| To mortgage loan originators the purpose and | | | | areas including management, emerging issues, |
| activities of various national associations and | | | | safety and soundness regulation, trust, law, and |
| agencies, which are most often known only by | | | | technology. The programs are targeted to state |
| their acronyms, may seem confusing and | | | | banking department personnel but participants |
| complicated. In this paper we will describe, and | | | | from the banking industry may attend selected |
| clarify the missions of, agencies including the | | | | programs. |
| Conference of State Bank Supervisors (CSBS), | | | | The association's continuing education and |
| the American Association of Residential Mortgage | | | | executive programs are developed to address |
| Regulators (AARMR), and the Nationwide | | | | the evolving issues of the financial industry. The |
| Mortgage Licensing System (NMLS). We'll describe | | | | content changes yearly and participants have an |
| these entities in relation to the mortgage industry, | | | | opportunity to learn from each other as well as |
| and how they relate to one another, the state | | | | become familiar with industry hot topics of the |
| regulatory agencies, and the MLOs in | | | | moment. |
| neighborhood offices. | | | | AARMR |
| CSBS | | | | Based in Washington, DC, the American |
| Founded in 1902 as a clearinghouse for ideas to | | | | Association of Residential Mortgage Regulators is a |
| solve common problems of state bank regulators, | | | | professional trade association that promotes |
| the Conference of State Bank Supervisors is | | | | communication between and among state officials |
| based in Washington, DC and is committed to | | | | who are responsible for the administration and |
| advancing professionalism in all state banking | | | | regulation of residential mortgage lending, servicing |
| departments. CSBS is the only national | | | | and brokering. The group develops model |
| organization dedicated to protecting and advancing | | | | legislation applicable to the administration and |
| our nation's dual banking system. | | | | regulation of mortgage lending, servicing and |
| To understand what that means, we need to go | | | | brokering. Like CSBS, AARMR provides education |
| back to the era of the Civil War. In 1863, in an | | | | programs; in its case they seek to increase the |
| attempt to retire the greenbacks that it had | | | | knowledge and ability of both those engaged in |
| issued to finance the North's military effort in the | | | | the administration and enforcement of mortgage |
| Civil War, Congress passed the National Bank Act. | | | | regulation, and the MLOs engaged in mortgage |
| This made it possible to charter banks nationally. | | | | lending, servicing or brokering. Educational activities |
| Concurrently, by the 1880s the rise of the | | | | include organizing and sponsoring lectures, |
| demand deposit account, also known as a | | | | seminars, and training programs, and by providing |
| checking account, changed the primary source of | | | | a forum for the exchange of information. |
| revenue for many state banks. The result of | | | | Working together, CSBS and AARMR created and |
| these trends was the creation of the "dual | | | | today promote the Nationwide Mortgage Licensing |
| banking system," whereby new banks may | | | | System (NMLS), an automated, internet-based |
| choose either state or national charters. National | | | | nationwide mortgage licensing system that |
| banks have the word "National" or "N.A." in the | | | | provides state regulators, the mortgage industry, |
| name of the bank (i.e. Citibank N.A.). National banks | | | | and the general public with a centralized source of |
| are regulated by the Office of the Comptroller of | | | | information about state-licensed mortgage |
| the Currency, Department of the Treasury. | | | | providers. |
| CSBS is a professional trade association that acts | | | | NMLS |
| to promote and defend the dual-banking system, | | | | In response to the increased volume and variety |
| and more specifically to promote and defend the | | | | of residential mortgage originators, and the need |
| interests of properly regulated state-chartered | | | | to address these changes with modern tools and |
| banks. The goals of CSBS include:o By acting as a | | | | authorities, in 2004 CSBS and AARMR created |
| voice in Washington to promote the authority of | | | | the Nationwide Mortgage Licensing System |
| individual states to regulate the activities of | | | | (NMLS). It is owned and operated by the State |
| state-chartered financial institutions, and to | | | | Regulatory Registry LLC (SRR), a wholly owned |
| represent the state banking system to federal | | | | subsidiary of CSBS. SRR is governed by a |
| and state legislative and regulatory agencies.o | | | | six-member Board of Managers comprised of |
| Through education and training, to strengthen the | | | | state banking commissioners and a representative |
| professionalism of state banking departments and | | | | of AARMR. The SRR Board of Managers is |
| state banking regulators.o In the new era of | | | | responsible for all system development, |
| financial modernization, to ensure that all banks | | | | operations, and policy matters concerning NMLS. |
| continue to have the flexibility and choice of the | | | | NMLS is a secure, internet-based licensing system |
| state charter. | | | | for the residential mortgage industry. The system |
| CSBS believes that the states must retain their | | | | has been built and is maintained by the Financial |
| role as the front-line, grass-roots regulator for the | | | | Industry Regulatory Authority (FINRA), which is |
| financial services industry, and that federal | | | | the largest independent regulator for all securities |
| regulatory preemption of state laws endangers | | | | firms doing business in the United States. Created |
| the dual banking system and consumer protection. | | | | in July 2007 through the consolidation of the |
| Why at the state level? Because bank supervision | | | | National Association of Securities Dealers (NASD) |
| at the state level provides regulators who are | | | | and the member regulation, enforcement and |
| accessible, are in tune with the local economy, | | | | arbitration functions of the New York Stock |
| who understand state laws, and who are | | | | Exchange, FINRA provides both regulatory and |
| knowledgeable about the local consumer. | | | | compliance and technology-based services. |
| CSBS promotes the safety and soundness of | | | | NMLS itself does not grant or deny license |
| individual financial institutions and the overall | | | | authority. NMLS administers the licensing process |
| banking system through two key activities: bank | | | | of mortgage originators in all participating states, |
| supervision and examination, and comprehensive | | | | the District of Columbia and U.S. territories. In |
| training and education programs for state bank | | | | these jurisdictions, NMLS is the official and sole |
| examiners. | | | | system for individuals and companies seeking to |
| The defense of state banking against perceived | | | | apply for, amend, renew, and surrender licenses |
| federal intrusion is ongoing on many fronts. For | | | | managed in the NMLS on behalf of the |
| example, CSBS believes that for the supervision | | | | jurisdiction's governmental agencies. Regulators |
| of an interstate bank the primary regulator should | | | | use NMLS to process and manage licenses within |
| be the banking supervisor of the bank's home | | | | their jurisdictions. In the NMLS system, a single |
| state. The agency supports the authority of the | | | | licensing record is created and maintained for each |
| states to permit banks to develop new services | | | | licensed company, branch, loan officer, and control |
| to market to their customers, and believes that | | | | person. This single record is used by regulators to |
| states must continue to play a major regulatory | | | | evaluate license applications and renewals. |
| and enforcement role in the supervision of the | | | | By providing a centralized and standardized |
| mortgage industry. | | | | system for mortgage licensing, NMLS streamlines |
| Continuing education and executive programs that | | | | the licensing process for both regulatory agencies |
| are designed for senior-level regulators, state | | | | and the mortgage industry. Indirectly, NMLS |
| banking department management, and area | | | | serves the mission of CSBS by maintaining the |
| specialists help ensure a high level of | | | | viability of autonomous state regulation of |
| professionalism. CSBS education programs cover | | | | state-chartered mortgage originators. |