008) was signed by President Bush on July 21, 2008. It requires mortgage originators to take at least 20 hours of pre-licensing education, no felonies in the last seven years, and to continue their education annually before they renew their license.

Finally, we’ve been waiting for this. But there’s a lot of worry even with the good intentions of the plan (that’s what we’re known for – Americans in disorder, perfective in framework, short in execution)… The first problem: They couldn’t get all 51 states to participate. In the resource center, only 33 states are still listed; and the most devastated states by foreclosure cases haven’t joined yet. However, a recent report by the New York Times tells that 48 states have already participated. We’re still waiting for California to sign in.

Second, there’s an issue as to who should register. For example, some are protesting against the exclusion of banks, credit unions, and savings associations in the registration. It could be unfair to residential mortgage lenders and servicers who need to spend time and money securing their licenses; when, in fact, some of their contemporaries won’t be doing the same preparation.

Clearly, the plan still needs to be ironed out. But it’s good to know that the government is taking actions against these crooks.

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