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  1.  
    Has anyone heard of the latest requirements for loan processor's being licensed? I have spoken to different schools, processor's and State officials and we are getting diverse answers. Most recently, I have heard that as of the first of the year all loan originator's and processor's will have to obtain their Broker's license. Thank you for anything that you can share. Denise
  2.  
    Hey Denise-
    The best spource of information on this topic can be found at the NMLS (National Mortgage Licensing System) Resource Center.

    If you go to http://mortgage.nationwidelicensingsystem.org/slr/Pages/default.aspx you can click on the state in question to review the licensing & certification requirements and how they are being implemented to comply with the S.A.F.E. Act. When you click on each state, it defines the various license requirements and defines them. You can cleary see which require processor licensing and which do not
    •  
      CommentAuthornancy_m
    • CommentTimeDec 14th 2009
     
    Hi all....

    Here is a letter I received from a fellow contract processor....

    I own and operate an outsource mortgage processing company. I have recently been informed by one of my brokers that I may need to get licensed to continue processing. This then began my research, which by the way is the worst research I have ever had to do. I started my research by going to NMLS web site. I read through some of the states regulations and became more confused with each state. They write these regulation the way a politician speaks, in circles and not understandable for the average human. I then called NMLS who told me they can not give me specific information that I must contact each state individually to see if I must be licensed as part of their regulations, and the fun begins…

    I have only contacted a few states so far. I leave messages but no one returns my calls. I have just recently begun sending emails to see if I get a better response. I have been able to speak to a member of the NJ Mortgage Bankers Association who could not give me an answer. I was told he would need to get clarification of the regulation and get back to me, no call back yet.

    The contact at the NJ Mortgage Bankers Association informed me at first that yes I need to be licensed in NJ but then re-read the regulation and told me he was not sure. I was told that if I did need to be licensed I would need to be licensed as a Loan Officer or Branch Office. I explained that I had employees and was told that each employee may also have to be licensed due to I would be licensed as an individual not as a company which means taking all the test required by each state not to mention the SAFE Act test. This would put me out of business, the cost and time would destroy my company, not to mention what broker would want a licensed LO processing their deals? Honestly I believe he was just as confused as I am, that just can’t be correct.

    I am just amazed that the people we need to explain these new regulations to us don’t understand them themselves. I have now started to contact other processing companies in hopes they are having better luck than I am. I have spent 3 full days on the phone and email with no straight answers. I am no closer to the answers I need then when I began. I am at a loss. I am now searching for an attorney who may be able to get the answers I need. I am more than just frustrated at this point.

    I started my processing company due to lack of work in this industry from the fallout in hopes of helping those small brokers stay in business. Processing is all I know and now I fear that I may have to look into another form of employment if I am forced into this license regulation. If I don’t get the answers I need I heard there can be up to a $10,000 fine if I am caught processing without the proper licensing requirements. This will surly put me out of business.

    I don’t disagree that as a processing company that we need to be sure that we are in compliance with each file however I don’t believe we should be licensed and tested as if we were a broker/loan officer. I did some research on some of the topics for the state and national test and they include state regulation for brokers, working with borrowers and programs just to state a few and still in my opinion this has nothing to do with processing a file. As a processing company I have no contact with the borrowers, I don’t lock loans and I don’t choose the program for the loans I process. I gather information from the broker, forward to the lender and clear the file for closing.

    I know there are many processing companies out there having this same issue and we need answers now to make the decision for our futures. We seem have no one who is willing or able to give us the correct answers. Please if anyone out there has any answers please feel free to email me at renee@rgprocessing.com.

    Thanks you,

    Renee Gesner
    RG Processing
  3.  
    I find it hard to believe that a processor would be required to be licensed. I mean think about all of the mortgage lenders who would have to have all of their employees go through this process and what would happen if they didn't pass the exam or had to be licensed in multiple states. Also how will "outsourcing" companies handle this issue as many major lenders use their services and own Outsourcing organizations. Would they also be under the same licensing laws/regulations?
    •  
      CommentAuthornancy_m
    • CommentTimeDec 15th 2009
     
    NY does not require Contract processing companies to be licensed, please read below. Just an FYI

    I received an email from Edauro Chao (Eduardo.Chao@banking.state.ny.us) stating we do not need to be licensed in NY. Please see definition below of a processor/underwriter as he has requested. Please read below.

