MLO Licensing: Small Business Regulation Guide
This guide is intended to assist small businesses and individuals in complying with the regulatory requirements of revised Part 420 that the Department intends to adopt to conform Part 420 to changes in Article 12-e of the Banking Law which became effective on July 11, 2009. It does not amend or change the requirements of revised Part 420.
The FAQs below contain the following 10 main categories.
- Requirement for MLO License
- MLO Application Process
- Who is Exempt from Licensing
- Non-Profit Organization Licensing Requirements
- Pre-Licensure Education
- Pre-Licensure Testing
- Bonding Requirements
- After Initial Licensing
- Continuing Education Requirements
- Obligations and Penalties
Requirement for MLO Authorization
Q. Why do MLOs have to be licensed by the New York State Department of Financial Services?
A. Article 12-E of the New York Banking Law, which went into effect on July 11, 2009, requires all individuals (with limited exceptions) who engage in the business of mortgage loan originating with respect to New York residential real estate, to obtain a license from the Superintendent of Financial Services. Article 12-E is intended to make New York Law consistent with Title V of the Housing and Economic Recovery Act of 2008, also known as the SAFE Mortgage Licensing Act of 2008.
Q. May I apply for a license if I do not currently work for a mortgage broker or a licensed mortgage banker or have a job offer from one of these entities?
A. No. Each MLO must be an employee or an independent contractor of an "originating entity". An originating entity includes a licensed mortgage banker or registered mortgage broker. It may include other entities approved by the Superintendent (such as those involved in the financing of manufactured homes). MLOs who work for certain banking institutions or their subsidiaries are subject to a similar regulatory regime administered by the federal banking regulators and may not be "licensed MLOs" under the regime described in the Superintendent's regulations.
Q. What is the definition of mortgage loan originator?
A. Mortgage loan originator means an individual who for compensation or gain or in the expectation of compensation or gain takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan. The term does not include any individual engaged solely in loan processor or underwriter activities (as described in the statute), except if the individual is working as an independent contractor of an originating entity, certain individuals who are real estate brokers or an individual engaged in extensions of credit for timeshare plans. For a more detailed description, please see the MLO regulations.
Q. Who is considered an MLO?
A. A Mortgage Loan Originator (MLO) is an individual employed by or affiliated with an originating entity as an independent contractor, who engages in mortgage loan originating, irrespective of how they are compensated.
Q. Are owners of licensed mortgage bankers and registered mortgage brokers required to register?
A. An individual who, as an originating entity or any stockholder of an originating entity, engages in mortgage loan originating activities or supervises persons engaged in loan processing or underwriting, must be registered as an MLO.
Q. What is a loan processor or underwriter?
A. A loan processor or underwriter is an individual who performs clerical or support duties as an employee at the direction of, and subject to, the supervision and instruction, of a licensed MLO. A loan processor or underwriter may not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that he or she can or will perform any of the activities of a mortgage loan originator.
The "clerical or support duties" of a loan processor or underwriter may include the receipt, collection, distribution and analysis of information common for the processing or underwriting of a residential mortgage loan and communications with the consumer for the purpose of obtaining necessary information for processing or underwriting the loan, but only after the receipt of an application, and only if the employee does not offer or negotiate loan rates or terms, or counsel consumers about residential mortgage loan rates or terms.
Q. Am I required to have a physical presence in New York to become licensed as a mortgage loan originator?
A. No, you do not need to have a physical presence in New York. However, you can only engage in New York-related mortgage loan origination activities from branch locations authorized by the New York State Department of Financial Services, although such location may be in another state.
2. MLO Application Process
Q. How do I apply?
A. For detailed directions on submitting an application, please visit the MLO Application Instructions section on our website.
