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Montana Administrative Register Notice 2-59-612 No. 24   12/23/2021    
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                     BEFORE THE DEPARTMENT OF ADMINISTRATION

                                       OF THE STATE OF MONTANA 

 

 In the matter of the amendment of ARM

 2.59.310, 2.59.315, 2.59.705, 2.59.1201,

 2.59.1515, 2.59.1701, and 2.59.1707

 pertaining to standardized forms and

 procedures of the NMLS for consumer loan licenses, escrow business licenses, sales finance company licenses, and deferred deposit lender licenses, consumer loan license surrender, definitions for mortgage licensees, and revocation, suspension, or surrender of mortgage licenses; and the repeal of 2.59.313, 2.59.314, 2.59.316, 2.59.708, 2.59.709, 2.59.710, 2.59.711, 2.59.1204, 2.59.1205, 2.59.1206, 2.59.1207, 2.59.1517, 2.59.1518, 2.59.1519, 2.59.1520, and 2.59.1708 pertaining to initial applications through NMLS for consumer loan licenses, escrow business licenses, sales finance company licenses, and deferred deposit lender licenses, consumer loan license amendments and fees, escrow business license amendments, license surrender, and fees, sales finance company license amendments, license surrender, and fees, and deferred deposit lender license amendments, license surrender, and fees, and table funding requiring licensure for mortgage licensees

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NOTICE OF PROPOSED AMENDMENT AND REPEAL

 

NO PUBLIC HEARING CONTEMPLATED

 

TO: All Concerned Persons

 

1. On February 11, 2022, the Department of Administration proposes to amend and repeal the above-stated rules.

 

2. The Department of Administration will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Administration no later than 5:00 p.m. on January 4, 2022, to advise us of the nature of the accommodation that you need. Please contact Heather Hardman, Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546; telephone (406) 841-2922; TDD (406) 841-2974; facsimile (406) 841-2930; or e-mail to banking@mt.gov.

 

3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:

 

2.59.310 ADOPTION OF STANDARDIZED FORMS AND PROCEDURES OF THE NATIONWIDE MULTISTATE LICENSING SYSTEM (NMLS) (1) The NMLS Policy Guidebook dated July 23, 2012 September 27, 2021, is approved and adopted by reference. It can be found at http://mortgage.nationwidelicensingsystem.org/licensees/resources/LicenseeResources/NMLS%20Guidebook%20for%20Licensees.pdf and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.

(2) The following standardized NMLS forms relating to consumer loan licensing are approved and adopted by reference: Except as provided in ARM 2.59.312, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(a) NMLS company form dated September 12, 2015;

(b) NMLS branch form dated March 31, 2014; and

(c) NMLS individual form dated September 12, 2016.

(3) The following state-specific forms on the NMLS are approved and adopted by reference:

(a) Montana consumer loan license new application checklist dated October 7, 2016;

(b) Montana consumer loan license amendment checklist dated August 31, 2015;

(c) Montana consumer loan license surrender checklist dated September 8, 2016;

(d) Montana consumer loan branch new application checklist dated August 31, 2015;

(e) Montana consumer loan branch amendment checklist dated August 31, 2015; and

(f) Montana consumer loan branch surrender checklist dated August 31, 2015.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any consumer loan licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a consumer loan license issued by the department.

(4) For renewal, companies, branches, and individuals must go to the NMLS home page (mortgage.nationwidelicensingsystem.org) and select the "Annual Renewal" link under the State Licensing tab and follow the instructions. All applicants for a consumer loan license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

(5) Copies of the standardized NMLS forms are available on the NMLS web site at http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/ MT-Consumer_Loan_License-Company-New-App-Checklist.pdf. All standardized forms to be submitted to the department must be accessed through NMLS and submitted electronically.

 

AUTH: 32-5-209, 32-5-401, MCA

IMP: 32-5-201, 32-5-209, MCA

 

GENERAL STATEMENT OF REASONABLE NECESSITY: The department has identified changes to rules that will streamline regulation and cut red tape. Some of the proposed amendments are technical in nature, such as amending punctuation or updating authority and implementation citations to accurately reflect all statutes implemented through the rules and to provide the complete sources of the department's rulemaking authority.