    The answer is NO. However, please review Part 420 of the Superintendent's Regulations posted in our website (log on to: www.banking.state.ny.us Then click on Mortgage Loan Originator Licensing. Next page click on MLO Regulation. Then read to be sure.

    Specifically, read the definition for a loan processor or underwriter. Then, read education requirements for a MLO.

    (e) Loan processor or underwriter-

    (1) "Loan processor or underwriter" means an individual who performs clerical or support duties as an employee at the direction of, and subject to, the supervision and instruction of an individual licensed, or exempt from licensing, under this Part, provided that such individual does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

    (2) For purposes of this subdivision, "clerical or support duties" may include, subsequent to the receipt of an application:

    (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.

    (1) "Mortgage Loan Originator" (“MLO”) means an individual who for compensation or gain or in the expectation of compensation or gain:

    (i) takes a residential mortgage loan application; or

    (ii) offers or negotiates terms of a residential mortgage loan.

    (2) Does not include:

    (i) any individual engaged solely as a loan processor or underwriter except as otherwise provided in subdivision four of section five hundred ninety-nine-c of Article 12-E;

    Below is the subdivision 4 section 599-c of article 12-E

    4. Independent contractor loan processors or underwriters. A loan processor or underwriter who is an independent contractor of an originating entity may not engage in residential mortgage loan origination activities unless such independent contractor loan processor or underwriter obtains and maintains a license under this article. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the NMLSR.
  4.  
    I am in Tx and have also heard we need to have an LO license to be a contract processor for 2010. I have heard by Jan 1st and April 1st but can't find any additional information.
    •  
      CommentAuthorshae_davis
    • CommentTimeJan 14th 2010
     
    I'm finding that Dec and the beginning of the year is slow...Are you all noticing it also?
  5.  
    I am new to our company and wondering if there a simplified list of states that require processors to be licensed. Also, does NAMP offer any type of marketing assistance?
  6.  
    Hey All.... Got questions about the SAFE Act?

    Through the support of NAMP and it's members there is a new site dedicated to tackling the SAFE Act and the future it holds for fellow Contract Processors. Whether you're a Contract Loan Processor or W-2 In-House Processor, your support and input is needed so that together we can all make a difference in how individual States and HUD regulate our industry.

    Please show your support... here is their website: http://www.unitedmtgprocessors.org and it's completely FREE... we ask that you join the Forum and share your questions, comments, and experience so that together we are represented fairly. Together we can find the answers to the SAFE Act and how it affects all of us. See you there!

    - Patty
    •  
      CommentAuthormary_evans
    • CommentTimeFeb 16th 2010
     
    I believe the key to SAFE Act interpretation is the distinction of working "at the direction of and subject to the supervision and instruction of a State licensed loan originator or registered loan originator."

    Who among contract processors are not working at the direction of or under the supervision of the licensed LO who sent you the loan to process? You do not have to be sitting in their office to be under their supervision and at their direction.

    The document clearly states that processors who would be subject to licensing are those who do NOT work at the direction and under supervision of a state licensed LO.

    It says: "Sections 1503(4) and 1504(b) provide that this licensing requirement does apply to individuals who are ‘‘independent contractors’’ who perform these clerical or support duties, because, by definition, they do not perform their duties at the direction of and subject to the supervision and instruction of a State licensed loan originator or a registered loan originator. It is the lack of such supervision by individuals already licensed or registered as loan originators that subjects loan processors or underwriters to the SAFE Act licensing and registry requirements."

    Further, the document says: "Such a person or entity could prevent its employees from having to obtain a State loan originator license simply by ensuring that they perform any ‘‘clerical or support duties’’ at the direction of and subject to the supervision and instruction of a State licensed loan originator or registered loan originator."

    In my opinion, the Act says if you are working at the direction of and under the supervision of a license LO, then you are exempt from having to be state licensed as a Loan Originator or Mortgage Broker.
    •  
      CommentAuthorshae_davis
    • CommentTimeApr 30th 2010
     
    Hello,

    If you all have not heard Independent/Contract Loan Processors/Underwriters will need a license to continue to process and underwrite loans. For more information about your state requirements go to NMLS website. The deadline to complete application is May 31,2010
  7.  
    It seems like some states require independent processors and underwriters to be licensed and some do not. Each state has their own interpretation of the requirements. Take Illinois for example. It specifically says on NMLS for Illinois requirements that processors, underwriters, and account executives do not need to be licensed per SAFE Act. This is how Illinois has interpreted the rules but other states have differently.
    •  
      CommentAuthormary_evans
    • CommentTimeMay 6th 2010
     
    I emailed HUD to get interpretation and have asked additional question unanswered as yet. Responses below came 5/3/10.