Q. When do I apply?
A. There are various application schedules for licensing as set forth immediately below.
For each applicant who is already engaged in MLO activities and who filed an application to become an MLO before July 11, 2009:
- An individual who was engaged in mortgage loan origination activities as of July 11, 2009 and whose application pursuant to the prior version of Article 12-E had not been approved, denied or withdrawn by the Superintendent prior to such date shall file with the Superintendent by November 30, 2009 all such additional information as the Superintendent may require to comply with the informational requirements of new Article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of new Article 12-E by May 31, 2010; and
- An individual authorized to act as an MLO as of July 11, 2009 under the prior version of Article 12-E shall file with the Superintendent by November 30, 2009 all such additional information as the Superintendent may require to comply with the informational requirements of Article 12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of Article 12-E by August 31, 2010.
All individuals covered by (1) and (2) above may continue to engage in the activities of an MLO until the earlier of the date he or she receives notice that his or her license application has been denied or July 31, 2010 in the case of individuals covered by (1) above or January 1, 2011 in the case of individuals covered by (2) above. This does not apply to any person with one of the felony convictions described in the answer to the last question in this section.
MLOs Involved in Originating Manufactured Home Loans
An individual who was engaged in mortgage loan origination activities with respect to manufactured homes as of July 11, 2009 shall file with the Superintendent by December 31, 2009 an application to be licensed as an MLO under Article12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of Article 12-E by May 31, 2010. All such individuals may continue to engage in the activities of an MLO until the earlier of the date he or she receives notice that his or her license application has been denied or July 31, 2010
All individuals not covered above, but who are required to be licensed under new Article 12-E, shall file an application as set forth below:
- Any new applicant who was engaged in the business of a mortgage loan originator as of July 11, 2009 as an employee or independent contractor of a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union organized under the laws of this state, another state or the United States, or a subsidiary or affiliate of such a bank, trust company, private banker, bank holding company, savings bank, savings and loan association, thrift holding company or credit union and was not required to be authorized under the prior version of Article 12-E, but who must be licensed under the new Article 12-E, shall file with the Superintendent by November 30, 2009 an application to be licensed as an MLO under Article12-E and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of Article 12-E by May 31, 2010;
- Any new applicant not covered by the paragraph (1) above shall file with the Superintendent an application to be licensed as an MLO under Article12-E at least 120 days prior to the date such person expects to engage in such activities and shall satisfy the pre-licensing testing and educational requirements and bonding requirements of Article 12-E by May 31, 2010; and
- Any individual covered by paragraph (1) above may engage in MLO activities when notified in writing by the Superintendent that his or her application was informationally complete and had been accepted for processing. All other applicants shall not engage in the activities of an MLO until licensed or otherwise permitted in writing by the Superintendent. All new applicants described in this answer must be licensed by July 31, 2010.
Q. What are the parts of an MLO application?
A. An application is considered complete when the following items have been submitted through the Nationwide Mortgage Licensing System and Registry ("NMLS") or the Department of Financial Services as indicated below:
MU4 Form: Completed MU4 form submitted through the NMLS.
Fee: All appropriate fees, including the application fee must be paid through the NMLS.
- Fingerprints: Fingerprints must be provided to the department as instructed.
- Credit Report: Tri-merged Credit Report, including credit score, which must be issued by a recognized credit reporting agency no more than 30 days prior to the date the application is submitted must be submitted to the Department of Financial Services. Your NMLS identification number must be written on upper right-hand corner of the first page of the Credit Report.
- Affirmation: Affirmation subscribed under penalty of perjury stating that you will advise the Department of any changes that occur in the information furnished in the application after the application is submitted, and that you have personally reviewed the application and certify that the application does not contain any untrue statement or omission of any material fact, must be submitted to the Department.
- Supplemental Information: If you answered ‘yes" to any portion of Question 9 on the MU4 form, additional supplemental information must be submitted. The form of supplemental information may vary based on the nature of the question. When determining what supplemental information to submit, please remember that the goal of reviewing this supplemental information is to better understand your response and avoid further questioning later in the process. Your NMLS identification number must be written on all supplemental documents submitted. It is also recommended that you identify which section under Question 9 your supplemental documentation is related to.
- In the case of existing MLOs described in the prior Q&A, any additional information as may be requested by the Superintendent must be submitted to the Department of Financial Services.
