Topic: Mortgage Loan Originators (MLOs)
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We have a subsidiary that is a mortgage company. The president of the company wants to list his title on his business card as “mortgage lender.” Is that permissible?
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We are not aware of any laws or regulations that would prohibit a mortgage loan originator (MLO) from using “Mortgage Lender” as a title on his or her business cards. While the phrase “mortgage lender” ordinarily refers to an entity or organization that is acting as a lender, we do not believe that it would…
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Because some of our MLOs are not renewing their NMLS registrations, some of our branches will not have any MLOs available to originate residential loans. In those branches, can non-MLOs take loan applications to forward for processing, provide their names on loan documents (such as the promissory note), or act as the closing agent for loans or modifications?
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In our view, if an employee’s name appears on loan documents or if the employee is actively participating in a loan or modification closing, those actions likely would trigger the SAFE Act mortgage loan originator (MLO) registration requirements. However, if the employee’s actions are limited to taking completed loan applications from customers and forwarding them…
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Do we need to provide the bank’s NMLS number to our customers on any written communications? Our current procedures cover only the use of a loan originator’s NMLS number.
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Regulation Z requires the disclosure of NMLS identifiers for both financial institutions and loan originators on credit applications, Loan Estimate and Closing Disclosures, notes and loan contracts, and security instruments. Notably, the SAFE Act’s provisions regarding NMLS identifiers apply only to mortgage loan originators, not to financial institutions. For resources related to our guidance, please…
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Within sixty days after selling a mortgage loan on the secondary market, the customer decided to prepay the loan. Our sales contract required us to refund its fee. Can we take back the compensation paid to the loan officer for making the loan?
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The answer depends on the terms of your employment agreement. The Illinois administrative rules for the Wage Payment and Collection Act permit employers to deduct certain commissions from an employee’s wages. The commission must be provided for in an agreement with the employee, the commission must be for a particular sale, and the sale must…
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One of our mortgage loan originators recently left the bank. According to his NMLS record, he began working for a new employer a month before he left the bank — the NMLS shows a “start date” under “Office Locations” that is a month before his termination date with our institution. However, his NMLS record also shows a “start date” under “State Licenses/Registrations” that corresponds with his termination date. Which date should we treat as the employee’s termination date? How can we determine the exact date on which the employee’s NMLS identifier became registered with the new employer?
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While we cannot provide any legal advice or guidance on when the employee should be treated as terminated, the NMLS data entry guidelines may provide some clarification on what is meant by the two different “Start Dates.” The “Start Date” entry under “Office Locations” is the employee’s first day of working at the location listed…
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We originated a business-purpose mortgage loan. The loan documents use two different loan officers’ NMLS identifiers, because a second loan officer took over the file after the original loan officer left our bank. Now, the secondary market investor is refusing to purchase the loan because of the discrepancy in NMLS identifiers. Do the NMLS identifier requirements apply to non-consumer loans?
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No, the requirements to use the NMLS identifier on loan documents and elsewhere do not apply to non-consumer loans. Regulation Z’s NMLS identifier requirements apply only to consumer credit transactions secured by a dwelling. Similarly, the SAFE Act’s NMLS identifier requirements apply only to originations of consumer-purpose residential mortgage loans. However, it is possible that…
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Does the Department of Labor’s Administrative Interpretation No. 2010-1 apply to consumer loan officers originating unsecured loans (i.e., not secured by a dwelling), or does it only apply to residential mortgage loan originators? Also, would it apply to a loan officer who originates some residential mortgage loans but also performs other duties as an officer of the bank?
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The Department of Labor (DOL) Interpretation is focused on both mortgage loan originators (MLOs) and “employees who perform the typical job duties of a mortgage loan officer.” While the DOL Interpretation does not specifically address non-residential loan officers, its guidance does provide a framework for determining the treatment of other bank employees as non-exempt employees…
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Does Illinois law require us to include a mortgage loan originator’s NMLS number on the closing documents for a HELOC? We know this is not required under federal law.
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No, Illinois law does not require a financial institution employee to provide a Nationwide Mortgage Licensing System and Registry (NMLSR) identifier on loan documents. The Illinois law governing the licensure of mortgage loan originators, the Residential Mortgage License Act of 1987, governs the use of NMLSR identifiers on loan documents, but it does not apply…
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Are banks subject to the Illinois Residential Mortgage License Act of 1987? We were told that we need to provide a Borrower Information Document to mortgage loan applicants under the Act.
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No, the Illinois Residential Mortgage License Act of 1987 does not apply to financial institutions. The Act exempts “any bank . . . savings bank, or credit union.” However, if your institution has subsidiaries or affiliates that are not banks, they are not covered by this exemption. For resources related to our guidance, please see:…
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A customer asked one of our commercial lenders about a business-purpose loan secured by a second lien on the customer’s personal property. The commercial lender provided informal verbal approval before referring the customer to a mortgage loan originator for the formal application and approval process. Would the commercial lender’s actions be considered taking a loan application for SAFE Act purposes?
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No, the SAFE Act regulations would not apply because the loan was a business-purpose loan. The SAFE Act requirements apply only to mortgage loan originators who take applications for “residential mortgage loans,” defined as “any loan primarily for personal, family, or household use that is secured by a mortgage . . . .” Even though…