    From: Mary
    Sent: Friday, April 16, 2010 5:03 PM
    To: 'safeprogram
    Subject: Loan Processor Licensing

    Hello,

    I have questions regarding NMLS licensing requirements for Loan Processors who work for multiple licensed Mortgage Loan Originators in multiple states. Please note that you may assume, for purposes of the questions below, that my reference to “processing services” coincide in all cases below with the SAFE Act definition of “clerical or support duties at the direction of and subject to the supervision and instruction of: (1) A State-licensed loan originator, or (2) A registered loan originator.”

    1. The SAFE Act includes definitions for “Loan Originator” and “Loan Processor”, but the definition of “Independent Contractor” is not to be found. For purposes of the SAFE Act, please provide the definition of “Independent Contractor”.

    SAFE: We are not providing a definition at this moment but we can almost guarantee that if you’re not paid on a W-2 you would not meet the definition of employee and, thus, be an independent contractor. We also tried to define independent contractor on page 66551 of the proposed rule.

    2. If I am an individual who processes mortgages for state licensed Mortgage Loan Originators who are employed by state licensed mortgage broker companies or state licensed mortgage lenders and I process their loans under the licensee’s direct supervision and direction, am I required to be licensed as a MLO in the state in which the property is located?

    SAFE: Most likely that would meet the exemption as described in the proposed rule. The supervision by someone licensed would likely exempt you, at least under the federal statute.

    3. If I am paid a “per file” fee for processing services by the state licensed mortgage broker or lender on a 1099 basis, am I required to be licensed as a MLO in the state in which the property is located?

    SAFE: The manner of compensation is not really relevant. You need to determine if you’re supervised by someone with a license, etc. etc.

    4. If I am paid a “per file” fee for processing services by the state licensed mortgage broker or lender on a W-2 basis, am I required to be licensed as a MLO in the state in which the property is located?

    SAFE: That would make you an employee and likely not subject to SAFE licensing.

    5. If my “per file” processing fee is paid by the borrower as a line item on the HUD Settlement Statement and the invoiced fees are disbursed directly to me by the closing agent, am I required to be licensed as a MLO in the state in which the property is located?

    SAFE: That’s an interesting question and one for which we have no answer at the moment. No one, in the 5100 comments to the rule we received, described such a scenario.

    6. If my “per file” processing fee is paid to another entity who provides support services to me, the licensed MLO/Mortgage Broker/Lender (website, accounting, document storage) who then issues to me the net fee on a 1099 basis after deducting compensation for their services am I required to be licensed as a MLO in the state in which the property is located?

    SAFE: If you’re an independent contractor who is not supervised by a state-licensed loan originator then licensing is likely required.

    7. If all files are processed under the direct supervision and direction of the state licensed MLO then am I exempt from licensing regardless of how I am paid?

    SAFE: That appears to be in conformance to the proposed rule.

    SAFE: For what it’s worth, the inclusion of loan processors and underwriters in the actual SAFE Act makes sense to almost none of us. That may help explain our difficulty in providing definitive answers. We would also point out that the answer to these questions may not be made until a final rule is finally issued.

    I thank you kindly in advance for your responses to help us determine what the SAFE Act means for Loan Processors.
  8.  
    Mary,

    Great work! You have helped clarify many questions that we have all been wondering. I still wonder why some states like TX and LA require a contract loan processor to be licensed if we are independent contractors even though we mostly work under the direction and subject to the supervision and instruction of licensed originators.

    What is your contact info? I'd like to discuss this more outside of the forum.

    Thanks!
    •  
      CommentAuthorshae_davis
    • CommentTimeMay 6th 2010
     
    Mary,

    That is great information!!! However, when I called because I am in the state of TX I was told that I needed a License...I am not taking the class so there are no issues at a later date plus it will give me more knowledge of the broker side for future advancement.

