Rhode Island Adopts Licensing Provisions Regarding Lenders, Brokers and Mortgage Loan Originators
The Rhode Island Department of Business Regulation has recently adopted provisions regarding licensing requirements for mortgage lenders, mortgage brokers, and mortgage loan originators, effective immediately.
The new provisions provide a series of licensing requirements for lenders, loan brokers, third-party loan servicers, and small loan lenders. For example, regarding applications, the provisions state that all licensees are required to use the Nationwide Multistate Licensing System (NMLS) to apply for licenses, and to report all changes. Any changes to the information provided must be reported to the Department within thirty days of the change, through an NMLS filing.
Another licensing condition relates to required capital. Each licensee that applied for and is granted a license after June 30, 1995 must maintain a minimum net worth (defined as the amount by which total assets exceed total liabilities, calculated in accordance with Generally Accepted Accounting Principles), as set out in R.I. Gen. Laws § 19-14-5. All licensees must also prepare and maintain a financial statement, prepared at a minimum on a quarterly basis, which evidences compliance with these net worth requirements. All licensees must also upload quarterly and annual financial statements under the Financial Statement Summary Section within the NMLS.
The provisions also cover bond requirements. In accordance with R.I. Gen. Laws § 19-14-6, each lender, loan broker, third-party loan servicer, and small loan lender must file bonds in specified amounts, and must keep the bonds current throughout the period of licensure. The bond amounts for the initial license are: fifty thousand dollars ($50,000) for lenders; twenty thousand dollars ($20,000) for loan brokers; ten thousand dollars ($10,000) for small loan lenders; and fifty thousand dollars ($50,000) for third-party loan servicers.
Another licensing provisions requires mortgage lenders and brokers to appoint a person who holds a valid Rhode Island Mortgage Loan Originator license as the qualified individual or branch manager designated to operate the licensed business. This qualified individual or branch manager is required to oversee the operations of the licensee and to ensure compliance with all applicable regulations. This qualified individual or branch manager must be physically present at the licensed location for the majority of operating hours, and must personally oversee the operations of the licensee at that location.
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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