The Ohio Division of Financial Institutions (DFI) recently provided the much-needed updates to the recent legislation that expanded the registration requirements under the Ohio Residential Mortgage Lending Act (RMLA). The bill, HB 489, was passed unanimously in December 2018 and signed by Gov. Kasich in his last days in office. The expanded RMLA will now require companies that engage in mortgage servicing activities in Ohio to obtain a certificate of registration. The expansion of the RMLA now extends to both direct mortgage servicers and entities that merely hold mortgage servicing rights (MSRs).
Although there is not an official effective date yet, if companies apply for a Certificate of Registration by March 31,, 2019, the DFI will not take any action for unlicensed activity, even if the registration process is not complete before the effective date. The application checklist is now on the NMLS, and we note that the process and requirements are very similar to previous application requirements.
Companies that currently hold a RMLA Certificate of Registration for mortgage origination activities must update their business activities on the NMLS by the end of the year to indicate that they will engage in mortgage servicing in Ohio. Practically though, this should be updated prior to renewal so that renewal filings and attestations will be accurate.
No In-State Office Requirement
There is no Ohio in-state office requirement with the new changes to the RMLA. Several third parties have suggested that in-state office requirements may exist under the RMLA. This confusion is a holdover from the previous language modification made under HB199 in 2017. That change brought the registration of mortgage lenders and mortgage brokers, as well as the licensing of mortgage loan originators, under one act, Ohio Revised Code 1322 (i.e., the Ohio Residential Mortgage Lending Act). Bob Niemi, Senior Advisor with Bradley’s Financial Services team, was heavily engaged in the 2017 language modification process while working with the Ohio Mortgage Bankers Association. The language was intended to require registration for all locations within the state of Ohio where residential mortgage activities take place. It was not intended to require registered entities to maintain an in-state office requirement, and the latest changes do not impose such a requirement.
The existing requirements of the RMLA, including registration of branches, will apply to mortgage servicers under HB 489 with one general exception. A company applying for a new Certificate of Registration as a mortgage servicer must designate an Operations Manager. However, the DFI has stated that if the company only engages in servicing activities and will not engage in mortgage origination or brokering activities, the operations manager will not be required to be a licensed Ohio mortgage loan originator.