- If the NMLS develops the capacity to process fingerprints through the FBI, the Superintendent has reserved the right to require all applicants to submit a new set of fingerprints in the form required by the NMLS and to pay any processing fees required by the FBI and the NMLS.
Q. How much does it cost to apply?
A. Except for individuals who submitted an application under the prior version of Article 12-E, there is an investigation fee of $125; New York State fingerprinting processing fee of $86.50; an initial license fee of $50; NMLS Federal Criminal Background check fee of $39 and a NMLS processing fee of $30. That means the total cost associated with an application for a license as an MLO is $330.50. The annual renewal fee (described below) will depend on the cost to the Department of Financial Services of regulating MLOs, but the initial renewal fee will be $254 (revised and effective August 21, 2011).
Q. What forms of payment are acceptable?
A. The NMLS system accepts ACH, Visa and MasterCard.
Q. If my application is denied, will all or some of my fee be refunded?
A. No. Fees will not be refunded if the application is denied.
Q. Will my initial license fee be prorated, if my license is issued after June 30?
A. No. However, licenses issued during the renewal period from October through December 31, will not expire until the following December 31.
Q. Where do I send my application?
A. The MU4 Form is submitted electronically through the web-based NMLS. All supporting documentation must be mailed to:
MLO Application Processing
New York State Department of Financial Services
One State Street
New York, NY 10004-1511
Q. What will happen if I do not submit a complete application?
A. If the initial application received is not complete, the Department of Financial Services will notify you of the missing documentation and allow a 30-day window for receipt of additional items.
If additional required items are not received with 30 days of notification, your application will be considered withdrawn. To resubmit an application after it has deemed withdrawn, you will need to start the application process again, including completing the MU4 form and paying all applicable fees.
The Department of Financial Services recommends that applicants submit all required hard-copy documentation in one package to avoid the possibility of filing an incomplete application. For new entrants to the business, filing an incomplete application may delay their ability to begin originating loans in a timely manner.
Q. Do I have to submit my application personally, or can my originating entity submit for me?
A. The NMLS will accept applications submitted by either an individual or the originating entity he/she is employed by or affiliated with. However, all applications submitted by originating entities must be personally attested to by the respective mortgage loan originator via the NMLS and also by using the Affirmation Form.
Q. What will happen if my information changes after I submit my application?
A. You must immediately notify the Department of Financial Services through the NMLS of any changes in information related to the application being processed. Failure to provide updated information in a timely manner may reflect negatively on our assessment of your character and fitness.
Q. Must I be associated with an originating entity?
A. Individuals applying must be associated with an originating entity prior to submitting their application and must identify the entity when completing the application form. The notification of receipt of the application will be mailed to both the applicant and the originating entity.
Originating entities must be registered on the NMLS system in order to submit applications on behalf of MLOs employed by or affiliated with them.
Q. How long will the application process take?
A. Processing times will vary based on the background of the applicant and volume of applications being processed simultaneously. Incomplete applications will delay the processing time. Issues relating to convictions, bankruptcy or regulatory concerns may result in the request for additional information, which may lengthen the processing time.
New entrants to the business are encouraged to submit applications at least 120 days prior to the date they wish to engage in any MLO activities. Individuals currently engaged in mortgage loan originating activities are encouraged to file applications and any additional required information in accordance with the new Part 420.
Q. I filed bankruptcy a few years ago - will that stop me from getting a license?
A. A personal bankruptcy alone is not likely to stop you from getting a license if that's the only issue. Follow the application instructions for submitting an explanation and evidence of current status.
Q. I have a conviction - will that stop me from getting a license?
A. Convictions are reviewed on a case-by-case basis. If you have been convicted of a felony, please note the following:
Article 12-E prohibits the Superintendent from granting an MLO license to any applicant if the applicant as been convicted of, or pled guilty or nolo contendere to any felony, during the 7-year period preceding the date of the application for licensing or a felony involving an act of fraud, dishonesty, a breach of trust or money laundering occurring at any time preceding the date of the application, in a domestic, foreign, or military court (The Superintendent may, in his or her discretion, disregard a conviction where the applicant has been pardoned, but not where the applicant has received a certificate of relief from civil disabilities) or the applicant has had a mortgage loan originator authorization or license revoked in any jurisdiction, unless the revocation was vacated.
