Topic: Mortgage Loan Originators (MLOs)
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Does Illinois law require us to include an NMLS number on our residential mortgage loan advertisements?
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No, Illinois law does not require banks to include NMLS numbers in residential mortgage loan advertisements. The Illinois Residential Mortgage License Act of 1987 requires mortgage loan originators who do not work for financial institutions to display their NMLS numbers on “all residential mortgage loan application forms, solicitations, and advertisements, including business cards and websites.”…
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When a title insurance agent acts as a settlement agent for a residential mortgage closing, we have been tracking down and using their Illinois title insurance registration number in lieu of an NMLS number on the Closing Disclosure. Is this still correct?
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Yes, we believe it is still true that when a settlement or closing agent is a registered title insurance agent, the Closing Disclosure should display the agent’s Illinois title insurance registration number. Regulation Z’s requirements for the Closing Disclosure include the disclosure of “a license number or unique identifier for each person (including natural persons)…
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We have a residential mortgage employee whose job title is “loan specialist.” He is not an officer of our bank, but he has registered with the Nationwide Mortgage Licensing System (NMLS) and obtained an NMLS registry number. Can he sign Fannie Mae Uniform Residential Loan Applications (URLAs) as a mortgage loan originator? Or does he need to have the title of “loan officer” or any other qualifications or credentials?
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Yes, we believe that your employee may sign Fannie Mae ULRAs as a mortgage loan originator. You stated that the employee has registered with the NMLS and has obtained an NMLS registry number. By taking those steps, your employee has satisfied the requirements of federal SAFE Act to act as a residential mortgage loan originator.…
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We are registering an employee as a mortgage loan originator (MLO) with the NMLS. He has worked for the bank for several years as a teller and is just now starting MLO duties. For purposes of filling out his employment history, should we use the first date of employment with the bank, or the first date of his MLO duties?
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We recommend entering the employee’s first day as a teller for purposes of the employment history on the employee’s NMLS profile. The NMLS Guidebook states that a “full employment history” must be provided and that “no gaps should be present,” particularly for background check purposes. Consequently, we believe that the start date of employment should…
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We originate loans brokered by third party originators (TPOs) and also serve as a broker to other institutions. We only work with other banks. We require them to complete a loan brokerage agreement and disclosure statement. Does Illinois law require this form or any other forms?
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No, we do not believe that banks must use the loan brokerage agreement and disclosure statement required by the Residential Mortgage License Act of 1987 (RMLA) in a brokerage relationship with another bank. The RMLA requires licensed mortgage brokers to provide a loan brokerage disclosure statement and obtain a signed loan brokerage agreement before a…
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What are we required to do as far as employee background checks? If an employee already has license through NMLS, do we need to do a background check? We are merging with our mortgage bank subsidiary, resulting in those mortgage loan originators (MLOs) becoming bank employees.
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Both federal and Illinois law require banks to screen for criminal convictions before hiring or serving as an employee, officer, director, or controlling stockholder. For employees that already are registered with the NMLS, you must review their criminal background reports in any event. The SAFE Act regulations require financial institutions to review criminal background reports…
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If a loan originator (LO) receives a referral for a consumer mortgage loan from another bank employee, can we reduce the LO’s commission for the resulting mortgage loan? Also, if we make a pricing exception to offer a lower interest rate on a mortgage loan, can we reduce the LO’s commission to offset the lower interest rate? Currently, our commissions are based on loan volume only.
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Yes, we believe that you may reduce a loan originator’s compensation for loans that result from referrals from other bank employees, provided that those referred loans have similar loan terms as loans that come in from other referral sources or leads. However, we do not recommend reducing a loan originator’s compensation based on a loan’s…
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We are considering offering local civil service employees and teachers a discounted mortgage loan origination fee. This would not be a short-term advertising campaign, but a long-term program to build loyalty with civil employees within our village. Would there be any fair lending or other regulatory concerns with this type of program? Could we include our village board members in the program?
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Yes, you may run into fair lending concerns regarding this type of discount program. Neither federal nor state anti-discrimination laws treat “occupation” as a protected class. In other words, you are not prohibited from giving preferential treatment to an individual based their occupation. However, such a policy may create a fair lending challenge if it…
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When providing settlement services, does a title company or its individual employees need a Nationwide Mortgaging Licensing System (NMLS) number in Illinois? Our title company said they don’t need an NMLS number, but our auditor said that we can’t leave the title company’s NMLS number blank on our closing disclosures.
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In Illinois, title companies and their employees are not required to obtain an NMLS identification number when they are acting as settlement agents, provided they are not receiving compensation for “brokering, funding, originating, servicing or purchasing of residential mortgage loans.” The CFPB’s Closing Disclosure includes a table on page five entitled “Contact Information” that contains…
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In Illinois, is a title company or title agent required to obtain a Nationwide Mortgage Licensing System (NMLS) registration when they are acting as closing agents? If so, should we list it in the Closing Disclosure?
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In Illinois, title companies and their employees are not required to obtain an NMLS identification number when they are acting as closing agents, provided they are not receiving compensation for “brokering, funding, originating, servicing or purchasing of residential mortgage loans.” The CFPB’s Closing Disclosure includes a table on page five entitled “Contact Information” that contains…