if you were not aware new rules governing licensing of loan origination by the federal government go into to July 31st 2010. if a state does not comply, Government backed lending could be eliminated as an option so effectively the Federal government will take control of the licensing of loan origination in residential lending.
§ 3400.103 Individuals required to be licensed by States.
(a) Except as provided in paragraph
(e) of this section, in order to operate a SAFE-compliant program, a State must prohibit an individual from engaging in the business of a loan originator with respect to any dwelling or residential real estate in the State, unless the individual first:
(1) Registers as a loan originator through and obtains a unique identifier from the NMLSR, and
(2) Obtains and maintains a valid loan originator license from the State.
(b)(1) An individual engages in the business of a loan originator if the individual:
(i)(A) Takes a residential mortgage loan application; and
(B) Offers or negotiates terms of a residential mortgage loan for compensation or gain; or
(ii) Represents to the public, through advertising or other means of communicating or providing information (including the use of business cards, stationary, brochures, signs, rate lists, or other promotional items), that such individual can or will provide any of the services or perform any of the activities described in
paragraph (b)(1)(i) of this section.
(2) An individual does not engage in the business of a loan originator merely by performing administrative or clerical tasks.
(c)(1) An individual ‘‘takes a residential mortgage loan application'' if the individual receives a residential mortgage loan application for the purpose of deciding (or influencing or soliciting the decision of another)whether to extend an offer of residential mortgage loan terms to a borrower or prospective borrower (or to accept the terms offered by a borrower or prospective borrower in response to a solicitation), whether the application is received directly or indirectly from the borrower or prospective borrower.
(2) An individual ‘‘offers or negotiates terms of a residential mortgage loan for compensation or gain'' if the individual:
(i)(A) Presents for acceptance by a borrower or prospective borrower residential mortgage loan terms;
(B) Communicates directly or indirectly with a borrower or prospective borrower for the purpose of reaching an understanding about prospective residential mortgage loan terms; or
(C) Recommends, refers, or steers a borrower or prospective borrower to a particular lender or set of residential mortgage loan terms, in accordance with a duty to or incentive from any person other than the borrower or prospective borrower; and
(ii) Receives or expects to receive payment of money or anything of value in connection with the activities described in paragraph (c)(2)(i) of this section or as a result of any residential mortgage loan terms entered into as a result of such activities.
(d)(1) Except as provided in paragraph
(e) of this section, a State must prohibit an individual who is an independent contractor from engaging in residential mortgage loan origination activities as a loan processor or underwriter with respect to any dwelling or residential real estate in the State, unless the individual first:
(i) Registers as a loan originator through and obtains a unique identifier from the NMLSR, and
(ii) Obtains and maintains a valid loan originator license from the State.
(2) An individual engages in residential mortgage loan origination activities as a loan processor or underwriter if, with respect to a residential mortgage loan application, the individual performs clerical or support duties.
(e) A State is not required to impose the prohibitions required under paragraphs (a) and (d) of this section on the following individuals:
(1) An individual who performs only real estate brokerage activities and is licensed or registered in accordance with applicable State law, unless the individual is compensated directly or indirectly by a lender, mortgage broker, or other loan originator or by an agent of such lender, mortgage broker, or other loan originator;
(2) An individual who is involved only in extensions of credit relating to timeshare plans, as that term is defined in 11 U.S.C. 101(53D);
(3) A loan processor or underwriter who performs only clerical or support duties and does so at the direction of and subject to the supervision and instruction of an individual who is licensed and registered in accordance with paragraph (a) of this section or who is exempt under paragraph (e)(7) of this section;
(4) An individual who only offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual;
(5) Any individual who only offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence.
(6) A licensed attorney who only 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 lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; or
(7) An individual who is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry, and who is an employee of
(i) A depository institution;
(ii) A subsidiary that is:
(A) Owned and controlled by a depository institution; and
(B) Regulated by a Federal banking agency; or
(iii) An institution regulated by the Farm Credit Administration.
(f) A State must require an individual licensed in accordance with paragraphs
(a) or (d) of this section to renew the loan originator license no less often than annually.
For an individual to be eligible for a loan originator license required under § 3400.103(a) and (d), a State must require and find, at a minimum, that an individual:
(a) Has never had a loan originator license revoked in any governmental jurisdiction, except that a formally vacated revocation shall not be deemed a revocation;
(b)(1) Has never been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court:
(i) During the 7-year period preceding the date of the application for licensing; or
(ii) At any time preceding such date of application, if such felony involved an act of fraud, dishonesty, a breach of trust, or money laundering.
(2) For purposes of this paragraph (b): (i) Expungement of a conviction described in paragraph (b)(1) of this section does not affect the ineligibility of the convicted individual; (ii) Pardoned convictions do not render an individual ineligible; and (iii) Whether a particular crime is classified as a felony is determined by the law of the State in which an individual is convicted. (c) Has demonstrated financial responsibility, character, and general fitness, such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently, under reasonable standards established by the individual State.
(d) Completed at least 20 hours of prelicensing education that has been reviewed and approved by the Nationwide Licensing System and Registry. The pre-licensing education completed by the individual must include at least:
(1) 3 hours of Federal law and regulations;
(2) 3 hours of ethics, which must include instruction on fraud, consumer protection, and fair lending issues; and
(3) 2 hours of training on lending standards for nontraditional mortgage product marketplace.
(e)(1) Achieved a test score of not less than 75 percent correct answers on a written test developed by the NMLSR in accordance with 12 U.S.C. 5105(d).
(2) To satisfy the requirement under paragraph (a)(5)(i) of this section, an individual may take a test three consecutive times, with each retest occurring at least 30 days after the preceding test. If an individual fails three consecutive tests, the individual must wait at least 6 months before taking the test again.
(3) If a State licensed loan originator fails to maintain a valid license for 5 years or longer, the individual must retake the test and achieve a test score of not less than 75 percent correct answers.
(f) Be covered by either a net worth or surety bond requirement, or pays into a State fund, as required by the State loan originator supervisory authority.
(g) Has submitted to the NMLSR fingerprints for submission to the Federal Bureau of Investigation and to any government agency for a State and national criminal history background check; and
(h) Has submitted to the NMLSR personal history and experience, which must include:
(1) Information related to any administrative, civil, or criminal findings by any governmental jurisdiction; and
(2) An independent credit report.
For an individual to be eligible to renew a loan originator license as required under § 3400.105(f), a State must require the individual:
(a) To continue to meet the minimum standards for license issuance provided in § 3400.105; and
(2) To satisfy annual continuing education requirements, which must include at least 8 hours of education approved by the NMLSR. The 8 hours of annual continuing education must include at least:
(i) 3 hours of Federal law and regulations;
(ii) 2 hours of ethics (including instruction on fraud, consumer protection, and fair lending issues); and
(iii) 2 hours of training related to lending standards for the nontraditional mortgage product marketplace.
(b) A State must provide that credit for a continuing education course is valid only for the year in which the course is taken and that an individual may not meet the annual requirements for continuing education by taking an approved course more than one time in the same year or in successive years.
(c) An individual who is an instructor of an approved continuing education course may receive credit for the individual's own annual continuing education requirement at the rate of 2 hours credit for every one hour taught.
(a) Except as provided in paragraphs (b), (c), and (d) of this section, a State must provide that the effective date for requirements it imposes in accordance with §§ 3400.103, 3400.105, and 3400.107 is no later than July 31, 2010.
link to complete regulation
http://www.hud.gov/offices/hsg/ramh/safe/safeprule.pdf