The Supreme Court in New York County recently upheld the Superintendent’s denial of an MLO license to an applicant who had been convicted of mortgage fraud more than 10 years before applying for an MLO license, despite the applicant’s argument that the Superintendent should have applied the balancing test under Section 753 of the Corrections Law and given effect to a certificate of relief from civil disabilities.
Please contact the Department prior to submitting your application for additional items that should be included for consideration.
Q. Who is exempt from the license provisions of this law?
A. Article 12-E does not apply to individuals who are registered mortgage loan originators. For purposes of new Article 12-E, "registered mortgage loan originators" are individuals who are employed by a bank, trust company, savings bank, savings and loan association, or credit union organized under the law of this state, another state, or the United States. This exemption also applies to employees of a subsidiary of one of these institutions.
Licensing requirements also do not apply to individuals who offer or negotiate the terms of a residential mortgage loan with or on behalf of an immediate family member; any individual who offers or negotiates terms of a mortgage on the individual's own residence; or certain licensed attorneys.
Please note: Attorneys who are compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator are never exempt.
In addition, individuals employed as mortgage loan servicers and individuals involved in the sale of manufactured homes may be exempt to the extent determined by the U.S. Department of Housing and Urban Development and the Superintendent. For a more detailed description, please see MLO Part 420.
Q. I am a loan processor or underwriter. Do I need an MLO license?
A. As noted above, individuals who qualify as loan processors or underwriters generally are not included in the definition of mortgage loan originators. However, an individual who is a loan processor or underwriter and who is an independent contractor of an originating entity may not engage in residential mortgage loan origination activities or loan processor or underwriter activities unless the individual obtains and maintains a license under this article. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the NMLS. Please refer to the regulation for further clarification.
Q. I am licensed or registered as a mortgage banker or broker as a sole proprietor, do I need an MLO license?
A. Yes. As long as you engage in mortgage loan origination related to New York residential real estate or supervise loan processors or underwriters and are not considered exempt pursuant to Article 12-E, you must be licensed as an MLO by the Department of Financial Services .
Q. I am the owner of a registered mortgage broker or licensed mortgage banker, do I need an MLO license?
A. Yes. As long as you engage in mortgage loan origination related to New York residential real estate or supervise loan processors or underwriters and are not considered exempt pursuant to Article 12-E, you must be licensed as an MLO by the Department of Financial Services . However, if you do not engage in those activities, you do not need an MLO license.
4. Non-Profit Organization Licensing Requirement
Q. Are employees of non-profit organizations required to be licensed as mortgage loan originators?
A. The SAFE Act requires the licensure of individuals who take a residential mortgage loan application and offer or negotiate terms of a residential mortgage loan for compensation or gain. HUD has yet to issue a final rule addressing the application of the SAFE Act to employees of non-profit organizations. HUD’s proposed rule (74 Fed. Reg. 66548) released for comment on December 15, 2009 did not provide clear direction on this issue. Indeed, in July 2010, HUD released a FAQ acknowledging that there are ambiguities in the SAFE Act regarding whether certain individuals such as employees of bona fide non-profit organizations must be licensed as mortgage loan originators. HUD further indicated that it will allow states a reasonable amount of time to adjust their licensing systems to meet the final rule requirements. HUD’s FAQ is available at www.hud.gov
As the regulator responsible for implementing New York’s laws and regulations governing the licensing of mortgage loan originators, the Department of Financial Services believes that the federal and state mortgage loan originator licensing requirements were intended to cover anyone engaged as loan officers in the traditional private-sector, for-profit mortgage lending or mortgage brokerage business. In our view, the federal SAFE Act vests state regulators with the discretion to determine that individuals who work for bona fide non-profit organizations that promote affordable housing and financing or that offer homeownership education and counseling do not meet the definition of loan originator for licensing purposes because they do not engage in loan origination activities for compensation or gain (although such individuals may receive compensation unrelated to the amount of their mortgage activities).
