DISB to Participate in the Nationwide Mortgage Licensing System
DISB announced early January that the agency will begin participating in the Nationwide Mortgage Licensing System (NMLS) in August 2009. The NMLS was developed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to streamline the licensing process for state mortgage regulators and the mortgage industry. Since DISB plays a crucial role in regulating an important segment of the lending industry, according to DISB Commissioner Thomas E. Hampton, its participation in the system will not only “enhance consumer protection but will streamline the licensing process for mortgage regulators and the mortgage industry.” The NMLS is intended to include such benefits as online nationally uniform license applications, online tracking of applications and license status, and uniform annual renewals and reports. Licensees will be able to apply online for an initial or renewal license, update data or apply for an amendment with one or more regulatory agencies simultaneously.  

DISB is doing this to comply with the federal SAFE Mortgage Licensing Act of 2009, which was signed into law June 30, 2008. More than 20 states already participate in this new mortgage licensing system. DISB intends to commence use of the online automated processing of new license applications submitted by mortgage loan originators on Aug. 3, 2009. However all renewals of existing mortgage broker and lender licenses through December 31, 2009, must be completed using DISB’s existing mortgage licensing process. All DISB’s current and prospective licensees are encouraged to “create a record” on the NMLS between Aug. 3, 2009 and Oct. 31, 2009.

Recently, the District of Columbia published a final notice that a new mortgage-related regulation had become effective June 5, 2009. The new regulation is contained in Chapter 11 of Title 26A of the DCMR titled “Mortgage Lender, Mortgage Broker and Mortgage Loan Originators.” 

Licensees will find information that includes:

• NMLS – Requirements for Loan Originators/Officers  
• DISB Advisory for Mortgage Loan Originators as of July 2, 2009 
• DISB Transition Advisory as of May 1, 2009
• 2009 Renewal and Fee Schedule
• District of Columbia License Requirements
• Notice of Final Rulemaking that adopts a new Chapter 11 of Title 26A of the DCMR (Mortgage Lender,
• Mortgage Broker and Mortgage Loan Originators), effective June 5, 2009, and is published at 56 DCR 04356.
• Mortgage Lender Broker Amendment Act of 2009 (B18-133) Enrollment Version (passed by the City Council on May 5, 2009) 

For more information on the District’s implementation effort, contact Bank Examiner Sam Fuller at (202) 442-7839, or email samuel.fuller@dc.gov.

Written comments or questions may be addressed to DISB by email at BankingBureau@dc.gov or by letter to the office at 810 First Street, NE, Suite 701, Washington, DC 20002.

Also, CSBS and AARMR have included information on the NMLS on the CSBS Web site at csbs.org (see hot links for Mortgage Licensing in the header on the home page).

DISB Co-Sponsors Business Plan Competition
DISB along with the Washington, DC Economic Partnership (WDCEP) and others is sponsoring an award competition to provide a District-based business $100,000 in investment capital, among other prizes. The PremierPlan business plan competition is the only program of its kind developed on behalf of the District of Columbia to support District-based entrepreneurs. The initiative, administered by WDCEP’s BusinessPremier program, is funded by participants in the District of Columbia’s Certified Capital Company (CAPCO) program and is held in collaboration with the DC Coalition for Capital. This is the inaugural year of the competition, and it is aimed at encouraging entrepreneurship, innovation and job creation within the District of Columbia. PremierPlan is open to existing DC-headquartered businesses with at least one year of operating history.

The competition has been organized to promote entrepreneurship and the development of early stage companies in the District of Columbia. The goal of this initiative is to fund original business concepts that will lead to the continued development of new enterprises and further job creation within the District of Columbia. On July 22, 2009, DISB, along with the other partners will honor entrepreneurs, small businesses and business service providers at WDCEP’s Annual BusinessPremier Small Business Awards ceremony at the Willard InterContinental Hotel. The award ceremony will identify three outstanding businesses for their accomplishments in the following categories: Small Business of the Year, 100-Year-Old DC Business of the Year, Small Business Initiative of the Year and for the first time, the WDCEP will unveil the winner of the 1st Annual PremierPlan business plan competition.

