The Conference of State Bank Supervisors (CSBS) today announced the commencement of the federal registration of mortgage loan originators via the Nationwide Mortgage Licensing System and Registry (NMLS).
The system was developed and launched by state regulators to provide uniform mortgage licensing for loan originators nationwide whose regulations vary significantly by state.
It applies to those employed by banks, savings associations, credit unions, or Farm Credit System institutions.
It’s coupled with the licensing requirements imposed by the SAFE Act, which require criminal background checks, credit checks, and pre-licensure education and testing requirements.
The goal is to create standardized residential mortgage supervision, while increasing consumer protections for those seeking residential mortgages.
It was born out of the ongoing mortgage crisis, along with criticism that many industry players like mortgage brokers and their loan officers were not properly supervised, leading to fraud, predatory lending, and so forth.
To provide for better transparency, individual mortgage lenders, along with their employees, will be assigned unique identifiers to keep track of their performance, all of which will be made available to consumers before they commit to a mortgage transaction.
The registration period will run for the next 180 days, and those not licensed by July 29 will be prohibited from originating residential mortgage loans.