- § 5101. Purposes and methods for establishing a mortgage licensing system and registry
- § 5102. Definitions
- § 5103. License or registration required
- § 5104. State license and registration application and issuance
- § 5105. Standards for State license renewal
- § 5106. System of registration administration by Federal agencies
- § 5107. Bureau of Consumer Financial Protection backup authority to establish loan originator licensing system
- § 5108. Backup authority to establish a nationwide mortgage licensing and registry system
- § 5109. Fees
- § 5110. Background checks of loan originators
- § 5111. Confidentiality of information
- § 5112. Liability provisions
- § 5113. Enforcement by the Bureau
- § 5114. State examination authority
- § 5115. Reports and recommendations to Congress
- § 5116. Study and reports on defaults and foreclosures
- § 5117. Employment transition of loan originators
§ 5101. Purposes and methods for establishing a mortgage licensing system and registry
In order to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud, the States, through the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, are hereby encouraged to establish a Nationwide Mortgage Licensing System and Registry for the residential mortgage industry that accomplishes all of the following objectives:
(1) Provides uniform license applications and reporting requirements for State-licensed loan originators.
(2) Provides a comprehensive licensing and supervisory database.
(3) Aggregates and improves the flow of information to and between regulators.
(4) Provides increased accountability and tracking of loan originators.
(5) Streamlines the licensing process and reduces the regulatory burden.
(6) Enhances consumer protections and supports anti-fraud measures.
(7) Provides consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators.
(8) Establishes a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the consumer.
(9) Facilitates responsible behavior in the subprime mortgage market place and provides comprehensive training and examination requirements related to subprime mortgage lending.
(10) Facilitates the collection and disbursement of consumer complaints on behalf of State and Federal mortgage regulators.
(Pub. L. 110–289, div. A, title V, § 1502, July 30, 2008, 122 Stat. 2810.)
§ 5102. DefinitionsFor purposes of this chapter, the following definitions shall apply:
(1) Bureau
(2) Federal banking agency
(3) Depository institution
(4) Loan originator
(A) In generalThe term “loan originator”—
(i) means an individual who—(I) takes a residential mortgage loan application; and(II) offers or negotiates terms of a residential mortgage loan for compensation or gain;
(ii) does not include any individual who is not otherwise described in clause (i) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such clause;
(iii) does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless the person or entity is compensated by a lender, a mortgage broker, or other loan originator or by any agent of such lender, mortgage broker, or other loan originator; and
(iv) does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in section 101(53D) of title 11.
(B) Other definitions relating to loan originator
(C) Administrative or clerical tasks
(D) Real estate brokerage activity definedThe term “real estate brokerage activity” means any activity that involves offering or providing real estate brokerage services to the public, including—
(i) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;
(ii) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;
(iii) negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property (other than in connection with providing financing with respect to any such transaction);
(iv) engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and
(v) offering to engage in any activity, or act in any capacity, described in clause (i), (ii), (iii), or (iv).
(5) Loan processor or underwriter
(A) In generalThe term “loan processor or underwriter” means an individual who performs clerical or support duties at the direction of and subject to the supervision and instruction of—
(i) a State-licensed loan originator; or
(ii) a registered loan originator.
(B) Clerical or support dutiesFor purposes of subparagraph (A), the term “clerical or support duties” may include—
(i) the receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and
(ii) communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.
(6) Nationwide mortgage licensing system and registry
(7) Nontraditional mortgage product
(8) Registered loan originatorThe term “registered loan originator” means any individual who—
(A) meets the definition of loan originator and is an employee of—
(i) a depository institution;
(ii) a subsidiary that is—(I) owned and controlled by a depository institution; and(II) regulated by a Federal banking agency; or
(iii) an institution regulated by the Farm Credit Administration; and
(B) is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(9) Residential mortgage loan
(10) Director
(11) State
(12) State-licensed loan originatorThe term “State-licensed loan originator” means any individual who—
(A) is a loan originator;
(B) is not an employee of—
(i) a depository institution;
(ii) a subsidiary that is—(I) owned and controlled by a depository institution; and(II) regulated by a Federal banking agency; or
(iii) an institution regulated by the Farm Credit Administration; and
(C) is licensed by a State or by the Director under section 5107 of this title and registered as a loan originator with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.
