COMPLIANCE ALERT: LA MTG SERVICER NEEDS A LICENSE BY 6/30/15:  Just like Rhode Island, if you wish to service Louisiana Rhode Island mortgage loans, Louisiana requires a Mortgage Servicer to obtain a Louisiana Residential Mortgage Lending License by June 30, 2015.  Here is a link to the description showing the “mortgage servicer” has been added to the Lender License.   http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/LA-RMLL-description.pdf

Here is the link to the new Checklist http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/LA-RMLL-description.pdf  Call me at 214-692-7611 or email me at [email protected]  and I will be glad to help you.  I have been doing mortgage licensing for 24 years and have assisted over 2500 mortgage companies.  Thanks,  Herb

COMPLIANCE ALERT: RI MTG SERVICER LICENSE AS OF 6/1/15: If you wish to service Rhode Island mortgage loans, Rhode Island requires a Third Party Loan Servicer License after June 1, 2015.  Here is a link to the new Checklist http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/RI-Third-Party-Loan-Servicer-License-New-App-Checklist.pdf.   Call me at 214-692-7611 or email me at [email protected]  and I will be glad to help you.  I have been doing mortgage licensing for 24 years and have assisted over 2500 mortgage companies.  Thanks,  Herb

http://www.michigan.gov/documents/difs/Mortgage_Loan_Originator_and_Seller_Financing_FAQs_438151_7.pdf

MICHIGAN DIFS Mortgage Loan Originator and Seller Financing FAQs The following Mortgage Loan Originator and Seller Financing FAQs discuss the Department of Insurance and Financial Services analysis of licensing requirements under the Mortgage Loan Originator Licensing Act and the Mortgage Brokers, Lenders, and Servicers Licensing Act. Answers provided in these FAQs do not include other restrictions that may exist in the Michigan Occupational Code or other state or federal laws or regulations.

Q: Is a “land contract” a residential mortgage loan subject to the MLOLA? A: Yes. HUD’s response to public comments on the SAFE Act Final Rule clearly states that “residential mortgage loans” include installment sales contracts (i.e., land contracts).

Q: Does the MLOLA provide an exemption for a maximum number of residential mortgage loan transactions that may be originated before an individual is required to be licensed as a mortgage loan originator? (The Safe Act Final Rule refers to this as a de minimis exemption.) A: No, such an exemption does not exist. Generally, origination of one residential mortgage loan requires licensure under the MLOLA. However, certain loan origination transactions may be exempt from the licensure requirements of the MLOLA as discussed below. In addition, the SAFE Act Final Rule provides limited licensing exceptions for certain transactions. Please review all of the Mortgage Loan Originator and Seller Financing FAQs below to determine if you qualify for a limited licensing exemption.

Q: What is the definition of “seller financing”? A: Seller financing is the activity of an individual or entity that owns and subsequently sells a dwelling subject to the MLOLA, which is financed by the seller through a residential mortgage loan as defined by the MLOLA.

Q: What types/level of seller financing activity would subject a seller to the MLOLA’s licensing requirement? A: Mortgage loan origination involving a residential mortgage loan as defined by the MLOLA for personal, family, or household purposes on a dwelling located in the state of Michigan generally subjects the seller to the licensing requirements of the MLOLA. However, certain seller financing transactions may not require licensure under the MLOLA, as discussed in the next FAQ.Under the SAFE Act Final Rule or HUD’s response to comments on the Final Rule, what specific seller financing transactions do not require a mortgage loan originator license? The SAFE Act Final Rule, or HUD’s response to public comments on the Rule, states that a mortgage loan originator license is not required for the following seller financing transactions provided that such activity is not habitual: • An individual who sells his or her own residence in a seller financed transaction, and pursuant to the transaction, offers or negotiates the terms of a residential mortgage loan;• An individual who sells his or her vacation home in a seller financed transaction and, pursuant to the transaction, offers or negotiates the terms of a residential mortgage loan;• An individual who sells an inherited property in a seller financed transaction, and, pursuant to the transaction, offers or negotiates the terms of a residential mortgage loan;• An individual who sells his or her dwelling to an immediate family member (spouse, child, sibling, parent, grandparent, grandchild, step parent, stepchildren, stepsiblings, and adopted relationships) in a seller financed transaction and, pursuant to the transaction, offers or negotiates the terms of a residential mortgage loan.DIFS has taken the position that origination of the above-mentioned transactions does not require licensure under the MLOLA unless the number or frequency of the transactions indicates that the individual appears to be engaged in the business of mortgage loan origination. As discussed in the next FAQ, DIFS will presume that an individual is “engaged in the business” of origination if four or more transactions are originated in a calendar year.

