Agencies - Chapter 3 Flashcards
NMLS
Nationwide Multistate Licensing System & Registry
The system of record for non-depository, financial services licensing or registration in participating state agencies, including the District of Columbia and U.S. Territories of Puerto Rico, the U.S. Virgin Islands, and Guam.
The states work together with the federal government to regulate the mortgage industry.
The Tenth Amendment to the Constitution
“The powers not delegated to the United States by the Constitution nor prohibited by it to the states, are reserved to the states respectively, or to the people.” To simplify that - states are allowed to make their own laws as long as they do not contradict federal law.
The State Model
A template, not a law, written by the Conference of State Bank Supervisors (CSBS).
These standards ensure that state law governing mortgage loan originators follow certain guidelines consistent with the rules of the SAFE Act.
CSBS
Conference of State Bank Supervisors
CSBS was organized in 1902 as the National Association of Supervisors of State Banks. In 1971, the name was changed
Supports state regulators in advancing the system of state financial supervision by ensuring safety, soundness, and consumer protection; promoting economic growth; and fostering innovative, responsive supervision.
State Standards And The SAFE Act
State Standards And The SAFE Act
The following are standards expressed in the State Model that states are expected to incorporate into their own
laws:
• The requirement for licensing and/or registration of mortgage loan originators (MLOs)
• The application for and issuance of licenses or registries
• Education requirements
• Testing requirements
• License renewal
• Enforcement, Authority, Violations, and Penalties
• Surety Bond, State Fund, and Net Worth Requirements
• Investigation and Examination Requirements
• Prohibited Acts and Practices
• Mortgage Call Reports
• Use of the NMLS
• Requires unique Identifiers on all advertising
• Maximum penalty for violations of the SAFE Act is $30,058
Remember U-PULSE METER: Use of NMLS Prohibited acts Unique identifiers on advertising Licensing Surety bond Education Max penalty of SAFE Act is $30,058 Enforcement of penalties Testing Examination requirements Renewal of license
The State Authority (Common Titles):
Remember DDT SCABS: D • Department D • Director T • The State S • Superintendent C • Commissioner A • Authority B • Bureau S • Secretary
State Authority Responsibilities
State Authority Responsibilities
The state has the authority to apply, interpret, and enforce the SAFE Act within that particular state. The state also has the authority to put into action rules and regulations that aid in implementing this Act.
Among the numerous regulatory responsibilities of the state authority, the following are the most significant:
• Registration and licensing for mortgage loan originators
• Enforcing the SAFE Act at the state level
• Reporting MLO actions to the NMLS
• Fines
• Mortgage education requirements for the state
• State examinations
• Orders and directives
Prohibited Conduct
- Directly or indirectly employ any scheme, device, or cunning trick to defraud or mislead borrowers, lenders, or any person
- Engage in any unfair or deceptive practice toward any person
- Obtain property by fraud or misrepresentation
- Earn a fee or commission to obtain a loan when no loan is obtained for the borrower
- Solicit, advertise, or enter into a contract for specific interest rates or financing terms that are unavailable at that time
- Aid and abet any person conducting business without a valid license
- Fail to make disclosures
- Negligently make any false statement or omission of information requested in connection to an investigation conducted by a governmental authority
- Make monetary bribes or threats to any person to influence their judgment related to a residential mortgage loan
- Make monetary bribes or threats to any appraiser of a property to influence the appraiser’s judgment regarding the property’s value
- Collect, charge, attempt to collect or charge, or use any agreement with the intention to collect or charge any prohibited fee
- Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of improvements
- Fail to truthfully justify monies of a party in a residential mortgage loan transaction
The Consumer Financial Protection Bureau (CFPB)
A federal agency, the Consumer Financial Protection Bureau (CFPB) was created as part of the Dodd-Frank Act with the express responsibility of providing a single federal regulator for consumer financial protections.
Mortgage-Related Law Regulated By The CFPB
REGULATIONS:
B: Equal Credit Opportunity Act (ECOA)
C: Home Mortgage Disclosure Act (HMDA)
G: Secure and Fair Enforcement for Mortgage Licensing Act: Federal Registration of Residential Mortgage Loan Originators (SAFE Act)
H: Secure and Fair Enforcement for Mortgage Licensing Act: State Compliance and Bureau Registration System (SAFE Act)
N: Mortgage Acts and Practices - Advertising (MAP)
P: Privacy of Consumer Financial Information (Gramm-Leach Bliley Act, GLBA)
V: Fair Credit Reporting Act (FCRA)
X: Real Estate Settlement Procedures Act (RESPA)
Z: Truth in Lending Act (TILA)
Regulation B
Equal Credit Opportunity Act (ECOA)
Regulation C
Home Mortgage Disclosure Act (HMDA)
Regulation G
Secure and Fair Enforcement for Mortgage Licensing Act: Federal Registration of Residential Mortgage Loan Originators (SAFE Act)
Regulation H
Secure and Fair Enforcement for Mortgage Licensing Act: State Compliance and Bureau Registration System (SAFE Act)
Regulation N
Mortgage Acts and Practices - Advertising (MAP)
Regulation P
Privacy of Consumer Financial Information (Gramm-Leach Bliley Act, GLBA)
Regulation V
Fair Credit Reporting Act (FCRA)
Regulation X
Real Estate Settlement Procedures Act (RESPA)
Regulation Z
Truth in Lending Act (TILA)
CFPB Oversight
CFPB Oversight:
The CFPB is charged with making protections easier to understand and more accessible to consumers. The SAFE Act establishes federal regulatory and enforcement responsibilities of mortgage loan originators that are similar to those of the state authority. These include:
• Examining MLO records and data
• Penalizing licensees
• Providing information about licensees and potential licensees to the NMLS
Differences between CFPB and State Authority Responsibilities
The difference between the CFPB and the state authority are that the CFPB has jurisdiction in all 50 states, and can replace the NMLS system if needed.
The CFPB developed a system that allows for consumers to file complaints with the Bureau that are then quickly posted online for public access. Regardless of validity or resolution the complaint remains available as a matter of public record.
Department of Housing and Urban Development (HUD)
Department of Housing and Urban Development (HUD) is a federal agency with a mission “to create strong, sustainable, inclusive communities and quality affordable homes for all.”
As the lead federal housing agency, HUD oversees:
• Federal Housing Administration (FHA) and Fair Housing laws
As the lead federal housing agency, HUD sponsors
• The Federal National Mortgage Association (FNMA, Fannie Mae),
• The Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac)
• The Government National Mortgage Association (Ginnie Mae).
The Fair Housing Act
Ensure that all Americans have equal access to housing in strong and stable communities. The fair housing laws protect against discrimination in the provision of housing and the financing of housing.
Government Sponsored Enterprises (GSE)
Fannie Mae, Freddie Mac, and Ginnie Mae operate as private entities that were created to serve a public purpose.
