The April mortgage license update includes the following updates:
o FHA License Bond – Will it ever happen?
o Alaska Mortgage Licenses – July 1, 2008
o New York Mortgage Licenses – Transition to NMLS
o Guarantee bond issues – Massachusetts, District of Columbia and New York
o HUD exempt states – this is really interesting
FHA License Bond
Congress has been working on reconciling the FHA Modernization Act for months, and though every week it seems like they’re making progress, it’s still unclear if the new law will include a bond provision. If you’re looking to take out FHA loans and don’t meet the $63,000 net worth requirement, I recommend looking at other options. There are many companies that will allow you the independence you want while operating under HUD approval.
Alaska Mortgage Licenses
Although you won’t find anything on Alaska’s website, mortgage broker and lender licenses are required by July 1, 2008. Contact is Roger Prince at (907) 269-8144. My recommendation is to contact him as soon as possible if you want to originate from Alaska after July 1, 2008.
New York Mortgage Licenses
The transition of New York mortgage brokers and bankers to the NMLS has begun. As of April 1, 2008, you can now submit your business information to the NMLS. The deadline for transition is September 1, 2008. With the utter incompetence of the New York Department of Banking’s Mortgage Licensing Division, there is great concern that they can handle this professionally. It could be very bad for many businesses if this doesn’t pan out, but the NMLS may finally streamline the licensing process in New York, currently the most difficult state to obtain licenses in the nation. My hope is that they clean house there and get rid of the uncooperative and rude people.
Bond Issues
Massachusetts, the District of Columbia and New York are becoming very difficult states to place bonds. Hartford issued a letter that they would not renew any Massachusetts bonds. The District of Columbia has made some changes to how they interpret bail, which increases carrier liability, and New York has been making so many claims on bail that no insurer wants to write bail anymore. My recommendation to you is that you contact these states if you are licensed in them and complain. They need to make some changes to their bail bonds and the way they use them or mortgage companies in these states will lose their licenses or be forced to pay a lot of money to get bail bonds. Make your voices be heard.
HUD-exempt states
HUD approval allows you to make FHA loans, but it also has another added benefit: HUD exemptions. About 10 years ago, you could be exempt in most states if you were approved to negotiate FHA loans, but gradually states have eliminated these exemptions. Here is the list of states that still have some type of exemption in their laws. Please note that some of these exemptions will not apply to you and some lenders do not accept exemptions.
Alabama
Hawaii under foreign lender exemption (although some banks do not accept it, most do)
Oklahoma if you have an FHA Nationwide Direct Lending Branch or an FHA Approved Branch with a lending area that includes OK.
Ohio if you only originate HUD loans.
Missouri
Indiana if you originate 25 FHA loans per year in IN on or after 1/1/08 OR if you have a Full-Eagle.
Kentucky if you originate 12 FHA loans per year in KY.
Tennessee will allow you to register in lieu of the license, which eliminates the $90,000 bond requirement; however, if you already have a license, you will need to hold the bond for 2 years after changing from licensee to registrar.
Texas as a full-eagle under mortgage banker registration (must have DE Underwriter on staff)