Therefore, at the current time, the New York State Department of Financial Services is not requiring the licensing of employees of bona fide non-profit organizations under the following circumstances:
- Non-Profit Housing Lenders: The Department is not requiring the licensing of individuals employed by a bona fide non-profit organization that originates residential mortgage loans that promote affordable housing and financing and that offers or provides below market rates or terms more advantageous than are commercially available. However, the non-profit employer must obtain and maintain in good standing an exemption from licensing as a mortgage lender or registration as a mortgage broker pursuant to Part 39 of the General Regulations of the Banking Board. In granting such an exemption, the Department reviews the organization’s lending operations and structure and considers a variety of factors, including but not limited to, the organization’s funding sources, the nature of the terms and rates of mortgage loans originated, whether the organization’s primary purpose is to serve the public through helping low to moderate income borrowers or addressing other community credit and housing needs, the nature of any fees charged, the organization’s compensation structure, whether the organization makes a profit on its loan products and services, whether the organization provides financial literacy and/or homeownership education in conjunction with loan origination services and whether the organization provides training to its employees.
- Non-Profit Housing Counselors: The Department is also not requiring the licensing of individuals employed by a bona fide non-profit organization that provides homeownership education, counseling or loss mitigation services for no or a nominal fee.
Until such time as HUD issues a final rule clearly indicating that employees of bona fide non-profit organizations are required to be licensed under the SAFE Act, the Department of Financial Services will not require the licensing of such individuals as set out above. However, the Department reserves the right to review periodically any determination made that the activities of individual employees of any particular non-profit organization are not subject to licensing because they do not engage in loan origination activities for compensation or gain.
Q. When do the pre-license testing, educational, and bonding requirements go into effect?
A. (1) An individual authorized to act as an MLO as of July 11, 2009 must satisfy the pre-licensing testing and educational requirements and bonding requirements of new Article 12-E by August 31, 2010; and
(2) All other individuals must satisfy the pre-licensing testing and educational and bonding requirements of new Article 12-E by May 31, 2010.
Q. What courses are taken into consideration?
A. Only NMLS approved courses offered by NMLS approved providers are counted towards the 20 hours pre-licensing education requirements. You can obtain education information by accessing the NMLS website.
Please note: For the initial 2010 and 2011 licensing period, the Department will accept NMLS certifications for the 20 hours pre-licensing education. However, MLOs will still be required to comply with the required 3 hours of New York State specific course content.
Q. Will prior education courses count toward my pre-license educational requirement?
A. Courses taking under the prior version of Article 12-E may be considered as part of your pre-license education requirement if such courses are certified by the Superintendent to the NMLS as meeting the pre-license educational requirement.
Q. Will New York give me credit for courses taken in other States?
A. Credit will be given for NMLS approved courses offered by NMLS approved providers, where the course content, with the exception of New York State specific requirement, does not primarily relate to the laws and regulations of a particular state.
Q. Where will I find information regarding the availability of test providers and test locations?
A. Information on pre-licensing testing and testing centers can be accessed via the NMLS website by selecting the Professional Requirements link.
Q. What are the minimum passing grades to be licensed?
A. An individual must obtain a grade of at least 75% on the National test and a grade of 75% on the New York State specific test to be deemed to have passed the pre-license test. You must pass the National and State specific test to become licensed.
Q. Can I retake the test if I fail to obtain a passing grade?
A. An individual must wait 30 days before retaking the test. You may retake the test three consecutive times, with each consecutive taking occurring at least thirty days after the preceding test. If you fail three consecutive tests, you must wait at least six months before taking the test again.
Q. How much does it cost to take the test?
A. The National component cost is $92, and the State component cost is $69. Test fees must be paid at the time you register for the test. Fees cannot be paid at the testing center.
