Revisions to the Montana Mortgage Act
by: Nicole Legere, Esq.
The state of Montana recently revised the Montana Mortgage Act to bring it into compliance with federal rules. These revisions include changes to mortgage broker/lender licensing requirements updates to licensing exceptions and educational requirements, as well as new additions to the reasons for license denial. These amendments shall be effective on October 1, 2013.
Licensing Requirements
The licensing requirements under section 2 (32-9-102) of the Montana Mortgage Act have been amended to state “unless exempt, a person may not regularly engage in the business of a mortgage broker, mortgage lender, mortgage servicer, or mortgage loan originator with respect to any residential mortgage loan unless licensed under the provisions of this part or registered through the NMLS with a unique identifier assigned.” The provision goes on to require a person “regularly engaging in the business of a mortgage broker, mortgage lender, mortgage servicer, or mortgage loan originator under this part is required to be licensed through, and registered with, and maintain a valid unique identifier issued by the NMLS.” Additionally, this amendment also prohibits a mortgage broker or lender from employing or contracting with any person required to be licensed if that person is not licensed.
These amendments are a change from the previous requirement that individuals “acting as” mortgage brokers, mortgage lenders, mortgage servicers, or mortgage loan originators to be registered.
Licensing Exemptions
The exceptions to the licensing requirement are listed in section 4 (32-9-104) and allow certain individuals and entities to operate outside of the conditions listed above. Some of these exemptions include:
An entity that is an agency of the federal, state tribal or local government
An individual who is an employee of a federal, state, tribal, local government, or housing finance agency acting as a loan originator only pursuant to the individuals duties as an employee of the federal, state, tribal, local government or housing finance agency
An individual who performs only administrative or clerical tasks at the direction of and subject to the supervision of an individual who is a licensed and registered mortgage loan originator, is not required to be licensed, or an entity that is a bona fide not for profit entity
An employee of a bona fide not for profit entity who acts as a loan originator only with respect to work duties for the not for profit entity and who acts as a mortgage loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower
These exemptions were further clarified by Senate Bill 71, which was also passed to revise the Montana Mortgage Act, it includes technical corrections to the definitions and exemptions from licensing.
Under Section 19 (32-9-103) administrative or clerical tasks has been defined to mean “the receipt, collection, and distribution of information common for processing or underwriting of a residential mortgage loan and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan to the extent that the communication does not include offering or negotiating loan rates or terms or counseling consumers about residential mortgage loan rates or terms.”
Under Section 20 (32-9-104) of the same bill the exemptions from licensing were expanded to include:
An individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual
An entity engaged solely in commercial lending
A Montana licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client unless the attorney is compensated by a mortgage lender, mortgage broker, or mortgage loan originator or any of their agents
A Montana licensed certified public accountant (CPA) or Montana licensed public accountant who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to providing public accounting services to the client unless to account is compensated by a mortgage lender, mortgage broker, mortgage loan originator or any of their agents
The burden is on the person claiming the exemption to prove that he/she meets all the necessary requirements in order to be considered exempt. These clarifications will also become effective October 1, 2013.
Educational Requirements
The amendments include an update to the requirements for individuals seeking a mortgage loan originators license. The update states that, in addition to taking 20 hours of approved education courses, applicants may be required to complete additional training that is specific to Montana residential mortgage statutes and rules. Those individuals already licensed are required to complete and submit to the NMLS evidence of at least 8 hours of continuing education every year at the time they submit their license renewal applications.
License Denial
The reasons for license denial have also been updated, and include changes to denials based on felony convictions. The amendments allow “the department to consider the underlying crime, facts, or circumstances of a pardoned or expunged felony conviction.” More specifically, a pardoned or expunged felony conviction “does not necessitate denial of a license application.”
Additionally, the department may now consider an abandoned application when an applicant fails to provide or respond to a request for additional information within the time period specified by the department.
Lastly, an applicant can now be denied licensing if the applicant is found to have violated “any rule of conduct for persons taking the mortgage loan originator national or state test under the Federal Secure and Fair Enforcement for Mortgage Licensing Act or the Nationwide Multistate Licensing System Industry Terms of Use”
These amendments can be read in full on AllRegs at:
http://www.allregs.com/ao/main.aspx?did2=7e21b3c225974a47a0c87920fd8027f0
http://www.allregs.com/ao/main.aspx?did2=42bb6980a14644349e5d65d507487af0
About the Author:
Nicole Legere, Esq. is Senior Counsel and Assistant Vice President at Bankers Advisory, Inc. A graduate of the University of Massachusetts at Amherst, she earned her J.D. at Roger Williams School of Law. She is admitted to the bar in Massachusetts and New York. Nicole can be reached at Nicole@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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