The department proposes to amend ARM 2.59.310, 2.59.315, 2.59.705, 2.59.1201, and 2.59.1515 to adopt the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports as well as the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports.

The department is updating the website address of the NMLS, the version date of the NMLS Policy Guidebook, and the verbiage in the catchphrase.  It is not necessary to include the full name of the Nationwide Multistate Licensing System as NMLS is defined in 32-9-103, MCA.  In ARM 2.59.310, 2.59.705, 2.59.1201, and 2.59.1515, the department proposes to adopt new (3) to make clear that all relevant license status information on consumer loan, escrow business, sale finance company, and deferred deposit lender licensees is available on the NMLS consumer access website. For consumers who are unfamiliar with NMLS, new (3) explains that entities not listed on NMLS consumer access are not licensed by the department.

 

2.59.315 LICENSE SURRENDER (1) A licensee shall submit a license surrender request through the NMLS. If the surrender is accepted by the department, the license will be shown as "terminated-surrendered/cancelled" on the NMLS.

(2) and (3) remain the same but are renumbered (1) and (2).

 

AUTH: 32-5-205, 32-5-209, MCA

IMP: 32-5-205, 32-5-209, MCA

 

2.59.705 ADOPTION OF STANDARDIZED FORMS AND PROCEDURES OF THE NATIONWIDE MULTISTATE LICENSING SYSTEM (NMLS) (1) The NMLS Policy Guidebook dated July 23, 2012 September 27, 2021, is approved and adopted by reference. It can be found at mortgage.nationwidelicensingsystem.org/licensees/resources/LicenseeResources/NMLS%20Guidebook%20for%20Licensees.pdf and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.

(2) The following standardized NMLS forms relating to escrow business licensing are approved and adopted by reference: Except as provided in ARM 2.59.707, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(a) NMLS company form dated September 12, 2015;

(b) NMLS branch form dated March 31, 2014; and

(c) NMLS individual form dated September 12, 2016.

(3) The following state-specific forms on the NMLS are approved and adopted by reference:

(a) Montana escrow business company new application checklist dated January 23, 2017;

(b) Montana escrow business company amendment checklist dated January 23, 2017; and

(c) Montana escrow business company surrender checklist dated September 1, 2015.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any escrow business licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold an escrow business license issued by the department.

(4) For renewal, companies, branches, and individuals must go to the NMLS home page (mortgage.nationwidelicensingsystem.org) and select the "Annual Renewal" link under the State Licensing tab and follow the instructions. All applicants for an escrow business license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

(5) The standardized NMLS forms are available on the NMLS web site at mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/MT-Consumer_Loan_License-Company-New-App-Checklist.pdf. All standardized forms submitted to the department must be accessed through NMLS and submitted electronically.

 

AUTH: 32-7-108, 32-7-112, MCA

IMP: 32-7-109, 32-7-112, MCA

 

2.59.1201 ADOPTION OF STANDARDIZED FORMS AND PROCEDURES OF THE NATIONWIDE MULTISTATE LICENSING SYSTEM (NMLS) (1)  The NMLS Policy Guidebook dated July 23, 2012 September 27, 2021, is approved and adopted by reference. It can be found at http://mortgage.nationwidelicensingsystem.org/licensees/resources/LicenseeResources/NMLS%20Guidebook%20for%20Licensees.pdf and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.

(2) The following standardized NMLS forms relating to licensing are approved and adopted by reference: Except as provided in ARM 2.59.1203, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(a) NMLS company form dated March 31, 2014;

(b) NMLS branch form dated March 31, 2014; and

(c) NMLS individual form dated July 30, 2014.

(3) The following state-specific forms on the NMLS are approved and adopted by reference:

(a) Montana sales finance company new application checklist dated February 11, 2016;

(b) Montana sales finance company amendment checklist dated June 2, 2014;

(c) Montana sales finance company surrender checklist dated May 21, 2014;

(d) Montana sales finance company branch new application checklist dated June 23, 2015;

(e) Montana sales finance company branch amendment checklist dated June 2, 2014; and

(f) Montana sales finance company branch surrender checklist dated June 21, 2014.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any sales finance company licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a sales finance company license issued by the department.

