Editor’s note — The California Department of Business Oversight (DBO) supervises, licenses and regulates a variety of financial institutions, including some real estate mortgage loan originators (MLOs) holding a Nationwide Multistate (or Mortgage) Licensing System & Registry (NMLS) license. Alongside the California Department of Real Estate (DRE), the DBO shares the responsibility for overseeing MLOs depending on their license use.
December’s DBO Bulletin Digest covers new 2020 laws, streamlined NMLS licensing and FDIC reports.
New laws for 2020
Start the new decade right by getting a leg up on the competition on new legislation. Veteran housing protections, trustee substitutions and income discrimination: these are just a few DBO-related bills that passed in 2019. These three laws were highlighted by the DBO as legislation California MLOs need to prepare for in 2020:
- Senate Bill (SB) 222 (Discrimination: veteran or military status): This bill prohibits housing discrimination based on veteran and military status. The protections also prohibit landlords from discriminating against prospective tenants based on their use of a Veterans Affairs Supportive Housing (HUD-VASH) voucher.
- SB 306 (Mortgages and deeds of trust: trustee substitutions): This bill allows a trustee named in a deed of trust to resign as trustee or refuse an appointment as one. It also insulates the underlying deed of trust from any claims against it that arise from such a resignation or refusal.
- SB 329 (Discrimination: housing: source income): This bill expands the definition of “source of income” to include federal, state and local public assistance and housing subsidies. This means landlords may not discriminate against tenants based on their use of Section 8 vouchers to pay rent.
Some DBO licensees who use their license for loan origination beyond home mortgages may be interested in the DBO’s extended list of new legislation. Click here to see the DBO’s full list of 2019 legislative highlights.
MLO streamlines licensing
MLOs may now do business while moving between states or between a bank employer to a nonbank employer. This is thanks to the new Temporary Authority to Operate provision in the Secure and Fair Enforcement (SAFE) Act of 2008.
The provision streamlines the licensing process for federally-licensed MLOs to become licensed at the state level and state-licensed MLOs to become licensed in another state. It does this by allowing qualified MLOs to continue practicing while changing employment between institutions or states at the same time they complete any additional required pre-licensing education. The provision aims to minimize the interruption in practice MLOs previously faced when transitioning their licenses.
The change is part of an ongoing NMLS effort to reduce friction in licensing and lending nationwide. It went into effect November 24, 2019. For more information on the Temporary Authority to Operate provision, download the NMLS’s Frequently Asked Questions sheet here.
FDIC nonbank lending reports
The Federal Deposit Insurance Corporation (FDIC) is publishing three reports on nonbank lending in the next FDIC Quarterly edition. This quarterly publication covers issues from banking trends to regulatory policy research. This edition features three in-depth banking trend articles for MLOs, including:
- Bank and Nonbank Lending Over the Past 70 Years, which broadly summarizes trends in different lending markets since 1952;
- Leveraged Lending and Corporate Borrowing, which examines the risks and benefits of the shift in corporate borrowing toward leveraged loans; and
- Trends in Mortgage Origination and Servicing, which which focuses on banking trends in residential mortgages between 2010 and 2019 and how risks have migrated outside the banking system after the 2007 subprime mortgage crisis.
While these topics are not new to informed MLOs, the FDIC provides in-depth research and analysis crucial to understanding the underlying mechanisms of these banking trends. Click here to access past FDIC Quarterly issues.
That’s a wrap on 2019! Check back next month for the first DBO Bulletin Digest of 2020. As always, you can read the full DBO bulletin on their website.