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A national registry launched in the midst of the 2008 financial crisis to weed out fraud and predatory lending in the mortgage business is scheduled to be updated over the weekend as part of a long-term project to modernize the system.
The July 20 updates to the Nationwide Multistate Licensing System & Registry (NMLS) will allow the system’s more than 600,000 users to set and reset their username and password without having to contact a call center for support. The update will also allow more than 50,000 users who have multiple NMLS accounts to access their accounts using one username and password.
Those improvements might seem like essential basics to some mortgage professionals who are accustomed to using cutting-edge software applications to market, underwrite and process loans.
But the system’s operator, the Conference of State Bank Supervisors (CSBS), says it’s the just the first step in a multi-year effort “to improve system performance and alleviate pain points.”
Also on tap this year are updating system design and improving navigation. The next phase of the modernization project will make it easier for mortgage professionals to apply for state licenses through the NMLS.
Vickie Peck
“NMLS provides a valuable service to the mortgage, consumer finance and debt industry, and consumers,” CSBS executive Vickie Peck said in a statement. “Working with state regulators, we are committed to improving NMLS to provide a better user experience.”
Origins in financial crisis
First proposed in 2004, CSBS launched NMLS four years later with New York, Massachusetts, Rhode Island, Idaho, Iowa, Kentucky and Nebraska on board.
“Before NMLS, state financial services regulators did not have insight into mortgage business activity happening outside of their state – there was nothing to prevent bad actors from moving state to state, harming both consumers and the industry’s reputation,” CSBS says on its website.
The financial crisis of 2008 led Congress to incorporate NMLS into the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), establishing:
- Requirements for mortgage companies and mortgage loan originators (MLOs) to obtain and maintain a state license.
- Registration requirements for federally regulated banks and credit unions that originate mortgages and the MLOs they employ.
With consumer protection in mind, in 2012, state regulators expanded NMLS to include licensing for debt, consumer finance and money services businesses.
At the end of last year, more than 280,000 state-licensed companies and individuals in the mortgage, consumer finance, debt or money services businesses industry relied on NMLS to maintain their licensing and registration, plus nearly 370,000 registered MLOs who work for federally-regulated depository institutions.
Most state mortgage licensing laws require mortgage loan originators to publish their unique NMLS identifier on their websites and other documents like business cards. Consumers can use a public-facing website, NMLS Consumer Access, to look up an individual MLO or businesses’ state licenses, submit complaints to regulators, and see past enforcement actions brought by regulators.
Recruiting applications
While the NMLS database was originally created to weed out bad actors, it’s also being used to help mortgage lenders recruit talented prospects.
Attom Data Solutions has integrated NMLS loan originator data into its database to allow clients to pinpoint loan production by individual loan officers, lenders and mortgage brokers.
CoreLogic has partnered with Big Purple Dot on a mortgage recruiting platform that provides employers with detailed loan production data, coupled with a customer relationship management (CRM) service to help lenders automate their recruiting efforts.
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