Expansion of the Nationwide Mortgage Licensing System and Registry ("NMLS")

The NMLS has been expanded to include Money Services Businesses (“MSBs”) and certain other Non-Bank Financial Service Providers.

In April 2012, the Nationwide Mortgage Licensing System and Registry (“NMLS”) expanded the system to accommodate other financial service providers. As a result, state agencies will be allowed to use the system to license a wide range of non-depository, financial services-related businesses.  The “Expanded Industries” include: currency exchangers; check cashers/sellers; debt collectors; foreign transmittal agencies/money transmitters; insurance premium finance companies; motor vehicle sales; finance companies; retail installment; sales finance companies; small loan companies; debt management companies; payday lenders and pawnbrokers.

Original NMLS

The Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators (“AARMR”) developed and implemented the NMLS which is a national, secure, web-based system owned and operated by the State Regulatory Registry.  Through the NMLS, each residential mortgage loan originator (“MLO”) and each mortgage loan company is assigned a unique identifier.  Through the identifier, the NMLS has the capability of tracking an MLO across state lines and provide information about the MLO to regulators.

Originally the NMLS was a voluntary licensing system for state licensed and state regulated MLOs until the Secure and Fair Enforcement for Mortgage Licensing Act (“SAFE” Act) of 2008 was passed and congress made use of the NMLS mandatory.

Expanded NMLS

The expansion of the NMLS to include MSBs and certain other non-bank financial institutions (“NBFIs ”) means MSBs and NBFIs will be allowed to utilize the NML system to manage licensing and registration in a more efficient and streamlined manner via the secure web-based on line system.  MSBs and NBFIs will have the capability of obtaining and maintaining licensing in a one-stop database as all information will be centralized and readily accessible.  By completing a few simple steps, MSBs and NBFIs will be able to submit a single application in the data base.

To encourage participation in the program, there is no processing fee for submitting a new application or transitioning an existing license into NMLS.  The only charge will be for a renewal. Once an applicant is registered in the system, NMLS will annually charge a processing fee of $100 per company license and $20 per licensed branch location. All state regulatory fees will remain the same.

Along with the expanded NMLS will be the implementation of new NMLS licensing forms which have been updated and will be implemented in the system in April 2012. While NMLS forms will be uniform, state level licensing standards, forms, and requirements will continue to be determined by state law.(Authorized Agents/Delegates of money transmitters are not going to be managed using NMLS forms as state regulators are in process of developing a state method to manage reporting for these entities in a uniform manner.)

State Participation

The following states will begin using the NMLS system for applications starting on April 16, 2012.

Rhode Island

Rhode Island will move over every form except debt collector.

Source: Rhode Island Division of Banking

Vermont

Vermont is transitioning sales and retail finance companies on April 16th, and check cashers, money servicers, and debt adjustors will be transitioned later in the year pending legislative updates.

Source:State of Vermont

Massachusetts

Starting in April 2012, the Massachusetts Division of Banks will require all companies licensed as: debt collectors; small loan companies; motor vehicle sales finance companies; retail installment sales finance companies; insurance premium finance companies; check cashers; check sellers; and foreign transmittal agencies to have a complete record in NMLS. Once completed, the companies will be required to submit the record to the Division of Banks for approval.

Source:  State of Massachusetts

Washington

For Washington State, the first stage implementation, starting on April 16th, begins with money transmitters and currency exchangers. The second stage implementation starts in July and transitions check cashers and payday lenders.

Source: State of Washington

Other States Status

Tennessee, Louisiana, Idaho, New Hampshire, Maryland, Oklahoma, Wyoming, and the District of Columbia are in a testing and evaluation phase and/or require legislation to change the license application process.

Each state will maintain its unique license requirements and protocol. The states will communicate directly with affected licensees to provide details and instructions of state requirements for use of the NMLS and the requirements for transitioning licenses onto NMLS. The NMLS will identify the specific license requirements and authorities and post them on the NMLS website as they emerge.

Other changes to NMLS planned for April 2012 include an improved process flow of form filing and the capability of applicants and licensees to upload documents as part of a the overall filing process, including processing of criminal background checks where required by an FBI-approved state law, as well as other minor changes.

Larger licensees working in multiple states and regions may find the NMLS system time effective and cost saving as licensees can manage all of their information, including branch licensing, renewal, and address changes, etc., electronically using the streamlined  processes. Necessary changes can be updated across all licenses and dual licenses within a state, e.g., a money transmitter and check casher license can be maintained using the same NMLS record.

Smaller businesses that operate in one or even several states may find compliance with NMLS requirements to be a challenge as the initial registration process may call for an increase in staff,  and the need for certain technical equipment.  One thing is certain, regardless if the business is large, medium or small, all businesses will need to keep all compliance up-to-date across all states.

Chartwell Compliance offers professional services to assist you with every aspect of meeting the requirements of the new NMLS program. Our professional staff is available to: assist you with paper-based and NMLS state license application and administration; assist you with building a program to manage the NMLS process; or manage the entire NMLS process from top to bottom.  For more information please contact Chartwell Compliance by calling 1.800.541.6744.

More information about NMLS is available when you visit the Nationwide Mortgage Licensing System and Registry, http://mortgage.nationwidelicensingsystem.org or contact the NMLS Call Center at 240.386.4444.

Additional Sources: Conference of State Bank Examiners


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