In May of this year, the Mississippi Department of Banking and Consumer Finance notified all of the state’s mortgage license holders that, as of July 1, 2008, the state will be participating in the National Mortgage Licensing System (NMLS) and that participation for all of the state’s mortgage license holders is mandatory.

NMLS officially launched on January 2, 2008, and was the culmination of a four-year effort by state regulators and is just one part of a multi-faceted plan being implemented to enhance consumer protection, improve regulation, increase uniformity of mortgage supervision, and streamline the licensing process. These efforts include coordinated supervision, improved regulatory practices, and consistent standards for testing and training for mortgage originators; and uniform license application, renewals and annual reports. To accomplish this, Mississippi’s Department of Banking and Consumer Finance amended the Mississippi Mortgage Consumer Protection Law during the past regular session of the Legislature to mandate participation in NMLS.

At its core, NMLS is a state-based approach that has the benefits of localized accountability and an on-the-ground regulatory system combined with the efficiencies of a nationwide framework. This type of framework has the potential to create high and consistent regulatory standards without preempting states important role in the development of consumer protections and the enforcement of lending standards.

NMLS’ basic feature is a central database, containing a single record for every state-licensed mortgage lender,
broker, and branch and loan originator, based on the uniform mortgage application forms developed by state
regulatory agencies. It will also drive standardization and coordination among state regulators in areas such as
licensing requirements, background checks, testing and education, enforcement action, examinations and annual
reporting, which is bound to have a positive impact in the fight against real estate and mortgage fraud.

To date, 42 state agencies representing mortgage regulators in 40 states have indicated their intent to be a part of
NMLS. By the end of 2008 there should be 19 state agencies on the system with another 14 participating in 2009.
The remainder of the 42 agencies are expected to come online in 2010 and 2011. Total projected enrollment in NMLS will be more than 500,000 professional licensees. In Mississippi, the Department of Banking and Consumer Finance estimates its enrollment will be approximately 4,000 mortgage professionals.

The Connecticut Department of Banking and the Louisiana Office of Financial Institutions have issued announcements indicating their participation on NMLS starting July 1, 2008, also. Connecticut licensees have until September 30, 2008 and Louisiana licensees have until October 1, 2008 to transition their license(s) onto NMLS. Both agencies will begin accepting submissions through NMLS on July 1.

The director of the Idaho’s Department of Finance said this week that Idaho’s financial institutions are a “beacon of good news,” which is in stark contrast to the nation’s mortgage crisis. The state’s mortgage delinquencies are well within the range established over the last 20 years. In fact, Idaho’s annual delinquency figure was lower than that for 10 of the past 20 years (3.86% of total mortgages, compared with the nationwide number of 6.31%). The percentage of all Idaho mortgage loans reported as foreclosure-started for 2007, at 1.47%, was also within the range of the past 20 years, and is nearly half the 2.84% reported nationwide.

Contrary to the increasing number of news stories about large money center financial institutions (e.g. Bear Stearns) experiencing significant losses connected to mortgage defaults, Idaho’s banks are showing continued strength, with key performance indicators outpacing nationwide numbers. For example, in 2007, Idaho banks out-performed banks nationwide in loan and asset growth rates, and reported significantly smaller percentages for non-current loans and net charge-offs.

Maybe its time the rest of the nation took at how the 43rd state is handling its business. In January, Idaho became only one of seven states requiring that all new applications for mortgage licensure be processed through the new Nationwide Mortgage Licensing System (NMLS) and that existing licensees transition their current license information onto the NMLS by September 1 of this year. The NMLS is streamlining the licensing process for both regulatory agencies and the mortgage industry by providing a centralized and standardized system for mortgage licensing. NMLS is owned and operated by the State Regulatory Registry LLC, a wholly owned subsidiary of the Conference of State Bank Supervisors (CSBS). NMLS is a joint project of CSBS and the American Association of Residential Mortgage Regulators (AARMR) begun several years ago with the goals of improving supervision, streamlining compliance and enhancing consumer protection.