Colorado and Georgia Regulatory Update

The Colorado and Georgia regulators have amended their rules related to temporary authority for mortgage loan originators. 

 

COLORADO RULES 4 CCR 725-3 CHAPTER 2

 

The Colorado Department of Regulatory Agencies, Division of Real Estate (the “Division”) has amended the rules related to temporary authority for mortgage loan originators, effective November 20, 2019.

 

An applicant for a mortgage loan originator temporary license that is eligible for temporary authority must meet the following requirements:

  • Submit a set of fingerprints to the NMLS;
  • Be eligible for temporary authority with the NMLS in accordance with NMLS policies and procedures;
  • Be employed and sponsored by a Colorado NMLS registered mortgage company;
  • Has not had any of the following:
    • An application for a mortgage loan originator license denied in any jurisdiction;
    • A mortgage loan originator license revoked or suspended in any jurisdiction;
    • Been subject to, or served with a cease and desist order; or
    • Been convicted of, plead guilty or nolo contendre to, a misdemeanor or felony of a crime involving fraud, deceit, material misrepresentation, theft, breach of fiduciary duty, money laundering.
  • The applicant has met either one of the following:
    • Registered in the NMLS as a loan originator for a depository during the one-year period preceding the date of application for a temporary license; or
    • Had a license issued as a mortgage loan originator in another jurisdiction during the 30-day period preceding the date of application for a temporary license.

 

The applicant has 7 business days from notice of issuance of temporary authority from the NMLS to submit the Division’s “Mortgage Loan Originator License Application” which includes state specific requirements.  This includes identifying the Colorado licensed mortgage loan originator who is responsible for the supervision of the applicant during the time they hold an active temporary mortgage loan originator license (“Responsible Mortgage Loan Originator”). 

 

A mortgage loan originator holding a temporary license must be employed and sponsored by a Colorado NMLS registered mortgage company and must be supervised by a Responsible Mortgage Loan Originator licensed in Colorado.  The Responsible Mortgage Loan Originator will be held responsible under all applicable provisions of Colorado law for the actions of the mortgage loan originator holding the temporary license and is personally subject to all applicable penalties under the law.  The Responsible Mortgage Loan Originator must notify the Division of the beginning and ending dates of supervision for mortgage loan originators holding temporary licenses.  The Responsible Mortgage Loan Originator will be held responsible for the activities of mortgage loan originators holding temporary licenses through and including the date of the temporary license expiration or termination of supervision, whichever is sooner.

 

A mortgage loan originator temporary license will expire on one of the following dates, whichever is sooner:

  • The applicant withdraws the application for a Colorado mortgage loan originator license;
  • The Board of Mortgage Loan Originators (“Board”) denies the application for a Colorado mortgage loan originator license;
  • The Board approves and issues a Colorado mortgage loan originator license;
  • Supervision termination date between the Responsible Mortgage Loan Originator and the mortgage loan originator holding the temporary license;
  • 120 days after the date the applicant was issued a temporary license.

 

Applicants seeking a temporary license will be granted one mortgage loan originator temporary license provided the applicant meets the requirements for such a license.  Additional or extended temporary licenses are prohibited.  A temporary mortgage loan originator license issued by the Board will have the same force and effect as a mortgage loan originator license issued by the Board.  

 

GEORGIA RULES CHAPTER 80-11

 

The Georgia Department of Banking and Finance (“Department”) has amended its Residential Mortgage Brokers and Lenders rule to provide for temporary authority for mortgage loan originators.  The rules are effective January 9, 2020.

 

A mortgage lender or mortgage broker sponsoring a mortgage loan originator who has temporary authority to act as a mortgage loan originator must disclose in writing to each applicant that the mortgage loan originator has temporary authority to operate.  The disclosure must be made no later than the date the consumer signs an application or any disclosure, whichever event comes first, and must include the following language in at least 10-point bold-faced type:

“The Georgia Department of Banking and Finance requires that we inform you that our company is licensed but the mortgage loan originator responsible for your loan is not currently licensed by the Georgia Department of Banking and Finance. The mortgage loan originator has applied for a mortgage loan originator license with the Georgia Department of Banking and Finance. Federal law (12 U.S.C. § 5117) authorizes certain mortgage loan originators to operate on a temporary basis in the state of Georgia while their application is pending. The Georgia Department of Banking and Finance may grant or deny the license. Further, the Georgia Department of Banking and Finance may take administrative action against the mortgage loan originator that may prevent such individual from acting as a mortgage loan originator before your loan closes. In such case, our company could still act as your broker or lender.”

 

The applicant is required to sign the disclosure and the lender or broker must keep a copy of the signed disclosure.  The disclosure is required after April 1, 2020. 

 

In the event that a mortgage broker or mortgage lender sponsors a mortgage loan originator with temporary authority, any advertisements by the mortgage broker or lender that mention the mortgage loan originator’s ability to act as a mortgage loan originator in Georgia must clearly and conspicuously indicate that the individual has temporary authority to operate in Georgia.  The advertisement must also clearly and conspicuously indicate that the individual is unlicensed, has submitted a license application to the Department, and the Department may grant or deny the application.

 

The Mortgage Loan Transaction Journal maintained by the mortgage broker, lender, or loan originator must clearly identify if the mortgage loan originator utilized temporary authority to operate at any point in the application or loan process.  For mortgage loan originators that utilize temporary authority, the journal must also identify the final status of the mortgage loan originator’s Georgia license application as one of the following:  approved, withdrawn, or denied. 

 

It is a violation of the Georgia Residential Mortgage Act to permit an unlicensed person, or one acting without temporary authority, to engage in licensed mortgage loan originator activities.

 

A mortgage loan originator operating under temporary authority is jointly responsible with the mortgage loan originator’s sponsor for ensuring that the required disclosure regarding the temporary authority is provided. 

 

A mortgage loan originator operating under temporary authority must include “TAO,” “temporary authority to operate” or a substantially similar designation next to the signature line on any document, application, or disclosure signed by the mortgage loan originator in connection with any residential mortgage loan application, including but not limited to the negotiation of terms or the offering of a loan. 

 

Any mortgage loan originator who qualifies to operate under temporary authority must submit proof to the Department of enrollment in a class to satisfy the prelicensing education requirements, as well as registering to take the written test required for mortgage loan originators.  Proof must be submitted to the Department within 30 days of receipt of the mortgage loan originator’s application. 

 

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Diane Jenkins

Director, National Mortgage Compliance Practice Group

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