Q: In a seller financing transaction, does the MLOLA provide an exemption for a maximum number of residential mortgage loan transactions that may be originated before an individual is required to be licensed as a mortgage loan originator? A: No, such an exemption does not exist. However, the SAFE Act Final Rule states that an individual generally is not “engaged in the business of a loan originator” when an individual acts as a loan originator in providing financing for the sale of a property owned by that individual, provided the individual does not engage in such activity with habitualness. In considering whether activity is “habitual,” DIFS will generally apply the following standard. Unless other evidence to the contrary indicates that an individual is “engaged in the business” of loan origination, during a 12-month period from January 1 to December 31, an individual will not be considered to be engaged in the business of mortgage loan origination if the individual is not engaged in any activity under the MLOLA except seller financing transactions AND the individual originates three or fewer seller financed mortgage loan transactions. If four or more transactions are originated within such 12-month period, DIFS will presume the individual is “engaged in the business” and licensure as a mortgage loan originator is therefore required. Note that under the MLOLA, a mortgage loan originator must be a natural person.

Q: Can a seller who regularly provides seller financing for residential properties satisfy the MLOLA licensing requirements by simply working through a real estate broker or salesperson who is a licensed mortgage loan originator? A: If the real estate broker or salesperson receives no additional compensation beyond the customary commission on the real estate sale, a license under the MLOLA or MBLSLA is not required for that transaction. If the real estate broker or salesperson receives additional compensation beyond the customary commission on the real estate sale, the answer is “YES” if the real estate broker or salesperson is licensed as a mortgage loan originator under the MLOLA and is also licensed as a mortgage broker under the MBLSLA. The answer is “NO” if the real estate broker or salesperson is not licensed as both a mortgage loan originator under the MLOLA and a mortgage broker under the MBLSLA. HUD’s response to public comments on the SAFE Act Final Rule states that a seller who finances the sale of his or her own property avoids the issue of licensing by retaining the services of a licensed loan originator and having that individual carry out the functions that constitute engaging in the business of a loan originator. However, statutory language in the MBLSLA prohibits this activity unless the real estate broker or sales person is not only licensed as a mortgage loan originator, but is also licensed as a mortgage broker under the MBLSLA.

Q: Does a seller providing the seller financing need to be licensed as a mortgage lender under the MBLSLA? A: The seller providing the seller financing is a “mortgage lender” as defined under Section 1a(q) of the MBLSLA. The seller must be licensed as a lender unless a licensing exemption in Section 25 of the MBLSLA applies. An exemption for lenders with limited activity is provided in Section 25(g), which states: “This act does not apply to the following: (g) A mortgage lender that in the aggregate with any affiliates makes 10 or fewer mortgage loans in a 12-month period from January 1 to December 31.”

Seller Financing Examples Note: All examples below involve residential mortgage loans and meet the MLOLA definition of “originate.” A. Property owner A owns forty acres of farm land and sells three one-acre lots along the road frontage to unrelated individuals. The sales all occur within the same calendar year. Property owner A sells the lots to the individual buyers utilizing land contract agreements. Property owner A does not engage in any other activity under the MLOLA. Property owner A is not required to be licensed as a mortgage loan originator because he is not originating more than three mortgage loans in the calendar year and is not considered to be engaged in the business of mortgage loan origination. B. Investor X purchases twenty foreclosed properties and sells each property to other individuals. The sales all occur within the same calendar year. Investor X sells the properties directly to the individual buyers utilizing land contract agreements. Investor X is required to be licensed as a mortgage loan originator because she is engaged in the business of mortgage loan origination. C. Property owner Y sells the family vacation home to his child utilizing a land contract agreement. Property owner Y is not required to be licensed as mortgage loan originator because the transaction meets one of the statutory exclusions. He is not engaged in the business of a mortgage loan originator based on this transaction. D. Landlord Q sells seven individual properties that she has accumulated over several years to unrelated individuals. The sales all occur within the same calendar year. Landlord Q sells the properties directly to the individual buyers utilizing land contract agreements. Landlord Q is required to be licensed as a mortgage loan originator. Given the number of transactions in a calendar year, she is engaged in the business of mortgage loan origination. In this example, if Landlord Q decides to sell only three properties in a given calendar year, licensure as a mortgage loan originator may not be required if Landlord Q does not conduct any other activity considered to be in the business of mortgage loan origination. E. Builder Y sells five new homes that he built to unrelated individuals. The sales all occur within the same calendar year. Builder Y sells the properties directly to the individual buyers utilizing land contract agreements. Builder Y is required to be licensed as a mortgage loan originator because he is engaged in the business of mortgage loan origination. F. Real estate salesperson Z assists the seller with the sale of the seller’s personal residence. The seller is financing the sale on a land contract. Real estate salesperson Z is compensated for her real estate brokerage activities. Real estate salesperson Z is also compensated beyond customary real estate brokerage fees for her work assisting the seller in originating the land contract. Pursuant to Section 3(l)(ii) of the MLOLA, real estate salesperson Z is required to be licensed as a mortgage loan originator because she is engaged in the business of mortgage loan origination.