(13) Unique identifier
(A) In generalThe term “unique identifier” means a number or other identifier that—
(i) permanently identifies a loan originator;
(ii) is assigned by protocols established by the Nationwide Mortgage Licensing System and Registry and the Bureau to facilitate electronic tracking of loan originators and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators; and
(iii) shall not be used for purposes other than those set forth under this chapter.
(B) Responsibility of States
(Pub. L. 110–289, div. A, title V, § 1503, July 30, 2008, 122 Stat. 2811; Pub. L. 111–203, title X, § 1100(2)–(4), July 21, 2010, 124 Stat. 2106.)
§ 5103. License or registration required
(a) In generalSubject to the existence of a licensing or registration regime, as the case may be, an individual may not engage in the business of a loan originator without first—
(1) obtaining, and maintaining annually—
(A) a registration as a registered loan originator; or
(B) a license and registration as a State-licensed loan originator; and
(2) obtaining a unique identifier.
(b) Loan processors and underwriters
(1) Supervised loan processors and underwriters
(2) Independent contractors
(Pub. L. 110–289, div. A, title V, § 1504, July 30, 2008, 122 Stat. 2814.)
§ 5104. State license and registration application and issuance
(a) Background checksIn connection with an application to any State for licensing and registration as a State-licensed loan originator, the applicant shall, at a minimum, furnish to the Nationwide Mortgage Licensing System and Registry information concerning the applicant’s identity, including—
(1) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and
(2) personal history and experience, including authorization for the System to obtain—
(A) an independent credit report obtained from a consumer reporting agency described in section 1681a(p) of title 15; and
(B) information related to any administrative, civil or criminal findings by any governmental jurisdiction.
(b) Issuance of licenseThe minimum standards for licensing and registration as a State-licensed loan originator shall include the following:
(1) The applicant has never had a loan originator license revoked in any governmental jurisdiction.
(2) The applicant has not been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court—
(A) during the 7-year period preceding the date of the application for licensing and registration; or
(B) at any time preceding such date of application, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering.
(3) The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently within the purposes of this chapter.
(4) The applicant has completed the pre-licensing education requirement described in subsection (c).
(5) The applicant has passed a written test that meets the test requirement described in subsection (d).
(6) The applicant has met either a net worth or surety bond requirement, or paid into a State fund, as required by the State pursuant to section 5107(d)(6) of this title.
(c) Pre-licensing education of loan originators
(1) Minimum educational requirementsIn order to meet the pre-licensing education requirement referred to in subsection (b)(4), a person shall complete at least 20 hours of education approved in accordance with paragraph (2), which shall include at least—
(A) 3 hours of Federal law and regulations;
(B) 3 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and
(C) 2 hours of training related to lending standards for the nontraditional mortgage product marketplace.
(2) Approved educational courses
(3) Limitation and standards
(A) Limitation
(B) Standards
(d)
(1) In general
(2) Qualified testA written test shall not be treated as a qualified written test for purposes of paragraph (1) unless the test adequately measures the applicant’s knowledge and comprehension in appropriate subject areas, including—
(A) ethics;
(B) Federal law and regulation pertaining to mortgage origination;
(C) State law and regulation pertaining to mortgage origination;
(D) Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues.
(3) Minimum competence
(A) Passing score
(B) Initial retests
(C) Subsequent retests
(D) Retest after lapse of license
(e) Mortgage call reports
(Pub. L. 110–289, div. A, title V, § 1505, July 30, 2008, 122 Stat. 2814.)
§ 5105. Standards for State license renewal
(a) In general
The minimum standards for license renewal for State-licensed loan originators shall include the following:
(1) The loan originator continues to meet the minimum standards for license issuance.
(2) The loan originator has satisfied the annual continuing education requirements described in subsection (b).
(b) Continuing education for State-licensed loan originators
(1) In general
In order to meet the annual continuing education requirements referred to in subsection (a)(2), a State-licensed loan originator shall complete at least 8 hours of education approved in accordance with paragraph (2), which shall include at least—
(A) 3 hours of Federal law and regulations;
(B) 2 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues; and
(C) 2 hours of training related to lending standards for the nontraditional mortgage product marketplace.
