New Jersey Amends Licensing Provisions under RMLA
The state of New Jersey has recently amended provisions under its Residential Mortgage Lending Act (RMLA). These amendments are effective on November 22, 2018.
The RMLA is a law that regulates the New Jersey mortgage loan origination activities of mortgage companies and their individual mortgage loan originators (MLOs). The updated provisions make several substantive changes and also make it easier for residential mortgage lenders and brokers to comprehend and comply with the requirements of the RMLA.
The new regulations allow the New Jersey Department of Banking and Insurance (Department) to issue “transitional MLO licenses.” If an MLO has been working for a bank or a bank subsidiary or a mortgage company not licensed in New Jersey, this allows him or her to begin working for and earning commissions from a New Jersey-licensed mortgage company without the requirement of first obtaining a New Jersey MLO license. The provisions allow Bank MLOs to obtain transitional licenses if they: (1) were validly registered in the Nationwide Multistate Licensing System & Registry (NMLS&R) with a depository institution or a depository institution subsidiary, (2) become employed by a New Jersey-licensed mortgage company, and (3) submit an application for a New Jersey MLO license.
The provisions also allow several exemptions from the RMLA’s licensing requirement. One such exemption is for companies that only perform loan processing or underwriting functions. To qualify, the company must (1) register with the Department and the NMLS&R as an exempt company, (2) obtain a blanket bond in a qualifying amount, (3) employ at least one individual MLO licensee, and (4) satisfy certain other conditions. In addition, there is an exemption for “bona fide not for profit entities” and their employees, which applies as long as the entities retain their tax exempt status. And finally, there is an exemption for employees at any federal, state or local government agency, or housing finance agency.
Some of the other changes made by the amended RMLA are as follows: (1) A licensee’s branch offices must be supervised by a branch manager, who may not supervise more than one branch office (unless approved by the Department); (2) Depository institutions that register with the Department, as well as New Jersey-licensed mortgage companies, may sponsor individuals licensed in New Jersey as MLOs (including transitional MLOs); (3) An individual MLO license applicant found to have cheated or attempted to cheat on the written exam may be found to lack the character and fitness to qualify for a license; (4) Individual MLO applicants who have been convicted of (or pled guilty or nolo contendere to) a disqualifying felony are eligible for an MLO license if the conviction or plea has been expunged; (5) An existing prohibition against persons licensed as title insurance producers from also being licensed under the RMLA is removed; and (6) At least two of the eight hours of continuing education needed to renew an individual RMLA license must relate to New Jersey residential mortgage lending laws and regulations.
Zachary Pearlstein, JD, is a Regulatory Compliance Director with CLA's Mortgage Advisory Division. He joined CLA on January 1, 2014, as part of its acquisition of Bankers Advisory, Inc. Zachary oversees Mortgage Advisory's regulatory compliance team, which focuses on federal and state compliance, fair lending, and the Home Mortgage Disclosure Act (HMDA). He is a graduate of Brandeis University and earned his juris doctor at Suffolk University Law School. He is admitted to the Massachusetts Bar.
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