Maryland’s SAFE Act Conforming Legislation and the Transition to NMLS

1. Maryland’s SAFE Act Conforming Legislation and the Transitionto NMLS This presentation contains currently-available information regarding the Commissioner's transition to the NMLS.  It may be updated as necessary and should not be relied upon as legal advice.

2. Topics of Discussion • Nationwide Mortgage Licensing System • SAFE Legislative Framework • NMLS Demonstration • Maryland Process - Transitioning to NMLS

3. Section 1 Nationwide Mortgage Licensing System

4. NMLS Description • Nationwide state-supervised licensing system • Similar to other industries - • Securities • Investment advisors • Custom for mortgage industry • Two primary goals: • Uniform mortgage application for every agency • Comprehensive licensing and supervisory repository

5. NMLS Description • NMLS launched on 1/2/2008 with 7 states • 26 state agencies as of March 2008 • 9 more scheduled in 2009 including MD • NMLS currently tracking: • Over 12,000 companies • Over 11,000 branches • Over 55,000 loan originators

6. States currently using NMLS States to join NMLS in 2009 States to join NMLS in 2010 CSBS/AARMR Nationwide Mortgage Licensing System Washington Maine Montana Vermont North Dakota Minnesota Oregon New Hampshire Idaho Massachusetts Wisconsin South Dakota New York Michigan Rhode Island Wyoming Connecticut Iowa Pennsylvania New Jersey Nebraska Nevada Indiana (DFI & SOS) Ohio Delaware Utah Illinois Maryland West (DFI & DRE) Colorado Virginia District of Columbia California (DFI, DOC & DRE) Virginia Kansas Missouri Kentucky North Carolina Tennessee Oklahoma Arizona South Arkansas New Mexico Carolina Mississippi Georgia Alabama Hawaii Texas (OCCC & SML) Louisiana Florida Alaska Puerto Rico

7. NMLS Objectives • Streamline the licensing process • Efficient and standardized process leveraging technology • Centralized record for multi-jurisdictional entities • Enhance supervision • Uniform loan originator and lender records • Seamless visibility / coordination among states • Increase consumer protection • Industry accountability • Reduced fraud • Access to license and sanction data

8. Significant Infrastructure Commitment • NMLS at launch: $4.4 million • 2008: $4.0 million • 2009 $6.8 million • Testing • Education • Criminal Background Checks • Credit reports • Consumer access

9. System Overview www.stateregulatoryregistry.org/nmls

10. Single License File

11. Individual State Licensing • All regulators share the same electronic MU filing • Each regulator makes their own licensing decisions and controls their own license information. X

12. Section 2 SAFE Legislative Framework

13. Federal SAFE Legislation • Housing & Economic Recovery Act of 2008 • Signed by President Bush on July 30, 2008 • Reforms GSE (Freddie and Fannie) regulation • Modernizes the Federal Housing Administration • Promotes private-sector loan workouts to prevent foreclosure • Licensure of all loan originators (Title V)

14. Federal SAFE Legislation • All mortgage loan originators must be • Meet minimum standards • Be licensed or registered • Extended to mortgage lenders outside federal law

15. Key SAFE Participants

16. Federal Mandate for States • All states must have a system of licensing for loan originators by July 31, 2009 • System must meet SAFE definitions and minimum standards, that include: • Licensing loan originators through NMLS • Criminal and credit background check • Education • Testing Maryland Legislation – SB 269 Meets SAFE requirements* Includes several provisions to facilitate transition * Clarifying guidance from HUD is being obtained regarding (1) individual servicer licensing; (2) testing for current licensees; and applicability to manufactured housing

17. Federal Mandates for NMLS • Establish protocols for issuing unique ID # • Process criminal background checks • Approve pre-licensure and continuing education courses • Develop national test for loan originators • Develop mortgage call report • Provide public access to licensing data • Process consumer complaints

