New Horizons for Nationwide Mortgage Licensing System and Registry


The Nationwide Mortgage Licensing System and Registry (“NMLS”) is the system of record for non-depository, financial services licensing or registration for participating state agencies, including the District of Columbia and U.S. Territories of Puerto Rico, the U.S. Virgin Islands, and Guam. For participating jurisdictions, NMLS is the official system for companies and individuals seeking to apply for, amend, renew and surrender license authorities managed through NMLS by 59 state or territorial governmental agencies. NMLS itself does not grant or deny license authority. NMLS is also the system of record for the registration of depositories, subsidiaries of depositories, and Mortgage Loan Originators (“MLOs”) under the Consumer Financial Protection Bureau’s Regulation G Secure and Fair Enforcement for Mortgage Licensing Act (”SAFE Act”), published December 19, 2011.
 NMLS was created by the Conference of State Bank Supervisors (“CSBS”) and the American Association of Residential Mortgage Regulators (“AARMR”), and began operations in January 2008 specifically for registration of depositories, subsidiaries of depositories, and Mortgage Loan Originators (“MLOs”). It is owned and operated by the State Regulatory Registry LLC (“SRR”), a wholly owned subsidiary of CSBS.

NMLS Expansion in 2012

In April 2012, the NMLS expanded its system to accommodate other financial service providers. As a result, state agencies are allowed to use the system to license a wide range “expanded industries” of non-depository, financial services providers, and money services businesses (“MSBs”) including money transmitters, payday lenders, check cashers, consumer finance companies, currency exchangers, and debt collectors.

State participation by the end of 2012 expanded to 11 states including Rhode Island, Vermont, Massachusetts, Washington, Tennessee, Louisiana, Idaho, New Hampshire, Oklahoma, Indiana, and Pennsylvania. The map of Expanded State Agency Use of NMLS shows the states that added other nondepository licensing on NMLS in 2012 and States adding other non-depository licensing on NMLS in 2013 and future projections.

States on the Horizon in 2013

There are ten states slated to join NMLS in 2013, and eleven more states are considering transitioning to NMLS. Two states are committed to joining in 2014 and five others are in active conversations with NMLS. Maryland was the first state to transition to NMLS in 2013 with its Money Transmitter license.

Each state will maintain its unique license requirements and protocols. As the states start using the system, each state agency will communicate directly to affected licensees the details about using NMLS and the requirements for transitioning licenses onto NMLS. New applicants are generally directed to the NMLS system for application guidelines and checklists in addition to the states’ own websites.

Some states require legislative authority to join NMLS while others do not need to make any regulatory changes to provide their licensees the option to use NMLS. According to Tim Doyle, Senior Vice President, Policy at the Conference of State Bank Supervisors, out of all the non-depository regulations, the money transmitter laws are the most consistent with NMLS and some states transitioning money transmitters licenses need little to no statutory modification to allow their MSB licensees to use NMLS.

There are currently about 120 companies on the NMLS system. After the mortgage industry, the money transmitters industry has the next highest NMLS adoption rate by state agencies.

New Functionality on the Horizon in 2013

On October 1, 2012, the CSBS formally issued a Request for Comment regarding the Uniform Authorized Delegate Reporting functionality being developed to allow money service businesses (“MSB”) managing state licenses through NMLS to submit Authorized Delegate location information in a uniform manner.

An MSB may contract with independent third party locations as sales outlets to perform the function of receiving and dispensing funds on behalf of the licensed MSB. These third parties are known as “Authorized Delegates.”

Authorized Delegates can be part of a large corporate chain with multiple locations or a small, independent business with just one location. In some instances, an Authorized Delegate can be an entity physically located in one state and doing business on behalf of a licensed MSB in other states (such as, through an internet portal).

Depending on the number of Authorized Delegates, some companies find the state quarterly and/or annual reporting requirements for authorized delegates challenging.

The Uniform Authorized Delegate Reporting (“uniform reporting”) functionality in NMLS will enhance the monitoring and supervision of MSBs and also allow MSBs to submit quarterly and other reports efficiently through NMLS.

According to Kevin Finnerty, Policy Director at Conference of State Bank Supervisors, NMLS is working on a system that companies can use to upload a single file quarterly to NMLS that will also work with the states’ own reporting systems. The Request for Comment, page 7, identifies 12 pieces of information that NMLS would collect. The roll out and possible pilot project is expected in Spring 2013, but there may be a transition period where companies would not be held accountable for the reports until mid-Fall of 2013.

In addition to the authorized delegate reporting, Phase II of the NMLS uniform reporting functionality will be quarterly reporting and financial statement reporting for licensees. The Money Service Business Working Group (“Working Group”) is working on additional functionality to allow MSBs to submit business volume information to the appropriate state regulators through NMLS. The Money Service Business Working Group, which was convened at the direction of the NMLS Policy Committee, is comprised of state regulators that advise on the expansion of NMLS to ensure that MSB licenses can be managed efficiently for both regulators and industry.

The Working Group identified that the reporting of authorized delegate information was not properly addressed in the existing functionality on NMLS. Through both internal deliberation and consultation with industry, the Working Group developed enhanced functionality in NMLS that would allow MSBs to submit required information on Authorized Delegate locations to the appropriate regulators in a standardized format.

Horizon Beyond 2013

Nine months after the transition, NMLS has helped MSBs and states streamline the application review process; however, some companies still experience costly and burdensome delays in licensing. Each state has unique variations in statutory requirements and resources. As stated by Tim Doyle, “There are 59 state agencies participating in NMLS with 59 different budgets.”

For the regulators, NMLS offers centralized information sharing for disclosure, background checks and compliance. For MSBs, it offers a streamlined licensing system to obtain and maintain licensing in a one-stop database.

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

Smaller businesses may also find license application submission and the transition process cost effective. Learning how to use the NMLS system compliance may present some initial challenges, but there are training opportunities available through NMLS, a resource center, and hotline with staff available to answer questions.

One thing is certain, large, medium or small businesses still need to keep all compliance requirements up-to-date across all states. NMLS is a great resource and tool to keep ahead of the curve.

Please see the map for a comprehensive look at the expanded state agency use of NMLS.

More information about NMLS is available on the Nationwide Mortgage Licensing System and Registry, or by contacting the NMLS Call Center at 240.386.4444.

Chartwell Compliance offers professional services to assist with every aspect of licensing compliance including the requirements of the NMLS program. Our professional staff is available to assist you with state license applications both paper-based and on NMLS and state license reporting and administration.

For more information please contact Chartwell Compliance by calling 1.800.541.6744 or Trish Lagodzinski at or by calling 301.461.6483.

Additional Sources: Conference of State Bank Supervisors (“CSBS”).

Trish Lagodzinski has more than 19 years of experience in regulatory compliance and government contracting. As a Compliance Specialist at Chartwell Compliance and, previously, Ascella Compliance, she has assisted with regulatory compliance matters dealing with state money services business licenses and associated state and federal compliance regulations for nonbank financial services companies.


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