§5107 — Title 12 Banks and Banking | U.S. Code

Summary

If a State does not have a law or rule to license and register loan originators that meets the rules in sections 5104 and 5105 and subsection (d), or if the State does not join the Nationwide Mortgage Licensing System and Registry, and this is still true at the end of the 1-year period (or a 2-year period for States whose legislatures meet every two years) starting July 30, 2008, the Director must set up and run a system to license and register loan originators in that State as if they were State-licensed. The Director must make that system follow the same requirements as sections 5104 and 5105. The Director also must work with the Nationwide Mortgage Licensing System and Registry to give each licensed originator a unique ID so their work history and public disciplinary actions can be tracked and seen. A State law meets the minimum standards if it keeps a supervisory authority that enforces the law (including suspending or ending licenses), makes sure originators are registered with the Nationwide system, reports violations and enforcement to that system, lets the State challenge information in the system, can fine people who act as originators without a license, and has minimum net worth or surety bond rules (or a recovery fund paid into by originators). The Bureau may make rules setting those net worth, bond, or recovery fund minimums and must consider keeping loans affordable and a competitive market.

Title 12, §5107

Banks and Banking — Source: USLM XML via OLRC

(a)If, by the end of the 1-year period, or the 2-year period in the case of a State whose legislature meets only biennially, beginning on July 30, 2008, or at any time thereafter, the Director determines that a State does not have in place by law or regulation a system for licensing and registering loan originators that meets the requirements of section 5104 and 5105 of this title and subsection (d) of this section, or does not participate in the Nationwide Mortgage Licensing System and Registry, the Director shall provide for the establishment and maintenance of a system for the licensing and registration by the Director of loan originators operating in such State as State-licensed loan originators.

(b)The system established by the Director under subsection (a) for any State shall meet the requirements of section 5104 and 5105 of this title for State-licensed loan originators.

(c)The Director shall coordinate with the Nationwide Mortgage Licensing System and Registry to establish protocols for assigning a unique identifier to each loan originator licensed by the Director as a State-licensed loan originator that will facilitate electronic tracking and uniform identification of, and public access to, the employment history of and the publicly adjudicated disciplinary and enforcement actions against loan originators.

(d)For purposes of this section, the law in effect in a State meets the requirements of this subsection if the Director determines the law satisfies the following minimum requirements:

(1)A State loan originator supervisory authority is maintained to provide effective supervision and enforcement of such law, including the suspension, termination, or nonrenewal of a license for a violation of State or Federal law.

(2)The State loan originator supervisory authority ensures that all State-licensed loan originators operating in the State are registered with Nationwide Mortgage Licensing System and Registry.

(3)The State loan originator supervisory authority is required to regularly report violations of such law, as well as enforcement actions and other relevant information, to the Nationwide Mortgage Licensing System and Registry.

(4)The State loan originator supervisory authority has a process in place for challenging information contained in the Nationwide Mortgage Licensing System and Registry.

(5)The State loan originator supervisory authority has established a mechanism to assess civil money penalties for individuals acting as mortgage originators in their State without a valid license or registration.

(6)The State loan originator supervisory authority has established minimum net worth or surety bonding requirements that reflect the dollar amount of loans originated by a residential mortgage loan originator, or has established a recovery fund paid into by the loan originators.

(e)The Director may extend, by not more than 24 months, the 1-year or 2-year period, as the case may be, referred to in subsection (a) for the licensing of loan originators in any State under a State licensing law that meets the requirements of section 5104 and 5105 of this title and subsection (d) if the Director determines that such State is making a good faith effort to establish a State licensing law that meets such requirements, license mortgage originators under such law, and register such originators with the Nationwide Mortgage Licensing System and Registry.

(f)(1)The Bureau is authorized to promulgate regulations setting minimum net worth or surety bond requirements for residential mortgage loan originators and minimum requirements for recovery funds paid into by loan originators.

(2)In issuing regulations under paragraph (1), the Bureau shall take into account the need to provide originators adequate incentives to originate affordable and sustainable mortgage loans, as well as the need to ensure a competitive origination market that maximizes consumer access to affordable and sustainable mortgage loans.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Pub. L. 111–203, § 1100(3), (6)(A), inserted section catchline, struck out former section catchline which read “Secretary of Housing and Urban Development backup authority to establish a loan originator licensing system”, and substituted “Director” for “Secretary” wherever appearing in text. Subsec. (f). Pub. L. 111–203, § 1100(6)(B), added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date

of 2010 AmendmentAmendment by Pub. L. 111–203 effective on the designated transfer date, see section 1100H of Pub. L. 111–203, set out as a note under section 552a of Title 5, Government Organization and Employees.

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