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Lending / Servicing

Benjamin Lawsky just made it easier to be a mortgage banker in New York

Sometimes he offers you a carrot, not just the stick

June 5, 2014

Benjamin Lawsky is New York’s Superintendent of Financial Services. He's also one of the most powerful people in finance right now, because as New York’s top financial regulator, his power is broad and his reach is wide.

In recent months, he’s used that power and reach to have a profound impact on the mortgage servicing rights market and the rest of mortgage finance. According to William Erbey, the executive chairman of Ocwen Financial Corp. (OCN), Lawsky has frozen the entire market by putting an indefinite hold on a $2.7 billion MSR deal between Ocwen and Wells Fargo (WFC).

Lawsky has demanded answers from Ocwen and other nonbanks over their servicing and business practices. That includes questioning whether Ocwen was using “gag clauses” on it customers, looking into a potential cyber attack at Ellie Mae, and setting his sights on Nationstar (NSM).

It’s probably safe to say that Lawsky isn’t the most popular guy in a lot of mortgage bankers’ offices these days.

But fear not, mortgage bankers…especially those in New York. Lawsky’s office has just made your lives much easier.

That’s because Lawsky announced Thursday that New York’s Department of Financial Services is implementing “a new streamlined licensing process for mortgage banking in New York.”

The release announcing the measures said, “These measures – which include allowing the online submission of application materials, conforming to certain national standards, reducing outdated regulatory barriers, and other initiatives – will improve efficiency and reduce unnecessary wait times, while at the same time ensuring consumers remain protected.”

Here’s how Lawsky’s office is making it easier for mortgage bankers:

1. Adopted the Uniform State Test for mortgage loan originators

New York will adopt the Uniform State Test for mortgage loan originators on September 2, 2014, joining dozens of other states that have adopted the test, which is designed to make it easier for loan officers to obtain licensing in multiple states.

2. Simplified the process for moving to New York to be a mortgage loan originator

Currently, when a mortgage loan originator working in another state or for a federal bank wants to move to a New York-licensed mortgage banker or broker, that person can’t apply for a license until after he or she gets a new job and is unable to work at that new job until his or her license is processed.

The new procedure makes a lot more sense. Individuals can now apply for an MLO license before being hired by a New York-licensed entity. DFS will process the application and will send a letter to the applicant once it is satisfied that the applicant has met all of the requirements to become an MLO, other than affiliation with a New York-licensed entity. The applicant can then take this letter to potential employers, get a new job, and as long as the new employer is disclosed to DFS within 30 days of this letter, DFS will promptly license the MLO.

3. Made the application process much less complicated

The DFS has reorganized its internal process to “eliminate excess layers of review of license applications and approvals.” This process has been in place for four months and according to the DFS, “The Department’s mortgage licensing team worked through a significant backlog (in the last four months) and reduced the number of pending banker and servicer applications by more than 25%. Over the same period, the unit’s rate of application processing more than doubled.”

4. Mortgage bankers, mortgage brokers, mortgage loan servicers and mortgage loan originators with a question now have an e-mail address just for them

License applicants and licensed entities no longer have to search for the appropriate person if they have questions. New, encrypted inboxes dedicated to particular topics will be staffed daily, and the DFS will find the appropriate person to answer a given question within one business day.

For mortgage bankers or mortgage banker applicants, the address is mortgage.banker@dfs.ny.gov; for mortgage brokers or applicants, the address is mortgage.broker@dfs.ny.gov; for mortgage loan servicers or applicants, the address is mls@dfs.ny.gov; and for mortgage loan originators or applicants, the address is mlo@dfs.ny.gov.

5. Those e-mail addresses are for more than just questions

The DFS will now accept application materials at the dedicated e-mail addresses above. “This should nearly eliminate documents being lost or delayed in the mail,” the DFS announcement said. “Where DFS needs originals of certain documents, it will accept online submission first so that mail delays do not hold up processing of the application, and the original can follow by mail.”

The DFS has also launched a new mortgage section of its website that lists all of the new rules and regulations and will soon have “industry guidebooks” designed to help companies and individuals to apply for and maintain a license.

“We’re committed to making state government work better for both businesses and consumers,” Lawsky said. “Governor Cuomo proposed creating our department to take a fresh look at financial regulation in our state. We undertook a top-to-bottom review and found a number of areas where we could dramatically improve the speed and efficiency of our mortgage licensing process – without sacrificing vital consumer protections.”

So Lawsky's not bad news all the time, right? Maybe now you can take his picture down off the dartboard...for at least a day or two.

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