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Order Regarding Effective Date Of Individual Mortgage Loan Originator Licensing For Employees Of Loan Servicing Companies

Order
Monday, April 19, 2010
Docket No. 10-033-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/Docket-2010-033-B.pdf

Docket No. 10-033-B

In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.l71) 2009


Order Regarding Effective Date Of Individual Mortgage Loan Originator Licensing For

Employees Of Loan Servicing Companies

 

Background

1. Act 29 of the 2009-2010 legislative session modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

2. The SAFE Act requires that all states license individual mortgage loan originators and Chapter 73 now governs the licensing of individual mortgage loan originators in Vermont.

3. Under the broad definitions in the SAFE Act and in Chapter 73 the loss mitigation employees of mortgage loan servicing companies need to obtain individual mortgage loan originator licenses to continue their loan modification and loss mitigation efforts for loans serviced by the loan servicing company.

4. The federal Department of Housing and Urban Development ("HUD") is responsible for determining whether a state has a law or regulatory system inplace that meets the requirements of the SAFE Act. See, SAFE Act §1508.

5. HUD is currently in the rulemaking process for the SAFE Act and has issued Proposed Rule "SAFE Mortgage Licensing Act; HUD Responsibilities Under the SAFE Act", Docket No. FR-5271-P-01 (the "Proposed HUD Rule").

6. The Proposed HUD Rule indicates HUD's inclination to require individuals who modify residential mortgages to be licensed as mortgage loan originators. The Proposed HUD Rule also specifically asks for comments on this issue. The final HUD rule has not been published as of the date of this Order.

7. Subject to the guidelines and limitations provided in this Order, the commissioner desires to delay the effective date for loss mitigation employees and loan modification employees of mortgage loan servicing companies to obtain a mortgage loan originator license in order to promote foreclosure prevention opportunities during this time of increased foreclosure activity.

8. Act 29, Sec. 3, provides that the commissioner may extend the date for compliance with any provision of the Act provided the extension is permitted or approved by HUD.

9. Given the current difficult circumstances in the residential mortgage market, and the number of homeowners potentially facing foreclosure or having difficulty making their mortgage payments, it is appropriate to delay the effective date for loss mitigation employees and loan modification employees of mortgage loan servicing companies to obtain a mortgage loan originator license in order to avoid any disruption in their foreclosure prevention efforts and to encourage loan servicing companies to increase staff to meet the loss mitigation and loan modification needs of borrowers.

 

Order

10. Subject to the limitations and criteria in paragraph 11, it is hereby ordered that the effective date for loss mitigation employees and loan modification employees of mortgage loan servicing companies to obtain a mortgage loan originator license is hereby delayed until July 31, 2010.

11. An individual and the individual's employer must meet all of the following criteria to qualify for the delay in the mortgage loan originator licensing requirement set forth in paragraph l 0:

a. The individual must be an employee of a third party loan servicing company.

b. The third party loan servicing company must not be the original lender of the mortgage loan and the company must service residential mortgage loans owed or due, or asserted to be owed or due, another.

c. Neither the individual nor the third party loan servicing company receives any direct or indirect compensation from the borrower for providing the loan modification or any related foreclosure mitigation services.

d. Notwithstanding the provisions of subparagraph c the lender, the third party loan servicing company, and the borrower may receive incentive payments from a federal or state government, or an agency or department thereof, for participating in the federal Home Affordability Modification Program or in a similar state or federal foreclosure prevention program.

8 V.S.A. Chapter 73 Licensed Lender Statute, Act No. 29 (H.171) 2009 - Order Regarding: (A) Modification Of Transition Deadline; (B) Submission Of Credit Reports And Credit Scores; And (C) The Date The Department Will Begin Accepting Mortgage Loan ...