(4) For renewal, companies, branches, and individuals must go to the NMLS home page (http://mortgage.nationwidelicensingsystem.org) and select the "Annual Renewal" link under the State Licensing tab and follow the instructions. All applicants for a sales finance company license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

(5) Copies of the standardized NMLS forms are available on the NMLS web site at http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/MT-Sales_Finance_Company_License-Company-New-App-Checklist.pdf. All standardized forms to be submitted to the department must be accessed through NMLS and submitted electronically.

 

AUTH: 31-1-211, 31-1-223, MCA

IMP: 31-1-223, MCA

 

2.59.1515 ADOPTION OF STANDARDIZED FORMS AND PROCEDURES OF THE NATIONWIDE MULTISTATE LICENSING SYSTEM (NMLS) (1) The NMLS Policy Guidebook dated July 23, 2012 September 27, 2021, is approved and adopted by reference. It can be found at http://mortgage.nationwidelicensingsystem.org/licensees/resources/LicenseeResources/NMLS%20Guidebook%20for%20Licensees.pdf and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.

(2) The following standardized NMLS forms relating to licensing are approved and adopted by reference: Except as provided in ARM 2.59.1516, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(a) NMLS company form dated March 31, 2014;

(b) NMLS branch form dated March 31, 2014; and

(c) NMLS individual form dated July 30, 2014.

(3) The following state-specific forms on the NMLS are approved and adopted by reference:

(a) Montana deferred deposit lender new application checklist dated August 31, 2015;

(b) Montana deferred deposit lender amendment checklist August 31, 2015;

(c) Montana deferred deposit lender surrender checklist dated September 1, 2015;

(d) Montana deferred deposit lender branch new application checklist dated September 1, 2015;

(e) Montana deferred deposit branch amendment checklist dated June 2, 2014; and

(f) Montana deferred deposit branch surrender checklist dated September 1, 2015.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any deferred deposit lender licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a deferred deposit lender license issued by the department.

(4) For renewal, companies, branches, and individuals must go to the NMLS home page (http://mortgage.nationwidelicensingsystem.org) and select the "Annual Renewal" link under the State Licensing tab and follow the instructions. All applicants for a deferred deposit lender license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

(5) Copies of the standardized NMLS forms are available on the NMLS web site at http://mortgage.nationwidelicensingsystem.org/slr/PublishedStateDocuments/MT-Deferred_Deposit_Lender_License-Company-New-App-Checklist.pdf. All standardized forms to be submitted to the department must be accessed through NMLS and submitted electronically.

 

AUTH: 31-1-702, 31-1-705, 31-1-710, MCA

IMP: 31-1-705, 31-1-710, MCA

 

2.59.1701 DEFINITIONS For purposes of the Montana Mortgage Act and this subchapter, the following definitions apply:

(1) through (9) remain the same.

(10) "Table funding" means the closing of a loan naming a mortgage broker, a mortgage broker's business entity, or a loan originator as the lender on the mortgage loan note, which note is then sold to another party within three business days of closing.

(11) and (12) remain the same but are renumbered (10) and (11).

 

AUTH: 32-9-109, 32-9-121, 32-9-130, MCA

IMP: 32-9-109, 32-9-116, 32-9-120, 32-9-121, 32-9-122, 32-9-123, 32-9-133, 32-9-166, MCA

 

STATEMENT OF REASONABLE NECESSITY: The department proposes to amend ARM 2.59.1701 to remove (10) which defines table funding. The definition was used in ARM 2.59.1708 which is proposed to be repealed in this rule notice. If ARM 2.59.1708 is repealed, the definition of table funding is no longer needed.

 

2.59.1707 REVOCATION, SUSPENSION, OR SURRENDER OF LICENSE

(1) and (2) remain the same.

(3) A licensee who surrenders a license while not in compliance with a conditional agreement cannot reinstate the license or obtain a new license for a period of three years after the surrender, unless the conditions that led to the conditional license have been fully resolved.

(3) and (4) remain the same but are renumbered (4) and (5).

