Louisiana Office of Financial Institutions Louisiana Secure and Fair Enforcement of Mortgage Licensing Act of 2009 Or Louisiana S.A.F.E. Residential Mortgage Lending Act

Federal S.A.F.E. Act Congress passed federal legislation titled: Secure and Fair Enforcement for Mortgage Licensing Act of 2008 Established minimum licensing guidelines for originators. Effective July 31, –SAFE Mortgage Licensing Act

Louisiana S.A.F.E. Residential Mortgage Lending Act HB 810 of 2009 Regular Session of the Louisiana legislature became Act 522 LSA-R.S. 6:1081 through 6:1099 Enacted effective July 31, 2009 Provides for licensure of mortgage originators, brokers, and lenders

OFI’s Web Address Download a copy of the new statute

Definitions 1083 “Mortgage Loan Originator” means an individual who for compensation or gain or with the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.

Definitions Residential Mortgage Loan – Any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling as defined in Reg Z or residential immovable property upon which is constructed or intended to be constructed a dwelling as defined in Reg Z

Definitions Residential Mortgage Loan Now covers all loans secured by a persons dwelling including: – Mobile home loans without a security interest in the land – Motor homes used as the person’s dwelling – Boats if used as the person’s dwelling – Vacant land if to be used to construct or move a person’s residence on it

R.S. 6:1086 The following persons shall have until July 31, 2010 to obtain a license in compliance with the Act: – A person whose activities were not subject to the licensing provisions of this Act on July 30, 2009 – A person engaged in residential mortgage lending activities which was subject to an exemption provided by this Chapter on July 30, 2009

Originator Exemptions Loan Processor or Underwriter An individual engaging solely in loan processor or underwriting activities, who does not represent to the public, through advertising or other means including the use of business cards, stationary, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage originator. Defined as a person who performs clerical or support duties as an employee at the direction of and subject to the supervision of a person licensed or exempt from the Act.

Originator Exemptions Loan Processor or Underwriter Clerical or Support Duties include subsequent to receipt of an application: – Receipt, collection, distribution, and analysis or information common for the processing or underwriting of a residential mortgage loan – 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 loan rates or terms

MLO Requirements for a new License Effective July 31, 2009 Complete 24 hours of pre-licensing education approved by NMLS&R (4 hours must also be approved by either NAMB or MBA) also a minimum of each of the following – 3 hours of federal law and regulations – 3 hours of ethics including fraud, consumer protection, and fair lending – 2 hours of training relating to non-traditional mortgage marketplace – 16 hours of electives

Requirements for Licensing Pass the NMLS&R approved written examination with both national and state components Obtain and maintain a surety bond or deposit account pledged to the commissioner – Originators may be covered by a Surety Bond obtained by their employer or deposit account – Obtain documents from NMLS&R

NMLS Resource Center Page

State Specific Requirements

State Specific Requirements (cont’d)

Application Checklist

Company New License Check list

Restrictions on granting Licenses 1088(E) Paid all fees due to OFI Never had a mortgage related license revoked in any governmental jurisdiction Never convicted, pled guilty, or nolo contendere to a felony involving fraud, dishonesty, breach of trust, or money laundering Not convicted, pled guilty, or nolo contendere to ANY felony within the last seven years

Surety Bond / Deposit Each applicant for licensure must provide one of the following in an amount which is determined by loan volume: – Surety Bond based upon loan volume from the previous year: $0 to $99,999,999 bond amount of $25,000 $100,000,000 or greater bond amount of $50,000 Employer may obtain coverage for employees – Pledged deposit in federally insured institution located in Louisiana in the amount of Surety Bond otherwise required – For initial license, bond or deposit must be at least $25,000

Surety Bond / Deposit S.A.F.E. requires all originators to be covered by a surety bond. However, employers may supply the bond for the originator. The employer must file with OFI an “Employer Certification Affidavit” for every originator. and click on the state license resource page, LA, new originator application and scroll down to bond information.

Application Fees New Mortgage Broker, Lender$400 – Each Branch (other than main office) $100 – Renewal Fee (main office only) $300 New Originators$100 – Renewal Fee$100

RENEWALS Renewal period in the NMLS&R begins November 1 st each year. Renewal tab appears and licensee attests that information is correct and pay fees. Renewal is late if submitted in NMLS&R after December 31 st but before March 1 st. – Broker/Lender late fee $200 – Originator late fee $ 50 Licenses Expire January 1 unless all requirements are satisfied before March 1.

Continuing Education 1094 B Each licensed originator must complete 10 hours of NMLS&R approved continuing education each year prior to renewal – 2 hours must be NAMB or MBA – 3 hours of education pertaining to federal laws and regulations – 2 hours of ethics, which shall include instruction on fraud, consumer protection, and fair lending issues – 2 hours related to lending standards for the nontraditional mortgage product marketplace – 3 hours of electives

Continuing Education for 2009 HOWEVER specific content will not be required until Commissioner determines that CE through the NMLS&R is adequately available for all Louisiana licensees to become compliant – Anticipated in early 2010 – Any 10 hours of education approved by OFI will be sufficient for renewal of an originator license for 2010 – DO NOT GO TO NMLS&R IN 2009 FOR CE !!

Testing Requirements ALL licensed originators must obtain a passing grade of at least 75% on both the National and State Components of the S.A.F.E. compliant test developed by the NMLS&R All new applicants on or after July 31, 2009 must obtain a passing grade on both components of the test before obtaining a license Originators which were licensed on or before July 30, 2009 must obtain a passing grade on both components prior to renewal 2010

Testing Requirements State Component Exemption Everyone has to pass the National Portion of the SAFE test prior to renewal Only Originators with a passing grade on State test between 1/01/04 – 7/30/09 may be eligible for an exemption from the state test Take the National & State portions early - – A passing score is 75% correct answers

Testing Requirements Failing Grades An individual may retake one or both of the components of the test up to three consecutive times after waiting at least thirty days between tests After failing three consecutive tests the individual must wait at least six months before taking a test again – [ Don’t wait to take the test. ]

Requirement to Retake Examinations An originator who fails to maintain a license for a period of five years or longer will be required to obtain a passing grade on both components prior to obtaining a license

Requirements for a new applicant 1094 A Create a base record in the NMLS&R 24 hours of NMLS&R approved Prelicensure Education taken from a NMLS&R approved provider. 24 hours must include at least 4 hours of courses approved by either NAMB or MBA with verification sent to OFI. Must pass both the Louisiana specific portion and national portion of the S.A.F.E. test.

NMLS Resource Center Page

Test & Education Information

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Prohibition on Finance of Single Premium Insurance No mortgage lender shall finance or include in the loan amount any single premium credit life, dismemberment, health and accident, mortgage life and disability, involuntary unemployment, or debt cancellation insurance sold in connection with a residential mortgage loan transaction Financing of Single Premium Private Mortgage Insurance Not Prohibited

Exceptions To Prohibition on Finance of Single Premium Insurance The prohibition on financing of single premium credit insurance does not apply to the following: – Loans with a principal balance of $50,000 or less – Loans where the portion of the original principal balance attributable to the insurance premiums is scheduled to be fully amortized no later than the coverage expiration date of the insurance product.

NMLS&R Call Center and Website If you need assistance or have a question about how to navigate in the system, make changes to your record, payment of fees or submit renewals you should contact the Call Center. (240) View or navigate the site

Please Remember !!!!!! Keep your company information updated – Company & Contact person addresses – Officers, Owners, % ownership – Branches – Originators – Relationship & Sponsorship – This is an electronic system utilizing internet communication. Your license depends on it.