DISB Releases Alert on New COBRA Benefits in the Economic Stimulus Plan
In March, DISB released an information alert on new provisions in the recently enacted stimulus law, which amends COBRA (Consolidated Omnibus Budget Reconciliation Act). COBRA provides certain former employees the right to continue their health insurance coverage at group rates on a temporary basis. A significant provision included in the stimulus law established a new federal subsidy of up to 65 percent the cost of COBRA benefits for up to nine months for eligible employees who involuntarily lose their jobs between September 1, 2008, and December 31, 2009. 
Since the provisions were effective upon enactment, DISB Commissioner said it required prompt attention for employers and administrators to start reviewing the records of terminations from September  1, 2008, to date; and “prepare to provide notice of the new requirements as soon as a model notice is available from the federal government.”

Eligible employees are those involuntarily terminated between September 1, 2008, and December 31, 2009, and elects COBRA coverage. Business owners should note that eligible employees who initially declined COBRA coverage must be given an additional 60 days to elect COBRA coverage and receive the subsidy, and they may opt for lower cost plans. In the announcement, DISB answers key questions such as does the law extend the length of time for the group continuation coverage; where should eligible individuals sign up; and what to do if an employer refuses to provide group continuation coverage. District residents may visit the Web site to read the full announcement at disb.dc.gov. Any business owner needing more information on COBRA, please contact DISB at (202) 727-8000.

DISB Issues Fraud Warning Language
DISB recently issued a notice to District-licensed insurers and Health Maintenance Organizations that effective April 1, they were required to use verbatim one of two fraud warning language alternatives on their applications for insurance and claim forms. Insurers may choose between the language in the DC code or the NAIC model language. Insurers can find this information by following this link*. Neither of the requirements shall be deemed to apply to reinsurers and reinsurance contracts/claims. Should you have any questions about the notice, contact Insurance Examiner Manager Jamai Fontaine at jamai.fontaine@dc.gov or (202) 442-7782.

DISB to Adopt New Examination Guidelines for Reverse Mortgages
DISB Commissioner Thomas E. Hampton announced late last year that the agency will be adopting a comprehensive set of new examination guidelines designed specifically for reviewing the business practices and operations of District licensed lenders and brokers selling reverse mortgage loans to seniors. Developed by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR), the guidelines will apply to state-licensed mortgage lenders and brokers. DISB expects to begin using the Reverse Mortgage Examination Guidelines (RMEGs) in 2009.
 
According to Hampton, these guidelines will help examiners identify those licensees who exhibit abusive lending practices, violate consumer protection or fair lending laws, and engage in unfair or deceptive acts or practices, particularly against seniors, and enable the agency to take action against them. A reverse mortgage loan is a loan secured by a lien on residential real estate in which the homeowner is not required to make payments on the loan until the homeowner ceases to live on the property. Typically, a homeowner at least 62 years of age is eligible for these loans.
 
The RMEGs are a comprehensive set of guidelines to cover all aspects of operations from policies and procedures to marketing, underwriting, quality control and servicing of a reverse mortgage portfolio. The RMEGs take a two-pronged approach of regulatory compliance and sound management practices to achieve the dual goal of consumer protection and institutional stability. To see the guidelines, visit DISB’s Web site at disb.dc.gov.

Requirements to Obtain a Public Insurance Adjusters License
DISB reminds those who are interested in obtaining a public insurance adjuster’s license, they may apply for the license by going to nipr.com. Applicants must submit a copy of the contract for proposed use and a $20,000 bond. The Bond Form is available on disb.dc.gov. Company and Independent adjusters are not required to obtain a DC insurance license. Should you have any questions about the requirements, contact Insurance Licensing Specialist Manager Zadie Bowles at Zadie.bowles@dc.gov or (202) 442-7819.

DISB Creates Consumer Protection and Advocacy Task Force
In its continued efforts to protect District residents in the financial-services arena, DISB recently created a Consumer Protection and Advocacy Task Force. Its main goal is to leverage the collective knowledge, skills and abilities of the agency, so it can continue to provide targeted information to consumers. As a consumer protection agency, it is the responsibility of the entire agency to be involved in the fight to protect the DC consumer; and to bring the resources of each bureau and office together to produce quality work.

