The Commissioner of the Department of Business Oversight is seeking comments on proposed regulations that (1) require all licensees under the California Financing Law to register through the NMLS (Nationwide Multistate Licensing System & Registry), and (2) set forth regulatory requirements for the oversight of PACE program administrators. The comment period ends December 9, 2019. Today’s blog briefly discusses the first requirement.
NMLS is an online licensing system developed and operated by State Regulatory Registry LLC, a nonprofit affiliate of the Conference of State Bank Supervisors. The federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 required all state-licensed and federally registered mortgage loan originators to be registered with NMLS.
The NMLS has expanded since development and has become a multistate licensing system for many industries. The California Department of Business Oversight (DBO) licenses mortgage lenders, mortgage brokers, mortgage servicers, mortgage loan originators, student loan servicers, and program administrators through the NMLS.
Under the California Financing Law (CFL), some licensees, such as mortgage lenders, mortgage brokers, mortgage loan originators, and program administrators, are licensed through NMLS, while other lenders and brokers not engaged in the business of making or brokering loans secured with residential real property are not.
The DBO proposes new provisions that promote the transition of all licensees under the CFL to the NMLS. The transition is also intended to modernize the procedures for applying for and maintaining a license. These provisions are envisioned as streamlining the licensing process internally by utilizing technology already developed and used throughout the country.
The purpose of these provisions is to allow all California Financing Law applicants and licensees to utilize the same national database. The rulemaking action proposes requiring all licensees under the California Financing Law to make filings and pay fees through the NMLS.
Some licensees may already operate through the NMLS in other states, making any maintenance of a state license outside of NMLS inefficient. Thus, another specific benefit of the proposed regulations includes reducing the regulatory burden on licensees that operate in more than one state.
California Financial Code § 22101 contains the Legislature’s declaration encouraging the DBO to continue to develop and expand its use of electronic filings. However, because the licensees not found on NMLS directly file with the Department, they may make these filings physically with paper rather than electronically. Pursuant to the proposed rulemaking action, program administrators must apply for licensure through NMLS instead of applying in paper directly with the DBO.
Again, the comment period extends to December 9, 2019. Stay tuned to this blog for further updates.
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