There have been a lot of changes in 2007, and we can expect even more in 2008. With the state legislators gathering together and the current market conditions influencing their legislative decision-making power, we can expect numerous new laws relating to the mortgage industry from each state. Especially if the US Congress decides to pass legislation requiring minimum levels of licensing in each state, which is likely to pass early this year.
The updates for January are as follows:
| • FHA Licensing Update |
• Massachusetts Bond Form Released
• Colorado E&O Requirement Postponed
• Alaska Licensing by 7/1/08
• Nationwide Mortgage Licensing System Released
FHA Licensing Update
With legislation recently passing by the US House and the US Senate, many changes are expected to happen in 2008. The Senate bill that just passed was much more conservative than the House bill and did not include items such as the surety bond in lieu of audited financials, a dramatic increase in the FHA Loan Limit, and risk-based pricing. It did, however, include some major changes to the HECM loan (Reverse Mortgage) that many people are excited about. Now the two bills have been sent to committee for the House and Senate to come to a compromise on differences in the bills. I would expect the Senate to hold their ground and the final bill to look very similar to the bill just recently passed by the Senate, but there is still a chance that some of the provisions in the House bill will be adopted. I would expect a final bill to be sent to the President by February.
Massachusetts Bond Form Released
Massachusetts made some new requirements for new licensees back in September, one of which was a new bond requirement. Unfortunately, the state failed to make the new bond form available. All mortgage companies that applied for a mortgage broker license since that date have been on hold. Massachusetts finally issued the new bond form, but to this date, it still has not been approved by the insurance companies to be issued. Numerous companies are waiting on this final item in order to get a license and hoping that the insurance companies will start issuing surety bonds on the new form soon.
Colorado E&O Requirement Postponed
Colorado recently issued a new requirement for all individual mortgage brokers (loan originators) licensed in the state to maintain an E&O policy. The insurance companies starting issuing these around the beginning of December, however, one of the questions on the application was “what percentage of loans originated in the previous 12 months were sub-prime loans?” Anyone that said more than 20% was either denied or told that they would have to pay thousands for the policy. Due to this issue, Colorado has issued an emergency ruling allowing until 1/31/08 for individuals to obtain the necessary insurance as well as increasing the maximum deductible to make the bond more cost-effective. Colorado is getting known for their emergency rulings since the state legislator is not giving enough time for the Colorado Division of Real Estate to implement new legislation.
Alaska Licensing by 7/1/08
This is just a reminder for those of you who are currently originating loans in Alaska. Many people have been able to originate their for years without a license, however, there new licensing requirements go into effect on July 1, 2008. Make sure to get your applications in soon if you plan on continuing to do business there after the first of the year.
Nationwide Mortgage Licensing System (NMLS) Released
Just a final reminder for those who are licensed in the first 7 states that will be using the system. You will want to access the system as soon as possible to update your company information. Here is a list of the first 7 states that will be using the system:
| • Idaho |
• Rhode Island
• New York