 

AUTH: 32-9-130, MCA

IMP: 32-9-126, 32-9-130, MCA

 

STATEMENT OF REASONABLE NECESSITY: The department proposes to amend ARM 2.59.1707 to allow a licensee with a conditional agreement to surrender a license during the conditional agreement period, whether or not the licensee is in compliance with the conditions of the agreement. The department primarily offers conditional agreements to mortgage loan originator (MLO) applicants or existing licensees when it is not clear that they initially meet the financial responsibility standards identified in ARM 2.59.1740. A conditional agreement allows licensure on the condition that the licensee address the licensee's financial situation and report progress every six months to the department over the period of the agreement.

Historically, the department has not allowed licensees with conditional agreements to surrender their MLO licenses unless they were in compliance with the agreement terms or no longer in the mortgage industry. The intention was to discourage an applicant from obtaining a license by entering into a conditional agreement, doing business under the license, and then surrendering the conditional license without satisfying the agreement conditions. Conditional licensees were required to either honor their agreements to maintain their license or face suspension. Most conditional licensees do not want their licenses suspended because license suspensions are public information accessible via the NMLS and must be reported in the disclosure questions on future licensing and/or renewal applications. A person whose license is suspended may have difficulty getting licensed in another state or obtaining employment.

Beginning in March 2020, at the start of the COVID-19 pandemic, the department temporarily amended its guidelines to allow conditional licensees to surrender their licenses for any reason, and the licenses were not suspended. As the conditions of the pandemic wind down, the guidelines were revisited, and the department determined its concerns about conditional licensees surrendering licenses without meeting the conditions of their agreement could be addressed without a license suspension. Instead, in such circumstances, the department is proposing to allow those who have not satisfied agreement conditions to surrender their licenses with the limitation that they may not obtain another license for three years unless they have resolved the circumstances that led to conditional licensure. The three-year timeframe was chosen to allow licensees sufficient time to address their financial situation with the expectation that by the end of three years, they could reapply and satisfy the financial responsibility requirements for licensure without entering into new conditional agreements. The three-year limitation should not apply if a person who previously surrendered a conditional license has fully resolved the circumstances that led the department to impose conditions, and the department has no other reason to deny or condition licensure.

 

4. The department proposes to repeal the following rules:

 

2.59.313 INITIAL LICENSE APPLICATION THROUGH NMLS

 

AUTH: 32-5-201, 32-5-209, MCA

IMP: 32-5-201, 32-5-209, MCA

 

GENERAL STATEMENT OF REASONABLE NECESSITY: The department proposes to:

 

These revisions will streamline the regulatory process, cut red tape, and make it easier for applicants for consumer loan, escrow business, sales finance, and deferred deposit loan licenses to access relevant licensing information by placing related material in one rule. License applicants can go to the NMLS for all actions necessary to apply for, maintain, make changes to, and surrender their licenses. This "one-stop shop" centralizes all information and actions related to licenses issued by the department in one place. The NMLS allows everyone (applicants, licensees, and members of the public) quick and easy online access to licensing data and streamlining the administrative rules will help people find the applicable rules.

 

2.59.314 AMENDMENTS

 

AUTH: 32-5-209, MCA

IMP: 32-5-209, MCA

 

2.59.316 FEES

 

AUTH: 32-5-201, 32-5-209, MCA

IMP: 32-5-201, 32-5-209, MCA

 

2.59.708 INITIAL LICENSE APPLICATION THROUGH NMLS

 

AUTH: 32-7-109, 32-7-112, MCA

IMP: 32-7-109, 32-7-112, MCA

 

2.59.709 AMENDMENTS

 

AUTH: 32-7-109, 32-7-112, MCA

IMP: 32-7-109, 32-7-112, MCA

 

2.59.710 LICENSE SURRENDER

 

AUTH: 32-7-112, MCA

IMP: 32-7-112, MCA

 

2.59.711 FEES

 

AUTH: 32-7-110, 32-7-112, MCA

IMP: 32-7-110, 32-7-112, MCA

 

2.59.1204 INITIAL LICENSE APPLICATION THROUGH NMLS

 