    Thanks,

    Shae
    •  
      CommentAuthormary_evans
    • CommentTimeMay 6th 2010
     
    Frank and Shae,

    Of course the interpretation by the individual states is at issue. However, if enough of us bombard HUD and the state banking commissioners, perhaps they will realize they have erred in their assumption that a contract processor does not operate "at the direction of and subject to the supervision and instruction of: (1) A State-licensed loan originator, or (2) A registered loan originator.” It does not matter what form the compensation takes, where the processor is sitting at any given moment (in the broker's office or at home) or who writes the processing fee check. We absolutely have to be in direct consult with the LO throughout the process. We are contractors, yes. Independent, no! I don't know how anyone could successfully and efficiently process a loan without the LO's direct involvement. It is absurd to believe that any processor would attempt it, much less stay in business if the LO was left out of the process.

    Someone needs to take the lead and write up an eloquent and concise letter to use as a format that can be distributed to all the processors who would in turn copy and paste it into their personal letter to the banking commissioners in each state and to HUD. Does anyone have any ideas about how to get all the contract processors on the wagon to do this? We would need a list of email addresses and/or mailing addresses for the banking commissioners in each state. Who specifically is responsible for the wording of the SAFE Act? I admit my ignorance, since when I first read it, I saw the "direction and supervision" verbiage and wrote it off that it didn't apply to us. The "independent contractor" verbiage is what needs to disappear which is obviously what is confusing the states.

    Mary
  9.  
    Mary,

    I thought the new United Mortgage Processors website (www.unitedmtgprocessors.org) was going to take the lead in bringing all contract processors together to protest this new rule but I haven't seen any new discussions about it on their blog. I tried to email them directly to find out but never received a response. I'm not sure who is behind the website. Do you have any idea? I would be willing to collaborate with you and anyone else who is willing to help to bombard HUD as you said so they can change their verbiage so each state doesn't require every contract processor to be licensed as it seems most are following suit.

    I'll make a few phone calls on my end to NAMP and NLP to see how they can help as well.

    Here is my contact info. Shoot me an email so we can start working on this.

    Thanks,

    Frank
    303-500-3016
    frank@turnkeyprocessing.net
    •  
      CommentAuthormary_evans
    • CommentTimeMay 7th 2010
     
    Hi Frank,

    I joined on the United Mortgage Processors site, too and like you, found that nothing was happening with it. We need to do something for sure. I'll email you later today with proposed text for the "letter".

    Thanks!

    Mary
  10.  
    Mary,

    I never did receive an email from you. How is the draft for the proposed letter coming along?

    Thanks,

    Frank
    •  
      CommentAuthormary_evans
    • CommentTimeMay 11th 2010
     
    Hi Frank,

    Sorry for the delay - I'm happy to say that work got in the way. I'll be able to work on this soon!

    Mary
  11.  
    Not a problem. Let me know if you need anything.

    Thanks!
    •  
      CommentAuthormary_evans
    • CommentTimeJul 15th 2010
     
    Hello fellow Mortgage Professional!

    If you are a Contract Loan Processor or a Mortgage Loan Originator who has used or plans to use a contract processor, the attached petition applies to you and we urge you to become a "signer" to the attached Petition.

    In its current state, the SAFE Mortgage Licensing Act is being misinterpreted by many that a contract processor is considered an independent contractor and must be licensed in the state in which the subject property is located on any loan file processed. It is our consensus that the verbiage in the SAFE MLA needs to be clarified in this regard since the Act also states that if a processor solely performs clerical or support duties at the direction of and subject to the supervision of a State licensed or registered loan originator, that processor is exempt from licensing.

    It is our intent to gather as many "signers" to the attached petition as possible in the next few weeks. We will then distribute it to the entities who influence, interpret and or enforce the SAFE MLA requesting that the Act be revised or amended to reflect the true intent in crystal clear terms. The livelihood of untold numbers of contract processors depend on this and it seems obvious enough that whomever wrote this legislation had no intent to drive contract processors out of business and that it is simply a case of unfortunate wording.

    REPLY or SEND a separate message with SAFE MLA in the subject line to:

    h2obug@netzero.com or jenk2778@embarqmail.com

    In your message please include your name, title, location and email address in this format:

    Mary Evans / Loan Processor / Kill Devil Hills NC / h2obug@netzero.com

    Jenny Klingler / Loan Processor / Hanover PA / jenk2778@embarqmail.com

    Your signer information will be copied and pasted into a list which will be attached to the Petition and distributed to the parties noted at the top of the Petition. Your personal information will not be used for any other purpose whatsoever and will not be distributed to anyone other than the aforementioned addressees of the Petition and then solely for credibility and confirmation on the addressees' part if they choose to confirm validity.

