TN State licensing

Four departments of the Tennessee department of financial institutions

Compliance Bank Consumer resources Credit union

The following are exempt from the licensing requirements of the Act pertaining to lenders, brokers, and servicers:

Depository institutions and their subsidiaries Institutions regulated by the Farm Credit Administration Individuals who offer or negotiate loan terms with or on behalf of an immediate family member. Immediate family members are defined by Tennessee law to include: Spouse Parents Children Siblings Grandparents and grandchildren Stepparents, stepchildren, and stepsiblings Adoptive relationships (Tenn. Code Ann. §45-13-105(7)) Individuals who offer or negotiate the terms of a loan secured by a dwelling that served as their own residence Licensed attorneys who negotiate the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a mortgage lender, broker, or originator

Residential Lending, Brokerage and Servicing Act (the Act)

Found in the Tennessee Annotated Code under Chapter 13 of Title 45, the purpose of the Act is to "ensure a sound system of making residential mortgage loans through the licensing, examination, and regulation of mortgage lenders, mortgage loan brokers, mortgage loan servicers, and mortgage loan originators" and to maintain compliance with the S.A.F.E. Act, which required states to establish uniform licensing requirements for the mortgage industry (Tenn. Code Ann. §45-13-102). Adoption of the Act made Tennessee compliant with the federal S.A.F.E. Act provisions.

Tennessee Home Loan Protection Act (THLPA)

In response to concerns over the conduct of certain mortgage professionals, mortgage lending practices, and consumer fraud issues related to mortgage transactions, Tennessee also adopted a consumer-oriented law in 2006 to address the issues of mortgage fraud, high-cost loans, and unfair and deceptive trade practices in the mortgage lending business. Found in the Tennessee Code under Chapter 20 of Title 45, the legislation is known as

Real estate brokers

Tennessee-licensed real estate brokers who only perform real estate brokerage activities are not required to obtain loan originator licenses unless they are compensated by a mortgage lender, broker, loan originator, or the agent of a lender, broker, or loan originator (Tenn. Code Ann. § 45-13-105(16)(A)(iii)). The law defines "real estate brokerage activity"to include: Acting as a real estate broker or agent for a buyer, seller, lessor, or lessee of real property Bringing together parties interested in the sale, purchase, lease, rent, or exchange of property Negotiating any portion of a contract for the exchange of property Engaging in any activity for which a person must be licensed or registered as a real estate agent or broker Offering to engage in any of the aforementioned activities

Rules Pertaining to Mortgage Lending, Loan Servicing and Loan Brokering (0180-17):

These Rules are issued by the Compliance Division of the Tennessee Department of Financial Institutions.

Home Equity Conversion Mortgages Act (Tenn. Code Ann. §47-30-101 et seq.)

This section of the Tennessee Code includes provisions relevant to reverse mortgages.

Interest on Home Loans (Tenn. Code Ann. §47-15-101 et seq.):

This section of the law includes provisions relating to the maximum rate of interest permitted and requirements related to contracts.

Industrial Loan and Thrift Companies Act (Tenn. Code Ann. §45-5-101 et seq.)

While the scope of this course will not cover this legislation, it is useful for mortgage professionals to be aware of its requirements.

The Consumer Resources Division

handles consumer complaints regarding financial institutions. The Division typically forwards a consumer complaint to the financial institution for a response. If further action or review is warranted, the complaint and response are forwarded to the appropriate division within the Department for further investigation.

The Credit Union Division

is responsible for ensuring the safety and soundness of credit unions in the state. The Division also handles the review and investigation of consumer complaints related to credit unions.

The Bank Division

is responsible for ensuring the safety and soundness of the Tennessee state-chartered banking system. In order to ensure compliance with the governing statutes, the Bank Division periodically examines the financial institutions that it regulates, including state-chartered banks, savings banks, non-depository banks, trust companies, and money transmitters. The Bank Division is responsible for evaluating applications for new institutions, branches, expanded financial services, and corporate reorganizations.

The Compliance Division

is responsible for the licensure and regulatory supervision of mortgage loan originators, brokers, lenders, and servicers, as well as industrial loan and thrift companies and other consumer finance companies. In order to ensure compliance with state and federal laws, the Compliance Division evaluates applications for licensure, issues and maintains licenses and registrations, and periodically examines licensed entities.

Loan processors and underwriters:

n individual engaging solely in loan processor or underwriter activities may not represent to the public, through advertising or other means of communicating or providing information, that he/she can or will perform any of the activities of a mortgage loan originator (Tenn. Code Ann. §45-13-301(c)). Loan processors and underwriters are defined as individuals performing clerical or support duties while working as employees at the direction of, and subject to, a licensee or an exempt person (Tenn. Code Ann. §45-13-105(11)(A)). The law defines "clerical or support duties" to include activities following the receipt of a residential mortgage loan application, such as:

NMLS is not a

state regulatory agency

State regulators

such as the Tennessee Department of Financial Institutions, are still responsible for making licensing decisions after reviewing the information that license applicants submit to them through the NMLS.