18. Maryland SAFE Act LegislationSenate Bill 269 • On April 14, 2009, Governor O’Malley signed SB 269 into law bringing Maryland into compliance with SAFE • Legislation will become effective July 1, 2009 • From a structural perspective, SB 269 seeks to • Maintain underlying structure and elements of MD mortgage licensing laws to retain integrity of features that do not conflict with the Federal SAFE Act • Integrate key elements necessary to meet SAFE Act requirements • Minimize disruption to mortgage industry in the transitional period

19. Key Elements for Originators

20. Key Elements For Originators

21. Key Elements For Originators

22. Transition Timeline NMLS • 1/1/09 - New / renewal license expiration shifts to 12/31/09 • 5/11/09 - NMLS Portal opens for MD licensees • 6/30/09 - Last day for using MD system alone for MO and ML licenses (applications received well prior) • 7/1/09 - New / renewal license applications approved through NMLS by MD - New / renewal licenses expire on 12/31/10 • 1/1/10 - NMLS Federal / MD test and fingerprinting open • 12/31/10 - License transition complete Pre-Transition Licensing Solely through MD System 18 Month Transition Licensing through NMLS

23. Section 3 Transitioning to NMLS

24. Transition Timeline NMLS • 1/1/09 - New / renewal license expiration shifts to 12/31/09 • 5/11/09 - NMLS Portal opens for MD licensees • 6/30/09 - Last day for using MD system alone for MO and ML licenses (applications received well prior) • 7/1/09 - New / renewal license applications approved through NMLS by MD - New / renewal licenses expire on 12/31/10 • 1/1/10 - NMLS Federal / MD test and fingerprinting open • 12/31/10 - License transition complete Pre-Transition Licensing Solely through MD System 18 Month Transition Licensing through NMLS

25. Current Mortgage Loan Origination Professionals in MD What Does This Mean for You? NOT an employee of bank or subsidiary? Current Licensees (Expiration After 6/30/09 New Licensees (Exempt at 6/30/09) New Licensees (De Novo)

26. What Does This Mean for Originators? • Current originator licensees • NMLS entry at renewal – 18 month transition (you may transition early) • Education / bonding / background check requirements met by 12/31/10 • Testing subject to HUD guidance • Continuing education within past 5 years will meet NMLS pre-licensing requirement • New originator licensees - previously exempt mortgage originators • Interim license allows current activities • Interim license application must be received by 7/31/09 or full de-novo licensing • Key requirements (education, background check, bonding, testing) must be satisfied to lift restrictions and must be obtained by 7/31/10 • New originator licensees – de-novo • NMLS entry at initial licensing • Full compliance required at outset • Testing deferred until NMLS test is available

27. Current Originator Licensees • Licenses with expiration dates on or after July 1, 2009 • Transition AT EXPIRATION (you may transition early) • New license will expire Dec. 31, 2010 (up to 18 months) • Key requirements - LO holding a MD Mortgage Originator license on 7/1/09 must comply with these requirements for NMLS licensing by 12/31/10 Current Licensees

28. Current Originator Licensees 1) Initiate MU4 on NMLS (after consultation with employer) 2) Complete MU4 and related tasks on NMLS 3) Pay NMLS processing fee - $30 annually / $60 if prior to 12/31/09 • 4) Proceed to MD website for - • Association with lender done on MD website (all lenders not on NMLS until end of transition (12/31/10) • Payment of MD license fee - $225 annually - pro-rated for duration by MD Current Licensees

29. What Happens When on MD Website – Current MLO

30. What Happens When on MD Website – Current MLO

31. What Happens When on MD Website – Current MLO

32. New Originator Licensees Previously Exempt • Interim Mortgage Loan Originator license if AS OF 6/30/09 • Employed by licensed mortgage lender that makes loans and doesn’t broker • Owns 25% or more interest in mortgage lender • Application for interim license MUST be received by July 31, 2009 • License will expire Dec. 31, 2010 (up to 18 months) BUT “Interim” status must be cleared by 7/31/10 (within 12 months) • Key requirements - New Licensees Previously Exempt