Q. What will be covered on the test?
A. Please consult the NMLS website. Outlines of the test components are posted under Test Availability Schedule and Content Outline.
Q. How many question will there be?
A. There will be a total of 100 test questions on the National component, of which 90 are scored. The time allotted for the test will be 150 minutes with an additional 30 minutes for completing a tutorial and an optional candidate survey.
State specific component will consist of 55 scored questions plus 10 questions which are not scored. The test time will be 90 minutes with an additional 30 minutes for completing a tutorial and an optional candidate survey.
Q. How much must my bond be?
A.The Superintendent is authorized to set the amount of a bond that each licensed mortgage loan originator must maintain. These amounts are set forth in Part 420.
Q. May I use a bond provided by my employer?
A. An originating entity or other entity approved by the Superintendent may provide a bond for MLOs employed or independent contractors affiliated with such entity. The entity can elect to provide a single bond for all MLOs not separately covered by a qualifying surety bond so long as the aggregate amount of the bond is equal to or greater than the amount prescribed in Part 420.
Q. Is there a prescribed bond form?
A. The surety bond shall be in a form prescribed by the Superintendent which is to be posted on our website.
Q. Where does this license allow me to work?
A. The license permits you to work as an MLO for the originating entity. If you leave this entity or switch to a new originating entity, the Department must be notified of the change. You license will be place in inactive status until you notify the Department of your association with a new originating entity.
This license does not give you the authority to engage in mortgage loan origination for properties in any other state or for any organization other than the one associated with your license. It also does not authorize you to operate as a mortgage broker or banker in New York. See prohibitions in Part 420.
Q. Can I work for more than one company?
A. No. An MLO cannot work simultaneously for more than one originating entity.
Q. Do I have to file a new application if I move from one company to another?
A. No. Your new employer must promptly notify the Department of your employment through the NMLS. Additionally, your old employer must submit a notice of termination or resignation through the NMLS.
Q. How often do I have to renew my license?
A. Annually. Failure to renew will result in the automatic expiration of the license, and the MLO will no longer be able to originate mortgage loans. MLOs will receive a renewal notification 60 days prior to the December 31st expiration date.
Q. Do I have to pay to renew each year?
A. Yes, there will be an annual license fee each time you renew. The renewal fee is based on the actual cost incurred by the Department of Financial Services . The current fee is $254 and is subject to change each year.
Q. What will happen to my license if I am unemployed for a period of time?
A. If you are not associated with an originating entity, you may not engage in mortgage loan originating. Your license will be placed in an ‘inactive" status and remain inactive until written or electronic notification is submitted to the Department of Financial Services by an originating entity sponsoring your license.
Q. Can I renew my license if I am not employed by an originating entity at the time my license expires?
A. Yes. You can personally renew your license while it is in inactive status as long as you have complied with the continuing education and other requirements of Article 12-E and the NMLS renewal process.
Q. What will happen if my personal information changes after I am licensed?
A. You must immediately notify the Department of Financial Services through the NMLS of any changes in information. Failure to provide updated information, including disclosure of convictions, arrests and or administrative action by governmental agencies may reflect negatively on your ability to retain or renew your license.
Q. Can my employer pay my mortgage loan originating compensation to the LLC, Partnership, or Corporation I formed?
A. No. Compensation may only be paid to and in the name of the individual named on the license. Licenses are only issued to individuals, not business entities.
Q. If I get a mortgage loan originator license, can I allow other individuals who are not licensed to originate loans and assign them?
A. No. A person who is required to be licensed in New York and is not licensed may not originate mortgages and assign those mortgages to an MLO who is licensed.
Q. Are there specific prohibitions or guidelines that must be followed by mortgage loan originators?
A. Yes. A few of these prohibitions are outlined below in this Q&A. Additional guidelines governing mortgage loan origination activities can be found in federal and state laws and regulations.
Q. What are the educational requirements after the initial pre-licensure education?
A. MLOs must complete a minimum of 11 hours of approved continuing education courses beginning in the year after such individual is licensed. Three hours must be in New York specific laws and regulations.