Order
Monday, September 28, 2009
Docket No. 09-128-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/ORD-B-09-128.pdf

Docket No. 09-128-B


In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.171) 2009

 

ORDER REGARDING:

(A) Modification Of Transition Deadline;

(B) Submission Of Credit Reports And Credit Scores; And

(C) The Date The Department Will Begin Accepting

Mortgage Loan Originator License Applications

 

Background

1. On May 21, 2009 Governor Douglas signed Act 29 (H. 171) into law.

2. Act 29 modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

3. Among other things, Act 29 requires applicants to obtain and submit fingerprints for a criminal background check.

4. The Department has learned that the fingerprint and criminal background check functionality of the Nationwide Mortgage Licensing System and Registry ("NMLS") will not be available until late January 2010.

5. Act 29 also requires applicants to submit authorization for the NMLS and the commissioner to obtain credit reports and credit scores.

6. The Department has learned that the credit report and credit score functionality of the NMLS will not be available as of January 1, 2010 and may not be available until late spring 2010.

7. Pursuant to Act 29, Sec. 3 (b) (transition provisions), the commissioner may extend the date for compliance with any provision of Act 29.

8. The commissioner has determined that, under the current transition provisions in Act 29, Sec. 3 (b), the timing of the fingerprint and criminal background check functionality on the NMLS, and the current unavailability of the credit report and credit score functionality on the NMLS, may create problems for the Department and for those individuals who begin acting as a mortgage loan originator after December 31, 2009.

9. This Order is issued to modify the transition provisions of Act 29, to provide guidance as to how to accommodate the current unavailability of the credit report functionality, to inform potential mortgage loan originators when the Department will begin accepting mortgage loan originator license applications, and to enable the orderly transition to the licensing of mortgage loan originators in a manner consistent with the SAFE Act and Act 29.

10. This Order is permitted under Act 29, is not in conflict with the SAFE Act, and is permitted under HUD's interpretation of the SAFE Act

Order

11. The transitional provisions of Act 29, Sec. 3 (b), are hereby modified as follows:

All individuals who, on or before March 31, 2010, are employed by a mortgage broker holding a valid Vermont license and who are authorized to act as a mortgage broker under such license, or are employed by a lender holding a valid Vermont lender license and are acting as a lender or loan officer under such license, shall complete the pre-licensing education and testing requirements and shall obtain a mortgage loan originator license as required by the Act 29 no later than July 1, 2010. All other individuals (i.e., those individuals who start acting as a mortgage loan originator under a Vermont mortgage broker or lender license beginning on or after April 1, 2010) must obtain a mortgage loan originator license as required by Act 29 prior to acting as a mortgage loan originator in this state.

12. Until such time as the credit report and credit score functionality is available on the NMLS, applicants shall obtain and submit to the Department, outside of the NMLS, a copy of their current credit report and credit score, which credit report and credit score must not be more than sixty (60) days old.

13. The Department will begin accepting mortgage loan originator applications February 1, 2010.

14. The Department strongly encourages individuals to apply for a mortgage loan originator license well in advance of the July 1, 2010 deadline. Those who wait until the July 1, 2010 deadline may experience significant backlogs and delays in the processing and issuance of a mortgage loan originator license, including a period of time during which the individual is not permitted to engage in mortgage loan originator activities in Vermont.

8 V.S.A. Chapter 73 Licensed Lender Statute, Act No. 29 (H.171) 2009 - Order Regarding Effective Date Of Deletion Of Licensed Lender Statute Exemption For Nonprofit 501(c) Organizations That Conduct Their Lending Activities Through Revolving Loan Funds

Order
Thursday, July 23, 2009
Docket No. 09-097-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/ORD-B-09-097.pdf

Docket No. 09-097-B

In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.171) 2009

 

ORDER REGARDING EFFECTIVE DATE OF DELETION OF

LICENSED LENDER STATUTE EXEMPTION FOR

NONPROFIT 501(c) ORGANIZATIONS THAT CONDUCT THEIR LENDING

ACTIVITIES THROUGH REVOLVING LOAN FUNDS

 

 

Background

1. Act 29 modified the following exemption from the Licensed Lender Statute, which exemption was formerly found at 8 V.S.A. §2201(c)(8) (the "Nonprofit Revolving Loan Fund Exemption") by adding the following italicized language:

(c) No license shall be required of:

. . .