(2) Approved educational courses
(3) Calculation of continuing education credits
A State-licensed loan originator—
(A) may only receive credit for a continuing education course in the year in which the course is taken; and
(B) may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(4) Instructor credit
(5) Limitation and standards
(A) Limitation
(B) Standards
(Pub. L. 110–289, div. A, title V, § 1506, July 30, 2008, 122 Stat. 2816.)
§ 5106. System of registration administration by Federal agencies
(a) Development
(1) In general
(2) Registration requirements
In connection with the registration of any loan originator under this subsection, the Bureau shall, at a minimum, furnish or cause to be furnished to the Nationwide Mortgage Licensing System and Registry information concerning the identity of the employee, including—
(A) fingerprints for submission to the Federal Bureau of Investigation, and any governmental agency or entity authorized to receive such information for a State and national criminal history background check; and
(B) personal history and experience, including authorization for the Nationwide Mortgage Licensing System and Registry to obtain information related to any administrative, civil or criminal findings by any governmental jurisdiction.
(b) Coordination
(1) Unique identifier
(2) Nationwide Mortgage Licensing System and Registry development
(c) Consideration of factors and procedures
(Pub. L. 110–289, div. A, title V, § 1507, July 30, 2008, 122 Stat. 2817; Pub. L. 111–203, title X, § 1100(2), (5), July 21, 2010, 124 Stat. 2106.)
§ 5107. Bureau of Consumer Financial Protection backup authority to establish loan originator licensing system
(a) Backup licensing system
(b) Licensing and registration requirements
(c) Unique identifier
(d) State licensing law requirements
For purposes of this section, the law in effect in a State meets the requirements of this subsection if the Director determines the law satisfies the following minimum requirements:
(1) A State loan originator supervisory authority is maintained to provide effective supervision and enforcement of such law, including the suspension, termination, or nonrenewal of a license for a violation of State or Federal law.
(2) The State loan originator supervisory authority ensures that all State-licensed loan originators operating in the State are registered with Nationwide Mortgage Licensing System and Registry.
(3) The State loan originator supervisory authority is required to regularly report violations of such law, as well as enforcement actions and other relevant information, to the Nationwide Mortgage Licensing System and Registry.
(4) The State loan originator supervisory authority has a process in place for challenging information contained in the Nationwide Mortgage Licensing System and Registry.
(5) The State loan originator supervisory authority has established a mechanism to assess civil money penalties for individuals acting as mortgage originators in their State without a valid license or registration.
(6) The State loan originator supervisory authority has established minimum net worth or surety bonding requirements that reflect the dollar amount of loans originated by a residential mortgage loan originator, or has established a recovery fund paid into by the loan originators.
(e) Temporary extension of period
(f) Regulation authority
(1) In general
(2) Considerations
(Pub. L. 110–289, div. A, title V, § 1508, July 30, 2008, 122 Stat. 2818; Pub. L. 111–203, title X, § 1100(3), (6), July 21, 2010, 124 Stat. 2106.)
§ 5108. Backup authority to establish a nationwide mortgage licensing and registry system
If at any time the Director determines that the Nationwide Mortgage Licensing System and Registry is failing to meet the requirements and purposes of this chapter for a comprehensive licensing, supervisory, and tracking system for loan originators, the Director shall establish and maintain such a system to carry out the purposes of this chapter and the effective registration and regulation of loan originators.
(Pub. L. 110–289, div. A, title V, § 1509, July 30, 2008, 122 Stat. 2819; Pub. L. 111–203, title X, § 1100(3), July 21, 2010, 124 Stat. 2106.)
§ 5109. Fees
The Bureau, the Farm Credit Administration, and the Nationwide Mortgage Licensing System and Registry may charge reasonable fees to cover the costs of maintaining and providing access to information from the Nationwide Mortgage Licensing System and Registry, to the extent that such fees are not charged to consumers for access to such system and registry.
(Pub. L. 110–289, div. A, title V, § 1510, as added Pub. L. 111–203, title X, § 1100(7), July 21, 2010, 124 Stat. 2107.)