Q. Do I have to take continuing education courses while my license is inactive?
A. In order to retain your license, you must continue to meet the educational requirements. If educational requirements are not met, your license will be immediately suspended. The license will terminate 30 days after the date of suspension if you remain in noncompliance with the education requirements. Once your license terminates, a new application must be submitted if you wish to reenter the business.
Q. What will happen if I do not meet the educational requirements within the required time frames?
A. Your MLO authorization will be suspended immediately if the educational requirements are not met within the timeframe required. You can only receive credit for continuing education courses in the year in which the course is taken. In order to meet the education requirements you must take required courses prior to December 31 of each year.
Q. If I earn more than the required 11 hours of continuing education credits a year, am I allowed to carry them over to the next year?
A. No. Credits can only be applied for the year in which the course was taken.
Q. Where can I find information on approved providers and/or courses?
A. You can obtain education information by accessing the NMLS website.
Q. How do I notify the Department of Financial Services about continuing education courses I have taken?
A. The Department will receive information directly from approved course providers through the NMLS. However, the Department may request additional information from you or your sponsoring entity to evidence completion of specific continuing education requirements.
Q. Will I get credit for repeat courses?
A. No. The Department of Financial Services will not grant credit for repeating the same course. Additionally, credit for courses taken on the same or similar topics will only be granted if the course has significant new content, such as updates to reflect changes in the law or regulations or new court interpretations or where a course is geared to a more in-depth or advanced treatment of the subject matter.
Q. Are there different education requirements for inexperienced and experienced MLOs?
A. Yes. Individuals with less than 4 years experience are required to take education courses in either a classroom or fully interactive format, as outlined in Part 420. Experienced MLOs must take at least half of the annual education requirement in a classroom or fully interactive format. See Part 420 for additional details.
10. Obligations and Penalties
Q: What obligations does an MLO have?
A: An MLO must:
engage in originating activities in a manner that commands the confidence of the community and warrants the belief that his or her activities are conducted honestly, fairly and without deception,
notify the Department of Financial Services of certain changes in the information provided in connection with his or her application, and
complete the annual requirements with respect to Education Courses.
An MLO may not:
engage in conduct prohibited under Part 38.7 of the General Regulations of the Banking Board,
engage in Mortgage Loan Originating after being sent, at the last address for notices provided to the Superintendent, a notice that his or her application for a license has been denied or, if licensed, that such license has been suspended, revoked or has terminated,
misrepresent his or her authorization status or imply that he or she is a mortgage banker or mortgage broker unless so licensed or registered, or use an advertisement that contains any such implication,
conduct business with an unlicensed mortgage banker or unregistered mortgage broker or unlicensed MLO that is not exempt,
engage in any transaction or practice that is not in good faith or does not constitute fair dealing,
use information about borrowers or loan applicants without the written permission of the originating entity, advertise his or her authorization certificate number in a manner that implies it can be used by others, or allow another person or entity to use such number to engage in originating activities,
or simultaneously work for or be affiliated with more than one mortgage banker or mortgage broker registered under Article 12-D of the Banking Law or other person authorized by the Superintendent as an originating entity.
Q: What obligations does an Originating Entity have?
A: An Originating Entity must:
file quarterly reports with Department of Financial Services with respect to newly employed or affiliated MLOs, dismissals for cause and individuals who are no longer employed by or affiliated with the originating entity,
determine that each MLO employed by or affiliated with it has the character, fitness and education qualifications to warrant the belief that he or she will engage in mortgage loan originating honestly, fairly and efficiently, and maintain in its files the information on which such determination was based,
- obtain a copy of course completion certificates that indicate that each MLO has satisfactorily completed the required education courses, and, if the originating entity has the originals of such certificates, return the original to the MLO upon request when the MLO terminates his or her employment or affiliation with the originating entity,
- ensure that each MLO employed by or affiliated with it has been duly licensed, except with respect to the grace period described in Section 2 above, and that such license has not expired or been suspended or revoked,
- assign MLO's only to locations authorized by the Superintendent and, at any such location where members of the public are invited, display the license for each MLO assigned to such location, and
- ensure that the license number of each MLO performing mortgage loan originating services with respect to a mortgage application is recorded on the application,
An Originating Entity may not:
permit an MLO to engage in originating activities if he or she has not completed applicable education course requirements, or
pay compensation for mortgage loan originating activities to an individual who is required to be authorized but is not, or pay an MLO's compensation to a person other than the person named on the MLO license, except when required by law or court order.