Louisiana requires mortgage servicers to obtain a license on or before June 30, 2015 http://www.legis.la.gov/legis/ViewDocument.aspx?d=911276&n=HB807%20Act

New SAFE MLO Test:  Ohio, New York, Maine, Oklahoma, New Mexico Virgin Islands and Puerto Rico have adopted the Uniform State Test (UST) raising the total to 38 states and 44 state agencies.  The Ohio Division of Financial Institutions, New York State Department of Financial Services,  Maine Bureau of Consumer Credit Protection, Oklahoma Department of Consumer Credit,  U.S. Virgin Islands Division of Banking & Insurance, Puerto Rico Office of the Commissioner of Financial Institutions and New Mexico Financial Institutions Division have adopted the National SAFE MLO Test Component with Uniform State Content.  Oklahoma is the 44th state agency that will no longer require a second state-specific test component to be taken by mortgage loan originators (MLOs) seeking licensure with its state agency, effective 10/1/2014.  See the UST Adoption Table. Therefore, to obtain a MLO license from 44 state licensing agencies, the MLO must take only the combination National and Uniform State Test.  There are still 13 states that require a separate State Test: AZ, AR, CA, CO, CT, FL, IL, MN, OR, SC, UT, WV.

“Thomas Law Mortgage Licenses” Mobile App was recently voted “Best Business Mobile App of 2014” by an unanimous vote of my family,  and hopefully you!  You can download it to your smart phone by clicking on this link  http://m.thomas-law.com or at the  Apple Store (iPhone and iPad) or at the Google Play Store (Android and Tablets). For a preview, watch my mobile app video by clicking on this link: https://play.google.com/store/apps/details?id=biz.app4mobile.app_792efed64ccb4bd5a32685789b861d24.app  I welcome your feedback and suggestions to make improvements and add new features.  Please email me at [email protected]  Thank you, Herb Thomas, Thomas Law Firm, Dallas, Texas

Michigan: Seller financer is a “mortgage lender” 

Land Contracts are specifically covered by the Michigan Mortgage Brokers, Lenders, and Servicers Licensing Act [MBLSLA ] and, unless otherwise exempt, a business entity that brokers, makes loans on, or services land contracts is required to obtain the appropriate license or registration under the act.   The seller providing the seller financing is a “mortgage lender” as defined under Section 1a(q) of the MBLSLA. The seller must be licensed as a lender unless a licensing exemption in Section 25 of  the MBLSLA applies An exemption for lenders with limited activity is provided in Section 25(g), which states  “This act does not apply to the following: (g) A mortgage lender that in the aggregate with any affiliates makes 10 or fewer mortgage loans in a 12 –month period from January 1 to December 31.”

Texas: Seller Financing de minimis exemption:

The TX Savings and Mortgage Lending Department will continue to allow the exemption found in § 156.202(a) (3) that “an owner of real property who in any 12-consecutive-month period makes no more than five mortgage loans to purchasers of the property for all or part of the purchase price of the real estate against which the mortgage is secured”   is exempt from the Department’s licensing requirements. The Department holds the position that exemption from licensing does not relieve that individual from complying with all applicable laws and rules pertaining to disclosures required by RESPA, new GFE, TILA, APR, new HOEPA, High Priced Loans, etc and the timing of each disclosure and rules.

http://www.sml.texas.gov/ResidentialMortgageLoanOriginator/documents/rmlo_news_information/rmlo_notice_20100817_156.202a3%20Exemption.pdf

TX Savings and Mortgage Lending Department Questions and Answers:

Q:  May an individual or entity owner finance more than five properties within a 12 month period without being licensed if they use a licensed RMLO to facilitate the transaction? 
A:  Yes, assuming that they only act as the lender in the transaction and do not take an application or negotiate rate and terms with potential borrowers

Q:  Is the Department’s interpretation of the five-transaction exemption under Section 156.202(a-1)(7) of the Finance Code is subject to aggregation for entities that share a 25% ownership. This interpretation results in a single five-transaction exemption for the combined entity group, rather than five exempt transactions per entity?
A:  Yes, the Department’s position is that the exemption is subject to aggregation for entities that share a 25% ownership which results in a single 5 transaction exemption for the combined entity group rather than five exempt transactions per entity. The 25% threshold is based on federal depository guidance used by the FDIC to establish non-rebuttable presumption of control.

Q:  An entity seller can only act through individual representatives. Assuming that an entity owner-financing seller otherwise qualifies for an exemption under Section 156.202(a)(3), does that exemption allow an officer or employee of that entity to act on the entity’s behalf in taking an application and negotiating the terms of the owner-financing loan without being licensed?
A:  Yes, assuming that the entity qualifies for the exemption.

Washington: Seller Financing License Waiver

WA Department of Financial Institutions [DFI] has changed its process for issuing the Consumer Loan Act license waiver for seller financing. The license waiver is now “self-effecting.” The seller completes the license waiver form and provides the completed form to DFI as directed in the instructions.  Once DFI has received the waiver that part of the process is complete. All that remains is for the seller to provide the buyer with the applicable disclosure summary of the loan terms and conditions.  Access the new process and the forms at our website here:    http://www.dfi.wa.gov/cs/seller-financing.htm