NMLS Wants Input On Next-Gen System

The'OM-BOBS-MAN'

NMLS Wants Input On Next-Gen System

By ROBERT NIEMI, MORTGAGE BANKER MAGAZINE CONTRIBUTING WRITER

The Conference of State Bank Supervisors (CSBS) is requesting your input on their latest proposal to develop a ‘next generation’ system to anticipate and accommodate the needs of the Nationwide Multistate Licensing System (NMLS). While first posted on the NMLS Resource Center on March 31, the CSBS first provided insights during the 2021 Annual NMLS Conference and has since followed up with press releases, videos and several podcasts to support the initiative.

NMLS Modernization is a core component of this effort to support how regulators will incorporate Networked Supervision. One video highlights this process as a ‘dynamic’ and ‘collaborative approach’ to regulatory supervision. The video also discusses improvements in technology, increasing collaboration and harmonizing of state policies as part of the effort. While Networked Supervision may not be as visible to the mortgage industry, the money services businesses have experienced this regulatory coordination for several years.

One area where mortgage companies have experienced Networked Supervision is the implementation of the State Examination System or SES. While state regulators have worked to align examination processes for larger companies, the SES is in the final deployment for state regulators. The SES utilizes information captured from within the NMLS from licensing data and mortgage call reports. This data is then risk evaluated to help focus multistate exams on companies with increased potential risk.

The SES also shows more of the concept of Networked Supervision by how the state regulators share information, data, and coordinate efforts while relying on other state regulator’s work as part of the examination process. This includes full information sharing among states, common standards, data standardization and interdependent reviews to formulate the examination report. The concept of One Company, One Exam has also recently evolved to mortgage.

A modernized NMLS is also crucial for improved technology platforms that support a data driven and automated process. This is not NMLS 2.0 but a framework for how the technology will evolve to support the coordinated licensing and supervisory process that is to become the foundation of the modernized NMLS. Once achieved, NMLS could then provide a more user-friendly system for applicants, licensees and regulators.

There are also goals for a single point of contacts where one state regulator takes the lead on multistate applications, changes in control and more. The alignment of application information, how the information is processed will be crucial for Networked Supervision to succeed.

Networked Supervision is not new, but this evolution of the Networked Licensing Model is novel for mortgage licensing. While the core components of the state specific license requirement are based in the federal SAFE Act, ten years of regulation has brought alignment and disagreement in how states review applications and to process changes in control. So this challenge can benefit from your company’s review and comment on this proposal.

Each company holding an NMLS license should submit one single response that represents the company’s comments and feedback. Please note that submissions must include company contact information.

Your comments should be emailed to comments@csbs. org by May 31.

ROBERT NIEMI