• The new NMLS electronic surety bond (ESB) requirement has been adopted by nine states so far.
  • Besides the new ESBs, there are a few other NMLS license renewal requirements to consider with the 2016/2017 renewal process.
  • The NMLS has prepared a License Renewal Checklist where you can consult the requirements depending on your entity type and state.

For all professionals in the real estate and mortgage industry who need to keep a license with the Nationwide Mortgage Licensing System (NMLS), December 31 is the usual renewal deadline.

This year’s NMLS license renewal will be a bit different, so it’s worth checking up on the changes.

To stay on top of the requirements, you will have to meet the new criteria of the licensing system. One of the most notable changes is that you might have to provide electronic surety bonds to comply.

Depending on the state authority, some license-holders will have to stop using the paper submission of bonds and move to the electronic system.

Let’s take a look at the major changes that the NMLS is introducing with this renewal cycle so there are no last-minute surprises for your business.

Moving to NMLS electronic surety bonds

As a central body for handling licenses across states, the NMLS is in charge of the licensing procedure for a number of real estate and mortgage professionals. On many occasions, state authorities include a surety bond requirement for licensees.

As a result, the volume of surety bonds that the NMLS has to manage is considerable.

That’s the rationale for the NMLS moving to an electronic system of handling surety bonds (ESB). Its purpose is to ease the process of bonds submission and to ensure speed and security in their handling, turning the NMLS into a central database for licensing data.

The new NMLS surety bond requirement has been adopted by nine states so far:

  • Idaho
  • Indiana
  • Iowa
  • Massachusetts
  • Texas
  • Vermont
  • Washington
  • Wisconsin
  • Wyoming

Each state has imposed different deadlines for moving to the ESB.

In Indiana, debt management companies, exempt companies, first lien mortgage lenders, money transmitters and subordinate lien mortgage lenders will have to submit electronic surety bonds with their renewals by the end of 2016 to comply with the Indiana Department of Financial Institutions’ requirements.

The same applies to Iowa closing agents, debt management companies, exempt companies, money servicers, mortgage bankers and mortgage brokers regulated by the Iowa Division of Banking, and to Massachusetts mortgage brokers, mortgage lenders and exempt companies regulated by the Massachusetts Division of Banks.

In the rest of the states, the new requirement has either been already enforced (Massachusetts check sellers, debt collectors, and foreign transmittal agencies and Vermont debt adjusters, money transmitters, and litigation funding companies) or will come into effect sometime during 2017.

If you are affected by the introduction of ESBs, you will have to submit your surety bond via the NMLS website instead of printing and mailing your bond.

More changes in the NMLS license renewal

Besides the new ESBs, there are a few other NMLS license renewal requirements that you have to take into account with the 2016/2017 renewal process.

The NMLS has prepared a License Renewal Checklist where you can consult the requirements, depending on your entity type and state.

Additionally, make sure that the computer you will be using for the NMLS renewal online has fully updated internet browsers. In case your control person who is going to file the renewal plans to complete the process from a new location, this is especially important to prevent technical difficulties. The NMLS has updated its restrictions on older browser versions.

Another new aspect of the renewal process is that the NMLS now allows direct owners, executive officers, individual indirect owners, qualified individuals and non-licensed branch managers (known as MU2 control persons) to complete their Criminal Background Checks (CBC) via its system in 26 states. Not all states require the CBC to be done via the NMLS, so you have to check whether this is a requirement in your case.

For further information, you can check the NMLS license renewal page.

Have you prepared for the new NMLS license renewal requirements? Do you have any tips for fellow professionals? Please share your insights in the comments below.

Vic Lance is the founder and president of Lance Surety Bond Associates, Inc. Follow him on Twitter.

Email Vic Lance.

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