Q: What are the penalties for violation of Article 12-E or the Regulations:
A: The penalties for violations include revocation of license, suspension of license and fines, some of which may only be imposed after notice and hearing. In addition, in the case of certain orders of suspension, reinstatement may be conditioned on restitution to consumers with respect to fees or other charges that the MLO has improperly charged or collected, as determined by the Superintendent.
The Superintendent may revoke a license after notice and a hearing if he or she finds that (1) through a course of conduct, the licensee has violated any provisions of Article 12-E, or any rule or regulation promulgated by the banking board, or any rule or regulation prescribed by the Superintendent under and within the authority of Article 12-D or Article 12-E or of any other applicable law, rule or regulation of this state or the federal government pertaining to mortgage banking, brokering or loan originating; or (2) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the Superintendent to refuse to issue such initial license.
Q. Are there circumstances when a license might be suspended?
A. (1) The Superintendent may, for good cause, or where there is a substantial risk of public harm, without notice or a hearing, issue an order suspending the license of any mortgage loan originator for a period not to exceed ninety days for investigation. "Good cause" exists only when the mortgage loan originator has engaged or engages in dishonest or inequitable practices or practices which demonstrate incompetent mortgage loan originating, which practices may cause substantial harm to the persons afforded the protection of Article twelve-D or 12-E of the Banking Law, or the license of the mortgage loan originator has been revoked in another state or jurisdiction participating in the NMLS. If the Superintendent has issued an order suspending a license for good cause, such license may be reinstated if the Superintendent determines, in his or her sole discretion after investigation, that good cause therefor did not exist or no longer exists.
(2) The Superintendent may, without notice or a hearing, issue an order suspending any license: (i) thirty days after the date the mortgage loan originator fails to file any report required to be filed with the Superintendent pursuant to the authority provided in Article 12-E; or (ii) immediately upon termination of any required surety bond with respect to the licensee if the Superintendent has not received evidence of a satisfactory replacement bond. If the Superintendent has issued an order suspending a license pursuant to this authority, such license may be reinstated, if the Superintendent determines, in his or her sole discretion, that the licensee has cured all deficiencies set forth in such order by the close of business ninety days after the date of such suspension order. If such failure has not been cured by the 90th day after such order, the MLO's license will be terminated by operation of law.
Q: May an MLO surrender authorization as an MLO?
A: Yes. With the prior approval of the Superintendent, an MLO may surrender his or her authorization by written notice to the Department of Financial Services in the form prescribed by the Department, but an Originating Entity may not make such a surrender on behalf of an MLO. Such a surrender does not affect any civil or criminal liability for acts committed by the MLO before the surrender.
Q. When might a license terminate?
A. (1) All MLO licenses shall terminate on the annual expiration date unless the annual license fee is paid prior to or upon the date the payment is due. If such license expires because the annual fee has not been paid by the due date, the license shall be reinstated if such fee is paid within sixty days after such due date.
(2) Each licensed MLO shall complete and provide evidence to the Superintendent through the NMLS or otherwise as directed by the Superintendent of the completion of his or her annual education requirements by the annual expiration date of such MLO's license. Failure to timely complete and demonstrate such completion shall cause the MLO's license to be terminated on such annual expiration date. The license shall be reinstated if the MLO demonstrates to the Superintendent's satisfaction that the applicable education requirements were completed within sixty days of the annual expiration date.
(3) An MLO license may be terminated by operation of law as provided above.