(8) lenders that conduct their lending activities, other than residential mortgage loan activities, through revolving loan funds, that are nonprofit organizations exempt from taxation under section 501(c) of the Internal Revenue Code, and that register with the commissioner of economic development under section 690a of Title 10

[As amended, this exemption is now codified at 8 V.S.A. §2201(d)(9).]

2. The effect of the modification to the Nonprofit Revolving Loan Fund Exemption is that nonprofit organizations operating revolving housing loan funds using grant money (for example, grant money from the Department of Housing & Community Affairs) would need to be licensed as a lender under Chapter 73 as of July 1, 2009 in order to continue making residential mortgage loans to low income homeowners.

3. Pursuant to Act 29, Sec. 3 (b), the commissioner may extend the date for compliance with any provision of Act 29 provided the extension is permitted or approved by the federal Department of Housing and Urban Development ("HUD").

4. Act 29 modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

5. Under the SAFE Act HUD is responsible for determining whether a state has a law or regulatory system in place that meets the requirements of the SAFE Act. See, SAFE Act §1508.

6. Both the SAFE Act and HUD commentary permit a state to delay licensing lenders such as nonprofit 501(c) organizations that conduct their lending activities through revolving loan funds.

7. Delaying the effective date for the removal of an exemption from Chapter 73 is consistent with the SAFE Act and HUD guidelines, and is fair and reasonable because of the particular circumstances involved in the transactions that would otherwise be affected by the removal of the exemption, provided the delay does not extend the effective date for licensing beyond July 31, 2010.

8. Given the current difficult circumstances in the residential mortgage market, and the number of homeowners potentially facing foreclosure or having difficulty making their mortgage payments, it is appropriate to delay the effective date of the modification to the Nonprofit Revolving Loan Fund Exemption to enable these nonprofit 501(c) organizations to continue assisting homeowners while they transition to becoming a licensed lender under Chapter 73.

Order

9. Based upon the foregoing and other factors deemed relevant to the commissioner, it is hereby ordered that:

a. The effective date of compliance with the requirement of Act 29 that nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds be licensed as lenders is hereby delayed until December 30, 2009.

b. Prior to and including December 30, 2009, nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds, as described in former 8 V.S.A. §2201(c)(8), do not need to obtain a lender license to make residential mortgage loans.

c. Beginning December 31, 2009 nonprofit 501(c) organizations that conduct their residential mortgage lending activities through revolving loan funds must have obtained a lender license or otherwise qualify for an exemption from Chapter 73 in order to continue the practice of making residential mortgage loans in Vermont.

8 V.S.A. Chapter 73 Licensed Lender Statute, Act No. 29 (H.171) 2009 - Order Regarding Effective Date Of Deletion Of Nonprofit Institutions Of Higher Education Exemption

Order
Wednesday, July 8, 2009
Docket No. 09-084-B
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/ORD-B-09-084.pdf

Docket No. 09-084-B

In Re: 8 V.S.A. Chapter 73 Licensed Lender Statute Act No. 29 (H.171) 2009

 

ORDER REGARDING EFFECTIVE DATE OF DELETION OF

NONPRO F IT INSTITUTIONS OF HIGHER EDUCATION EXEMPTION

 

Background

1. Act 29 deleted the following exemption from the Licensed Lender Statute, which exemption was formerly found at 8 V.S.A. §2210(c)(11) (the "Nonprofit Institutions of Higher Education Exemption"):

(c) No license shall be required of:

. . .

(11) nonprofit institutions of higher education, exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, that make residential mortgage loans to their employees from their own funds.

2. Pursuant to Act 29, Sec. 3 (b), the commissioner may extent the date for compliance with any provision of Act 29 provided the extension is permitted or approved by the federal Department of Housing and Urban Development ("HUD").

