A residential mortgage licensing system to manage state licensing of mortgage brokers, lenders, and bankers is being developed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).
Most mortgage lending is licensed and regulated at the state level. A CSBS survey last year estimated that states manage approximately 90,000 mortgage company licenses, 63,000 branch licenses, and over 280,000 loan officer licenses.
“There has been a lack of uniformity among state laws and regulations and clearly we have the need to modernize,” said Bill Matthews, senior vice president of CSBS. The system is being developed to streamline the licensing process for regulators and the mortgage industry, provide accountability of industry professionals, and reduce fraud.
Thirty-five states to date have already indicated their intent to participate in the system and at least 15 states are to participate in its first stage, which is scheduled to start early next year, Matthews said.
Consumers will have access to public licensing and enforcement actions related to licensed mortgage lenders, brokers, and loan officers, according to plans of the CSBS and AARMR.
The plans envision that the states will bear the system’s development costs and the mortgage industry will pay for operating costs. The Financial Industry Regulatory Authority (FINRA), which was created in July 2007 through the consolidation of the National Association of Securities Dealers and the member regulation, enforcement, and arbitration functions of the New York Stock Exchange, has been contracted to develop and operate the system.