33. New Originator LicenseesPreviously Exempt 1) Initiate MU4 on NMLS (after consultation with employer) 2) Complete MU4 and related tasks on NMLS (by 7/31/09 for interim) 3) Pay ALL NMLS and MD fees on NMLS - NMLS - $30 annually / $60 if prior to 12/31/09 - MD - $225 annually / $550 if prior to 12/31/09 and $100 investigation fee 4) Proceed to MD website for association with lender only (all lenders not on NMLS until end of transition (12/31/10) 5) Identify prior exemption on Affidavit of Md MLO Activity 6) Clear background, bonding, education, testing by 7/31/10 New Licensees Previously Exempt

34. New Originator LicenseesDe Novo • Application any time after May 1, 2009 for approval after July 1, 2009 • License will expire Dec. 31, 2010 (up to 18 months) • Key requirements - New Licensees De Novo

35. New Originator LicenseesDe Novo 1) Initiate MU4 on NMLS (after consultation with employer) 2) Complete MU4 and related tasks on NMLS 3) Pay ALL NMLS and MD fees on ON NMLS - NMLS - $30 annually / $60 if prior to 12/31/09 - MD - $225 annually / $550 if prior to 12/31/09 and $100 investigation fee 4) Proceed to MD website for association with lender only (all lenders not on NMLS until end of transition (12/31/10) New Licensees De Novo

36. What Does This Mean for Lenders? • Current lender licensees • NMLS entry at renewal – 18 month transition (you may transition early) • Original / main office MUST be on NMLS for branch to transition – so Original / main office may need to transition early if existing branch expires or new branch is to be licensed prior to expiration of original / main office license • Surety bond and net worth requirements as current • New lender licensees • NMLS entry at renewal – 18 month transition (you may transition early) • Original / main office MUST be on NMLS for new branch to be licensed through NMLS – original / main office may need to transition early for new branch to be licensed • Surety bond and net worth requirements as current

37. Current Lender Licensees 1) Initiate MU1 on NMLS 2) Initiate MU3 on NMLS – only after MU1 licensing completed* 3) Pay NMLS processing fee only ON NMLS Site - NMLS – Main - $100 annually / $200 if prior to 12/31/09 - NMLS - Branch - $20 annually / $40 if prior to 12/31/09 4) Pay MD license fee on MD website - $1,000 annually - pro-rated for duration *No branch office may be licensed through NMLS until the home/main office has transitioned. New Licensees De Novo

38. New Lender Licensees 1) Initiate MU1 on NMLS 2) Initiate MU3 on NMLS – only after MU1 licensing completed* 3) Pay ALL NMLS and MD fees on NMLS - NMLS – Main - $100 annually / $200 if prior to 12/31/09 - NMLS - Branch - $20 annually / $40 if prior to 12/31/09 - MD - $1,000 annually / $2,000 if prior to 12/31/09 No branch office may be licensed through NMLS until the home/main office has transitioned. New Licensees De Novo

39. Interim Changes • Do NOT make changes to your license while completing the transition / renewal process • If you need to make a change, transition / renew through the NMLS immediately and prior to expiration date • The license expiration will be extended to December 31, 2010 expiration pursuant to the normal renewal process and a pro-rated fee will be charged • Upon approval, you can implement the change through the NMLS directly No interim changes may be processed through MD Use NMLS AFTER license has transition / renewed

40. More Information to Follow • Communication has been and will be ongoing • Electronic newsletter • Webinars • Emergency regulations in process to support implementation http://www.dllr.state.md.us/finance/frnews/

41. Advantages of NMLS • Single record for each company / originator • More efficient simpler multi-state licensing • Greater consistency in standards • Better technology and support– • Superior regulatory oversight - Unified, multi-state access - Enhanced originator tracking - More information – call reports etc.