§ 5110. Background checks of loan originators
(a) Access to records
(b) Agent
(Pub. L. 110–289, div. A, title V, § 1511, July 30, 2008, 122 Stat. 2819; Pub. L. 114–94, div. G, title LXXXVIII, § 88002, Dec. 4, 2015, 129 Stat. 1799.)
§ 5111. Confidentiality of information
(a) System confidentiality
(b) Nonapplicability of certain requirements
Information or material that is subject to a privilege or confidentiality under subsection (a) shall not be subject to—
(1) disclosure under any Federal or State law governing the disclosure to the public of information held by an officer or an agency of the Federal Government or the respective State; or
(2) subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the Nationwide Mortgage Licensing System and Registry or the Director with respect to such information or material, the person to whom such information or material pertains waives, in whole or in part, in the discretion of such person, that privilege.
(c) Coordination with other law
(d) Public access to information
(Pub. L. 110–289, div. A, title V, § 1512, July 30, 2008, 122 Stat. 2820; Pub. L. 111–203, title X, § 1100(3), July 21, 2010, 124 Stat. 2106; Pub. L. 114–113, div. O, title VII, § 703, Dec. 18, 2015, 129 Stat. 3025.)
§ 5112. Liability provisions
The Bureau, any State official or agency, or any organization serving as the administrator of the Nationwide Mortgage Licensing System and Registry or a system established by the Director under section 5108 of this title, or any officer or employee of any such entity, shall not be subject to any civil action or proceeding for monetary damages by reason of the good faith action or omission of any officer or employee of any such entity, while acting within the scope of office or employment, relating to the collection, furnishing, or dissemination of information concerning persons who—
(1) have applied, are applying, or are licensed or registered through the Nationwide Mortgage Licensing System and Registry; and
(2) work in an industry with respect to which persons were licensed or registered through the Nationwide Mortgage Licensing System and Registry on May 24, 2018.
(Pub. L. 110–289, div. A, title V, § 1513, as added Pub. L. 111–203, title X, § 1100(8), July 21, 2010, 124 Stat. 2107; amended Pub. L. 115–174, title I, § 106(c), May 24, 2018, 132 Stat. 1304.)
§ 5113. Enforcement by the Bureau
(a) Summons authority
The Director may—
(1) examine any books, papers, records, or other data of any loan originator operating in any State which is subject to a licensing system established by the Director under section 5107 of this title; and
(2) summon any loan originator referred to in paragraph (1) or any person having possession, custody, or care of the reports and records relating to such loan originator, to appear before the Director or any delegate of the Director at a time and place named in the summons and to produce such books, papers, records, or other data, and to give testimony, under oath, as may be relevant or material to an investigation of such loan originator for compliance with the requirements of this chapter.
(b) Examination authority
(1) In general
(2) Power to examine
(3) Report of examination
(4) Administration of oaths and affirmations; evidence
(5) Assessments
(c) Cease and desist proceeding
(1) Authority of Director
(2) Hearing
(3) Temporary order
(4) Review of temporary orders
(A) Review by Director
(B) Judicial review
Within—
(i) 10 days after the date the respondent was served with a temporary cease and desist order entered with a prior hearing before the Director; or
(ii) 10 days after the Director renders a decision on an application and hearing under paragraph (1), with respect to any temporary cease and desist order entered without a prior hearing before the Director,
the respondent may apply to the United States district court for the district in which the respondent resides or has its principal place of business, or for the District of Columbia, for an order setting aside, limiting, or suspending the effectiveness or enforcement of the order, and the court shall have jurisdiction to enter such an order. A respondent served with a temporary cease and desist order entered without a prior hearing before the Director may not apply to the court except after hearing and decision by the Director on the respondent’s application under subparagraph (A).
(C) No automatic stay of temporary order
(5) Authority of the Director to prohibit persons from serving as loan originators
(d) Authority of the Director to assess money penalties
(1) In general
(2) Maximum amount of penalty
(Pub. L. 110–289, div. A, title V, § 1514, July 30, 2008, 122 Stat. 2821; Pub. L. 111–203, title X, § 1100(3), (9), July 21, 2010, 124 Stat. 2106, 2107.)
