Indiana Amends Licensing Provisions

by: Zachary Pearlstein

The state of Indiana has recently updated its licensing regulations to allow federal savings banks to retain and sponsor mortgage loan originators, under certain circumstances. These regulations are effective on July 1, 2014.

The updated provisions apply to federal savings banks that are exempt from statutes concerning the licensing of creditors in first lien mortgage transactions. The updates state that such banks may voluntarily register with the Department of Financial Institutions to retain and sponsor licensed mortgage loan originators. The originators must perform mortgage loan origination activities as independent agents under the federal savings bank’s direct supervision and control, and must hold a current, valid insurance producer license. They must also sell, solicit, or negotiate insurance under an exclusive written agreement for a licensed insurance company that is a subsidiary of a company that also owns or controls the federal savings bank. The regulations mandate that the federal savings bank:

Assumes responsibility for and reasonably supervises the activities of all licensed mortgage loan originators sponsored by the federal savings bank;

Registers with and maintains a valid unique identifier issued by the NMLSR;

Maintains a surety bond;

Provides access to records and documents, as required by the department in carrying out examinations of the activities of the sponsored originators; and

Agrees to comply with all laws, rules, directives, and orders in connection with the activities of the sponsored originators, as the director determines necessary to ensure compliance with the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008, and with Indiana law.

About the Author
Zachary Pearlstein, J.D. is Regulatory Compliance Consultant at Bankers Advisory. He is a graduate of Brandeis University and earned his Juris Doctor at Suffolk Law School. He is admitted to the Massachusetts Bar. Zachary can be reached at zachary@bankersadvisory.com