    Thank you for your support and consideration! PLEASE forward this message and the attachment to every mortgage professional you know and invite them to join the effort!

    Mary Evans and Jenny Klingler

    SEE SUBSEQUENT POST FOR PETITION CONTENT!
    •  
      CommentAuthormary_evans
    • CommentTimeJul 15th 2010
     
    Petition to senators, congressmen, Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), State Regulatory Registry (SRR) and HUD.
    Re: HR 3221, Title V - The Secure and Fair Enforcement (SAFE) Mortgage Licensing Act as a part of the Housing and Economic Recovery Act (HERA)
    As contract Loan Processors and State licensed or registered Mortgage Loan Originators we are writing to request that clarification be made to a particular aspect of the SAFE Mortgage Licensing Act which is leading regulators to inappropriately require licensing of Loan Processors who work for multiple State licensed or registered Mortgage Loan Originators (MLO) in multiple states on a contract “per file” basis.
    Please note that every Contract Loan Processor, regardless of how many licensed or registered Mortgage Loan Originators for whom he or she works and regardless of how he or she is paid, performs the processing clerical and support duties at the direction of and subject to the supervision and instruction of a State licensed or registered Mortgage Loan Originator. It is impossible to successfully process a mortgage loan file without the direct input, supervision, direction and instruction of the MLO. Contract Loan Processors do not take loan applications and do not offer or negotiate terms of residential mortgage loans. We do not work independently and we do not work without supervision of the MLO.
    The portion of the legislation that is causing problems for contract processors is below in Section 1504 (b)(2) copied from http://www.govtrack.us/congress/billtext.xpd?bill=h110-3221:
    QUOTE OMITTED DUE TO POST SIZE LIMITATION.
    The term “independent contractor” is what is causing confusion for the state regulators. Some state regulators are attempting to define “independent contractor” by which form of payment is used for services rendered. There are state regulators that assume if a Loan Processor is paid via 1099 rather than W-2 that they are “independent contractors” and must be licensed. What needs to be clarified is that regardless of the form of compensation, the Contract Loan Processor is not processing independently, is performing the clerical or support duties at the direction of and subject to the supervision of a licensed or registered Mortgage Loan Originator and therefore, should not be required to obtain a Mortgage Loan Origination License for each state in which we do business.
    See excerpt below from HUD’s “proposed rule setting the minimum standards that states must meet to comply with the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (SAFE Act) in licensing loan originators.” Copied from: Federal Register /Vol. 74, No. 239 /Tuesday, December 15, 2009 / Proposed Rules 66551
    QUOTATION PARTIALLY OMITTED DUE TO POST SIZE LIMITATION.
    This proposed rule would clarify in
    § 3400.23 that an ‘‘independent contractor,’’ for purposes of this provision, is an individual who performs these duties other than at the direction of and subject to the supervision of a State licensed loan originator or a registered loan originator.
    Accordingly, an individual who is an employee of some person or entity (i.e., the individual is not an independent contractor), but who is not subject to the direction, supervision, and instruction of a licensed or registered loan originator, would have to obtain a loan originator license. Such a person or entity could prevent its employees from having to obtain a State loan originator license simply by ensuring that they perform any ‘‘clerical or support duties’’ at the direction of and subject to the supervision and instruction of a State licensed loan originator or registered loan originator.
    The information above clearly defines “independent contractor” as one who does NOT perform at the direction of and subject to the supervision and instruction of a State licensed or registered loan originator. Therefore, Contract Loan Processors who DO perform at the direction of and subject to the supervision and instruction of a State licensed loan originator is and should be exempt from MLO licensing.
    Again, as Contract Loan Processors and Mortgage Loan Originators who use them, we respectfully request your support and influence to have the wording of the Secure and Fair Enforcement Mortgage Licensing Act revised for all of us. The livelihood of uncounted Contract Loan Processors hangs in the balance. Something we cannot afford to do is allow this industry to dissolve further damaging this country’s economy. Unemployment is already at an all-time high and this issue is causing loss of income for Contract Loan Processors.
    Sincerely,
    See attached for signers to this petition.
  12.  
    CONTRACT PROCESSORS NEED TO BE LICENSED IN ORDER TO RECEIVE PAYMENT. THE FINAL RULING IS POSTED UNDER CONTRACT PROCESSORS. GOOD LUCK!
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