§5107 Bureau of Consumer Financial Protection Backup Authority to Establish Loan Originator Licensing System

Summary

If a State does not have a proper system for licensing and registering mortgage loan originators by the deadline that began on July 30, 2008 (one year, or two years for States whose legislatures meet every two years), or if the State does not join the Nationwide Mortgage Licensing System and Registry, the Director must set up and run a backup licensing and registration system for loan originators working in that State. The backup system must follow the federal rules in sections 5104 and 5105. The Director will work with the Nationwide Mortgage Licensing System and Registry to give each originator a unique identifier to track work history and public disciplinary actions. For a State law to qualify, it must: keep a supervisor to enforce the rules; require originators to register with the Nationwide system; report violations and enforcement actions; allow challenges to registry information; be able to fine people who act as originators without a license; and require either minimum net worth or surety bonds tied to loan volume or a recovery fund. The Director may extend the deadline up to 24 months if a State is making a good-faith effort. The Bureau can set minimum net worth, bond, and recovery-fund rules and must consider keeping loans affordable and competition strong when doing so.