It is DISB’s intention that the task force will be able to complete specific consumer protection projects identified for FY 2009. These include an annual consumer complaint report that outlines areas generating the most complaints in the agency, what types of complaints, and how DISB resolves them. An annual mortgage foreclosure report, outlining the areas in the city where the foreclosures may be found, by ward, by addresses, the mortgage broker or lender involved and other specific details. Development of a quarterly newsletter on current consumer protection and advocacy issues, as well as modifying DISB’s Web site to feature more consumer friendly information.

The task force has been broken down into four working groups, which will tackle each of these areas: consumer complaints, mortgage and foreclosure, consumer protection initiatives, and the investor protection workgroups. DISB’s Consumer Protection Advocate will head up the task force, working with agency directors, managers and staff, to research some of the most pressing consumer issues in the District of Columbia. DISB will generate newsletters and press releases on research findings.

Investor Education in Your Community Seminar Series

Staff Assistant Gwyn Jackson
assists an attendee with registration.

DISB recently concluded its first “Investor Education in Your Community Seminar Series,” a free non-commercial program that sought to address the issue “How Can I Afford Retirement?”   The series garnered an audience of about 150 participants. They received information on planning for retirement, calculating social security benefits, how to avoid becoming victims of financial fraud and much more. Attendees indicated they would recommend the program to others. DISB plans to hold another investor education series this spring.

President Obama’s Regulatory Reform Plan
On June 17, 2009, President Barack Obama laid out a comprehensive regulatory reform plan to modernize and protect the integrity of the country’s financial system. While this crisis has had many causes, it is clear now that the government could have done more to prevent these problems from growing out of control and threatening our overall economy.

The President was joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and members of Congress as he laid out the ambitious plan.

The President’s plan will:

• Promote Robust Supervision and Regulation of Financial Firms. It will require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation.
• Establish Comprehensive Regulation of Financial Markets. Increase market discipline and transparency to make markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions.
• Protect Consumers and Investors from Financial Abuse. Rebuild trust in the markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
• Provide the Government with the Tools it Needs to Manage Financial Crises so it is not forced to choose between bailouts and financial collapse.
• Raise International Regulatory Standards and Improve International Cooperation and coordination.
  DISB will continue to monitor this situation as it affects the way the agency does its regulation.

DISB Announces Multi-State Agreement with TBW Corporation 
DISB in late June signed a major agreement with Taylor, Bean & Whitaker Mortgage Corporation (TBW) regarding its mortgage lending practices for “nontraditional” loans made in the District of Columbia. This agreement will result in a detailed review of TBW’s nontraditional loan practices, the adoption of the federal loan modification program to assist struggling homeowners, and the payment of $9 million to assist the states and the District of Columbia in their oversight of mortgage origination practices.

The agreement between TBW and 14 state mortgage regulators follows a coordinated multi-state examination of TBW to specifically determine compliance with laws and regulations pertaining to the origination of nontraditional mortgage loans in 2006. These products, also referred to as “alternative,” or “exotic” mortgage loans, include “interest-only” mortgages, “payment option” adjustable-rate mortgages, and stated income loans. The examination alleged exceptions relating to TBW’s underwriting standards, compliance and risk management practices, and internal control procedures pertaining to these loans. Alleged practices included multiple submissions of loan applications by third-party originators through automated underwriting programs resulting in altered income and asset information for prospective borrowers in order to qualify applicants for mortgage loans. Concern over these practices led TBW to stop offering nontraditional mortgages in early 2007 and to make other changes to its internal control processes.

Consumers do not need to take any action at this point to pursue a loan modification. As part of the agreement, TBW will reach out to impacted consumers who qualify for the Making Home Affordable program. Consumers may visit the Web site established by the Treasury Department at makinghomeaffordable.gov, to check their eligibility for a loan modification. Based in Ocala, Fla, TBW is currently one of the 10 largest wholesale mortgage lenders in the United States.
 
For more information, contact, Melissa Spata, 315 NE 14th Street, Ocala, FL 34470
Office: (352) 671-0178   Fax: (352) 690-0878   mspata@taylorbean.com