AUTH: 31-1-221, 31-1-223, MCA

IMP: 31-1-221, 31-1-223, MCA

 

2.59.1205 AMENDMENTS

 

AUTH: 31-1-223, MCA

IMP: 31-1-223, MCA

 

2.59.1206 LICENSE SURRENDER

 

AUTH: 31-1-223, MCA

IMP: 31-1-223, MCA

 

2.59.1207 FEES

 

AUTH: 31-1-223, MCA

IMP: 31-1-223, MCA

 

2.59.1517 INITIAL LICENSE APPLICATION THROUGH NMLS

 

AUTH: 31-1-705, 31-1-710, MCA

IMP: 31-1-705, 31-1-710, MCA

 

2.59.1518 AMENDMENTS

 

AUTH: 31-1-710, MCA

IMP: 31-1-710, MCA

 

2.59.1519 LICENSE SURRENDER

 

AUTH: 31-1-710, MCA

IMP: 31-1-710, MCA

 

2.59.1520 FEES

 

AUTH: 31-1-705, 31-1-706, 31-1-710, MCA

IMP: 31-1-705, 31-1-706, 31-1-710, MCA

 

2.59.1708 TABLE FUNDING REQUIRES LICENSURE

 

AUTH: 32-9-130, MCA

IMP: 32-9-102, MCA

 

STATEMENT OF REASONABLE NECESSITY: The department proposes to repeal ARM 2.59.1708 as this rule dates from the time before the division licensed mortgage lenders. This rule is no longer necessary, because now an entity that is table funding would be licensed as a lender.

 

5. Concerned persons may present their data, views, or arguments concerning the proposed action to Kelly O'Sullivan, Legal Counsel, Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546; faxed to the office at (406) 841-2930 or by e-mail to banking@mt.gov. Comments must be received no later than 5:00 p.m., January 20, 2022.

 

6. If persons who are directly affected by the proposed actions wish to express their data, views, or arguments orally or in writing at a public hearing, they must make written request for a hearing and submit this request along with any written comments to the person listed in 5 above no later than 5:00 p.m., January 4, 2022.

 

7. If the Division of Banking and Financial Institutions receives requests for a public hearing on the proposed action from either 10% or 25, whichever is less, of the persons directly affected by the proposed action; from the appropriate administrative rule review committee of the Legislature; from a governmental subdivision or agency; or from an association having not less than 25 members who will be directly affected, a hearing will be held at a later date. Notice of the hearing will be published in the Montana Administrative Register. Ten percent of those directly affected has been determined to be 608 persons based on the combined total of 210 consumer loan companies, 9 escrow business companies, 122 sales finance companies, 242 mortgage brokers, and 5,505 mortgage loan originators licensed in this state. There are no licensed deferred deposit lenders in this state.

 

8. An electronic copy of this proposal notice is available through the department's website at https://doa.mt.gov/administrativerules. The department strives to make its online version of the notice conform to the official published version but advises all concerned persons that if a discrepancy exists between the official version and the department's online version, only the official text will be considered. In addition, although the department works to keep its website accessible at all times, concerned persons should be aware that the website may be unavailable during some periods, due to system maintenance or technical problems.

 

9. The Division of Banking and Financial Institutions maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this division. Persons who wish to have their name added to the mailing list shall make a written request that includes the name, mailing address, and e-mail address of the person to receive notices and specifies that the person wishes to receive notices regarding division rulemaking actions. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written requests may be mailed or delivered to Heather Hardman, Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546; faxed to the office at (406) 841-2930; e-mailed to banking@mt.gov; or may be made by completing a request form at any rules hearing held by the department.

 

10. The bill sponsor contact requirements of 2-4-302, MCA, do not apply.

 

11. The department has determined that under 2-4-111, MCA, the proposed amendment and repeal of the above-stated rules will not significantly and directly impact small businesses.

 

 

By:   /s/ Misty Ann Giles                                    By:   /s/ Don Harris                             

Misty Ann Giles, Director                                  Don Harris, Rule Reviewer

Department of Administration                           Department of Administration

 

Certified to the Secretary of State December 14, 2021.


 
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