§5107 Bureau of Consumer Financial Protection backup authority to establish loan originator licensing system

Summary

If, by the end of the 1-year period (or the 2-year period for a State whose legislature meets only every two years) that began on July 30, 2008, the Director finds a State does not have a law or rule for licensing and registering loan originators that meets the requirements of sections 5104 and 5105 and subsection (d), or the State does not take part in the Nationwide Mortgage Licensing System and Registry, the Director must set up and run a system to license and register loan originators in that State as State-licensed loan originators. That system must meet the requirements of sections 5104 and 5105. The Director must work with the Nationwide Mortgage Licensing System and Registry to give each licensed originator a unique ID to make electronic tracking, employment history, and public records of disciplinary actions easy to find. A State law meets the minimum required standards only if the State keeps a supervisory authority that can enforce the rules (including suspending or ending licenses), makes sure originators are registered with the Nationwide Mortgage Licensing System and Registry, regularly reports violations and enforcement actions to that system, allows challenges to information in the system, can impose civil money penalties on people acting as originators without a valid license, and has minimum net worth or surety bond rules tied to loan amounts or a recovery fund paid into by originators. The Director may extend the 1- or 2-year period by up to 24 months if the State is making a good faith effort. The Bureau may set national minimums for net worth, surety bonds, and recovery funds and must consider keeping loans affordable and preserving a competitive market when doing so.