RD119 - Report on the Operations of the State Regulatory Registry LLC


Executive Summary:
This report was replaced in its entirety by the State Corporation Commission on June 16, 2010.

Introduction

In accordance with the Code of Virginia, the Bureau of Financial Institutions (Bureau) offers the following report of its review of the State Regulatory Registry LLC (SRR) and the Nationwide Mortgage Licensing System (NMLS) (*1).

Background

The NMLS initiative was begun by state mortgage regulators in 2004 in response to the increased volume and variety of residential mortgage originators and the need to address these changes with modern tools and authorities. The SRR was formed in 2006 and is a nonprofit corporation based in Washington, D.C. It is a wholly owned subsidiary of the Conference of State Bank Supervisors (CSBS) (*2), and it owns and operates the NMLS. The SRR is directed by a Board of Managers consisting of six state regulators. The NMLS has been built and is maintained by the Financial Industry Regulatory Authority (FINRA) (*3).

The NMLS is a Web-based application which enables participating state-licensed mortgage lenders, mortgage brokers, and mortgage loan originators to apply for, amend, update, and renew licenses online with participating state regulatory agencies using a single set of uniform applications. The NMLS also offers consumers an on-line public database disclosing licensing information of firms and individuals, including regulatory enforcement history. NMLS is an evolving information technology system, and as such several enhancements addressing specific problems have been and are being implemented.

NMLS launched with seven states on January 2, 2008, and the Bureau of Financial Institutions went live on the NMLS on August 3, 2009. Title V of the 2008 Housing and Economic Recovery Act mandated that all mortgage loan originators be either federally registered or state-licensed through NMLS (*4). As of May 21, 2010, the Bureau of Financial Institutions had received 5,408 Virginia mortgage loan originator applications through the NMLS.
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(*1) The SRR/NMLS 2009 Annual Report and final 2009 audited financial statements were not available until May 14, 2010 and April 30, 2010, respectively.

(*2) The Conference of State Bank Supervisors (CSBS) is the nationwide organization for state bank regulation, representing the bank regulators of the 50 states, the District of Columbia and U.S. Territories, who supervise some 6,000 state-chartered financial institutions. The majority of state banking departments also oversee mortgage providers and other financial service providers.

(*3) The Financial Industry Regulatory Authority (FINRA) is the largest independent regulator for all securities firms doing business in the United States. FINRA oversees nearly 4,700 brokerage firms, about 167,000 branch offices and approximately 635,000 registered securities representatives.

(*4) Title V of the Housing and Economic Recovery Act of 2008 (H.E.R.A.), “the SAFE Act”, became effective July 30, 2009 and mandates that state-licensed mortgage loan originators meet certain minimum requirements for licensure. States were required to enact SAFE laws that will bring their mortgage loan originators into compliance with the SAFE Act no later than December 31, 2010.