A convergence of tech and regulatory forces might mean procedural changes

Jason Roth, co-founder and senior vice president, ComplianceEase

As published in Scotsman Guide's Residential Edition, April 2010.

Navigating the mortgage industry's regulatory landscape, with its fluctuating volume and rapidly changing loan programs, presents an ongoing challenge for mortgage originators and regulators. Technology can help.

In some cases, originators must adopt new approaches if they want to continue in the business. This is especially true when it comes to licensing.

On the Web ___________________________ • Nationwide Mortgage Licensing System Resource Center: mortgage.nationwidelicensing system.org • Conference of State Bank Supervisors (CSBS) and American Association of Residential Mortgage Regulators (AARMR) Multistate Mortgage Committee Report to State Regulators: sctsm.in/2009MMCR • CSBS and AARMR Model Examination guidelines: sctsm.in/CSBSmeg

The Secure and Fair Enforcement for Mortgage Licensing (S.A.F.E.) Act's minimum licensing procedures include, among other things, the adoption of the Nationwide Mortgage Licensing System (NMLS) as a centralized online registry for mortgage originators. This means when it comes to licensing, the use of technology isn't merely encouraged -- it's mandated.

After the S.A.F.E. Act's implementation, states scrambled to enact compatible licensing laws. As of mid-2009, 47 states had passed legislation implementing procedures to comply with the federal minimum standards set forth in the act.

In turn, the S.A.F.E. Act's provisions accelerated adoption of technology that might otherwise have taken a long time to make its way through state agencies and regulatory authorities. As technology's influence continues to grow, brokers should understand what brought us to this point. They also should look for ways to use new tools to their advantage.

How change happened

If you originate mortgages under a state license, you can bet the agency that regulates your lending operation is a member of the Conference of State Bank Supervisors (CSBS) or the American Association of Residential Mortgage Regulators (AARMR).

These two organizations created a centralized online system for tracking licensing for mortgage lending across multiple states. Originator applicants could go to a single place to apply for approval to originate loans. This creates a uniform application process and can enable states to share valuable information about bad actors.

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