§ 5114. State examination authority
In addition to any authority allowed under State law a State licensing agency shall have the authority to conduct investigations and examinations as follows:
(1) For the purposes of investigating violations or complaints arising under this chapter, or for the purposes of examination, the State licensing agency may review, investigate, or examine any loan originator licensed or required to be licensed under this chapter, as often as necessary in order to carry out the purposes of this chapter.
(2) Each such loan originator shall make available upon request to the State licensing agency the books and records relating to the operations of such originator. The State licensing agency may have access to such books and records and interview the officers, principals, loan originators, employees, independent contractors, agents, and customers of the licensee concerning their business.
(3) The authority of this section shall remain in effect, whether such a loan originator acts or claims to act under any licensing or registration law of such State, or claims to act without such authority.
(4) No person subject to investigation or examination under this section may knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information.
(Pub. L. 110–289, div. A, title V, § 1515, July 30, 2008, 122 Stat. 2823.)
§ 5115. Reports and recommendations to Congress
(a) Annual reports
(b) Legislative recommendations
(Pub. L. 110–289, div. A, title V, § 1516, July 30, 2008, 122 Stat. 2824; Pub. L. 111–203, title X, § 1100(3), July 21, 2010, 124 Stat. 2106.)
§ 5116. Study and reports on defaults and foreclosures
(a) Study required
(b) Preliminary report to Congress
(c) Final report to Congress
(Pub. L. 110–289, div. A, title V, § 1517, July 30, 2008, 122 Stat. 2824; Pub. L. 111–203, title X, § 1100(3), July 21, 2010, 124 Stat. 2106.)
§ 5117. Employment transition of loan originators
(a) DefinitionsIn this section:
(1) Application State
(2) State-licensed mortgage company
(b) Temporary authority to originate loans for loan originators moving from a depository institution to a non-depository institution
(1) In generalUpon becoming employed by a State-licensed mortgage company, an individual who is a registered loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period described in paragraph (2) if the individual—
(A) has not had—
(i) an application for a loan originator license denied; or
(ii) a loan originator license revoked or suspended in any governmental jurisdiction;
(B) has not been subject to, or served with, a cease and desist order—
(i) in any governmental jurisdiction; or
(ii) under section 5113(c) of this title;
(C) has not been convicted of a misdemeanor or felony that would preclude licensure under the law of the application State;
(D) has submitted an application to be a State-licensed loan originator in the application State; and
(E) was registered in the Nationwide Mortgage Licensing System and Registry as a loan originator during the 1-year period preceding the date on which the information required under section 5104(a) of this title is submitted.
(2) PeriodThe period described in this paragraph shall begin on the date on which an individual described in paragraph (1) submits the information required under section 5104(a) of this title and shall end on the earliest of the date—
(A) on which the individual withdraws the application to be a State-licensed loan originator in the application State;
(B) on which the application State denies, or issues a notice of intent to deny, the application;
(C) on which the application State grants a State license; or
(D) that is 120 days after the date on which the individual submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.
(c) Temporary authority to originate loans for State-licensed loan originators moving interstate
(1) In generalA State-licensed loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period described in paragraph (2) if the State-licensed loan originator—
(A) meets the requirements of subparagraphs (A), (B), (C), and (D) of subsection (b)(1);
(B) is employed by a State-licensed mortgage company in the application State; and
(C) was licensed in a State that is not the application State during the 30-day period preceding the date on which the information required under section 5104(a) of this title was submitted in connection with the application submitted to the application State.
(2) PeriodThe period described in this paragraph shall begin on the date on which the State-licensed loan originator submits the information required under section 5104(a) of this title in connection with the application submitted to the application State and end on the earliest of the date—
(A) on which the State-licensed loan originator withdraws the application to be a State-licensed loan originator in the application State;
(B) on which the application State denies, or issues a notice of intent to deny, the application;
(C) on which the application State grants a State license; or
(D) that is 120 days after the date on which the State-licensed loan originator submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.
(d) Applicability
(1) Employer of loan originators
(2) Engaging in mortgage loan activities
(Pub. L. 110–289, div. A, title V, § 1518, as added Pub. L. 115–174, title I, § 106(a), May 24, 2018, 132 Stat. 1302.)