RD121 - Report on the Operations of the State Regulatory Registry LLC - June 7, 2011


Executive Summary:
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

NMLS was initiated by state mortgage regulators in 2004 in response to the increased volume and variety of residential mortgage loan originators. SRR was formed in 2006 and is a nonprofit corporation based in Washington, D.C. SRR is a wholly owned subsidiary of the Conference of State Bank Supervisors (CSBS) (*2), and it owns and operates NMLS. SRR is directed by a Board of Managers consisting of seven state regulators. NMLS was developed and is maintained by the Financial Industry Regulatory Authority (FINRA) (*3).

NMLS is a Web-based application which enables mortgage lenders, mortgage brokers, and mortgage loan originators (MLOs) to apply for, amend, update, and renew licenses online with participating regulatory agencies using a single set of uniform applications. NMLS also offers consumers an on-line public access/inquiry which discloses licensing information and regulatory enforcement history of mortgage firms and MLOs.

NMLS launched with seven states on January 2, 2008, and the Bureau went live on NMLS (with MLOs only) on August 3, 2009. Title V of the "2008 Housing and Economic Recovery Act," entitled "The Secure and Fair Enforcement for Mortgage Licensing Act of 2008" (SAFE Act), mandated that all MLOs be either federally registered or state-licensed through NMLS (*4). As of May 18, 2011, there were 5,739 MLOs licensed in Virginia through NMLS, of which 5,354 licenses were active.

Existing Virginia mortgage lender and broker licensees began transitioning onto NMLS on January 3, 2011. As of May 19, 2011, 741 license transitions had been requested, and 260 license transitions had been approved. Also beginning January 3, 2011, applicants for new mortgage lender/broker licenses and branches were required to submit their applications through NMLS.

Applications for relocation and for acquisition of control of Virginia mortgage licensees are not currently processed through NMLS. Applicants currently submit these applications directly to the Bureau. Effective July 1, 2011, mortgage licensees in Virginia will start submitting relocation information through NMLS. NMLS is also considering an enhancement to provide for processing applications for acquisition of control.

The Bureau is also providing the option for registration through NMLS to “exempt” entities or sole proprietorships not required to be licensed under Virginia law as mortgage lender/brokers. This registration is optional and is intended for those who wish to take advantage of the efficiencies offered by NMLS.
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(*1) The 2010 SRR Annual Report with final 2010 audited financial statements is dated April 15, 2011 and was publically released May 16, 2011.

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

(*3) FINRA is the largest independent regulator for all securities firms conducting business in the United States.

(*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 mandated that state-licensed MLOs meet certain minimum requirements for licensure. States were required to enact SAFE laws that brought MLOs into compliance with the SAFE Act no later than December 31, 2010.