3. Act 29 modified the Licensed Lender Statute, 8 V.S.A. Chapter 73, to bring Chapter 73 into compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act").

4. Under the SAFE Act HUD is responsible for determining whether a state has a law or regulatory system in place that meets the requirements of the SAFE Act. See, SAFE Act §1508.

5. Pursuant to HUD's Commentary on Model State Law, Section D, a state may delay the deadline for individual loan originator licensing until no later than July 31, 2010.

6. Delaying the effective date for the removal of an exemption from Chapter 73 would be consistent HUD guidelines, provided the delay did not extent the effective date beyond July 31, 2010.

Order

7. Based upon the foregoing and other factors deemed relevant to the commissioner, it is hereby ordered that:

a. The effective date for deletion of the Nonprofit Institutions of Higher Education Exemption is hereby delayed until January 1, 2010.

b. Prior to January 1, 2010 Nonprofit Institutions of Higher Education, as described in former 8 V.S.A. §2210(c)(11), do not need to obtain a lender license to make residential mortgage loans to their employees from the Institution's own funds.

c. Beginning January 1, 2010 Nonprofit Institutions of Higher Education must have obtained a lender license or otherwise qualify for an exemption from Chapter 73 in order to continue the practice of making residential mortgage loans to their employees.

Use of "Bank", "Banking Association", or "Trust Company" by Financial Services Institutions

Bulletin
Friday, November 2, 1990
Banking Bulletin #15
File attachments: 
http://www.dfr.vermont.gov/sites/default/files/BUL-B-15.pdf

BULLETIN # B-15

NOVEMBER 2, 1990

USE OF "BANK", "BANKING ASSOCIATION", OR "TRUST COMPANY" BY FINANCIAL SERVICES INSTITUTIONS

This bulletin explains the position of the Department of Banking, Insurance, and Securities on implementation of Title 8, V.S.A. Section 558, which provides:

A person, firm, association or corporation, except corporations reporting to and under the supervision of the commissioner, shall not advertise or put forth any sign as a bank, banking association or trust company, or in any way solicit or receive deposits or transact business as a bank, banking association or trust company, or use the words "bank", "banking association" or "trust company" ....(emphasis added)

A question of identity has arisen: within the scope of Section 558, which are the "corporations reporting to and under the supervision of the Commissioner"? Those which report and operate under the supervision of the Commissioner may use the words "bank", "banking association" or "trust company" in marketing or business transactions. Those which do not so report and operate may not use these terms in the conduct of their marketing or business transactions in Vermont.

In addition to financial entities holding a bank charter, there are financial entities with banking family relationships so close as to be perceived as banks by the public. Such entities typically engage in one or more traditional banking activities and operate in conjunction with a bank of some sort. Conversely, there are those financial services organizations which are governed by unique laws and regulations and which should not be so perceived. Insurance companies, securities brokers/dealers, credit unions and state-chartered savings and loan associations are examples of financial services providers not closely identified with banks and not regulated as banks.

For the foregoing reasons, it is the Department's position that the following corporations are "corporations reporting to and under the supervision of the Commissioner" for the purposes of compliance with Section 558:

  • State chartered banks ("state banks") as defined in 8 VSA Section 2;
  • Nationally chartered banks ("national banks") as defined by federal law or "federal savings banks" as defined by federal law, with their principal place of business in Vermont;
  • Those licensed lenders which are licensed under 8 VSA Chapter 73 and meet at least one (1) of the following criteria:

-  The licensed lender is a subsidiary of a "state bank", "national bank", or a "federal savings bank" or a subsidiary of a bank with its principal place of business in another state; or

- The licensed lender is a subsidiary of a bank holding company as defined in 12 USC Section 1841 et seg.

Corporations not meeting one of the tests set forth above may not use the terms "bank", "banking association", or "trust company" in marketing or business transactions within Vermont.

Any corporation allowed to use the terms "bank", "banking corporation" or "trust company" under Section 558 and this Bulletin is expected to follow name origination or name change procedures as prescribed by applicable Vermont state laws.

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