Mortgage Industry Regulation Flashcards
How does the SAFE act help regulate the mortgage industry?
- By directing states to adopt minimum uniform standards for the licensing and registration of residential mortgage loan originators, and
- By requiring state participation in the NMLS database
Who has the power to adopt and implement standards in the mortgage industry?
The authority to adopt and implement these standards is delegated to state regulatory agencies by state law.
Under the SAFE act what mus state licensing laws include?
- Loan originator licensing requirements
- Requirements for effective supervision of those who are licensed
- A program for enforcement of the law
What does effective supervision by a state regulator include?
- Participation in the NMLS
- Writing rules and regulations or adopting procedures necessary for the licensing of loan originators
- Conducting background checks for:
1. Criminal history through fingerprint and other databases
2. Civil or administrative records
3. Credit history, or
4. Any other information deemed necessary by the NMLS - Setting and accepting fees for new licenses and renewals through the NMLS
- Setting or resetting renewal or reporting dates
- Approving or denying loan originator applications and renewals
- Implementing laws related to requirements for amending or surrendering a license, and
- Bringing appropriate enforcement actions for violations of state or federal law by issuing:
1. License denials, suspensions, conditions, or revocations
2. Cease and desist orders
3. Civil money penalties, and
4. Orders to make consumer refunds
What does state supervisory authority also include?
- Establishing a process to verify that individuals and persons acting as independent contractors are licensed as required
- Examining books, papers, records, or other data of any loan originator operating within that state
- Summoning any person having possession, custody, or care of reports and records to appear and produce the records
- Administering oaths and affirmations
- Examining, taking, and preserving testimony
- Reporting violations of state law, as well as enforcement actions and other relevant information, to the NMLS
- Providing procedures for challenging information entered into the NMLS by the state
- Requiring all residential mortgage loans closed by a loan originator to be included in reports of condition submitted to the NMLS
- Entering cease and desist orders against an individual or person committing or causing a violation of the S.A.F.E. Act
- Suspending, terminating, or refusing renewal of a loan originator license for a violation of state or federal law
- Ordering the removal and barring of individuals from office or employment
- Imposing civil money penalties for individuals acting as loan originators, or representing themselves to the public as loan originators, in a state without a valid license or registration
Who can state licensing and regulatory agencies investigate and examine?
- Licensed loan originator
- Individual required to have a loan originator license
Licensed loan originators and those required to be licensed must do what when it comes to records and information?
- Must make records and books available to their state regulator and permit interviews of officers, principals, loan originators, employees, independent contractors, agents, and customers
- May not knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records, computer records, or other information during an investigation or examination
What are the reasons the state licensing agency may conduct examinations and investigations?
- Initial licensing or license renewal
- License suspension, conditioning, revocation, or termination
- Determining compliance with state law
What records and information does the agency have access to?
- Criminal, civil, and administrative history information, including non-conviction data
- Personal history and experience information, including independent credit reports
- Any other documents, information, or evidence which may be relevant to an inquiry or investigation, regardless of its location or in whose possession, control, or custody it is
What can the state licensing agency require each licensee, individual, or person to do?
- Make or compile reports or prepare other information necessary to carry out an examination or investigation, including:
1. Accounting compilations
2. Information lists, and
3. Data concerning loan transactions - Make available to it, upon request, the books and records relating to the licensee’s or person’s operations
In conducting an examination or investigation, the state licensing agency is authorized to do what?
- Administer oaths or affirmations
- Subpoena witnesses
- Require the production of relevant documents
- Control access to any documents and records of any person under examination or investigation
What else can state licensing agencies do?
- Retain attorneys, accountants, or other professionals and specialists as examiners, auditors, or investigators to conduct or assist in the examination or investigation
- Enter into agreements or relationships with other government officials or regulatory associations in order to improve efficiencies and reduce the regulatory burden by sharing resources, standardized or uniform methods of procedures and documents, records, information, or evidence obtained
- Use, hire, contract, or employ public and privately-available analytical systems, methods, or software to examine or investigate the licensee, individual, or other person
- Accept or rely on:
1. Examination or investigation reports made by other government officials, either from within that state or another state, and
2. Audit reports made by an independent certified public accountant for the licensee or person
What happens to confidential information?
- May be shared with other state and federal officials involved with mortgage industry oversight without the loss of privilege and confidentiality protections provided by law
- Is not subject to:
1. Disclosure under any federal or state law allowing for disclosure to the public of information held by an officer or agency of the federal or a state government, or
2. Subpoena, discovery, or admission into evidence in any civil action or administrative process unless the person to whom the information or material applies waives the privilege
What information is not protected by confidentiality and is available to the public?
Information or material held by the NMLS relating to the employment history and/or disciplinary and enforcement actions taken against a mortgage loan originator, however, is not protected by confidentiality and is available for public access
