Mortgage Servicer Frequently Asked Questions
The Department does not provide legal advice or guidance as to a whether a company’s activities require licensure. It is important that a company consult with their legal counsel to determine if their activities necessitate licensure. All citations are referencing the Mortgage Licensing Act. Act 81 and the updated act incorporating the changes can be found on the Generally Assembly page.
1. Who needs to be licensed as a mortgage servicer?
A person who engages in the mortgage loan business by directly or indirectly servicing a mortgage loan (master servicer or subservicer), however Section 6111 (a)(b)(1)(ii) specifically excepts a mortgage lender who acts as a servicer for mortgage loans they originated, negotiated and own.
2. Are there any exceptions to the licensing requirements as a mortgage servicer?
The full listing of Exemptions should be reviewed in Section 6112 of the Mortgage Licensing Act, however some of the questions presented are answered below;
a. Does a subsidiary of a bank require a mortgage servicer license to service mortgage loans?
No, Section 6112(1) provides the specific language and requirements in which they are excepted.
3. Do I need a license if I own master servicing rights, but use a subservicer to perform the servicing duties?
b. Does an affiliate of a bank or a subsidiary or affiliate of a credit union require a mortgage servicer license to service mortgage loans?
No, Section 6112(7) provides the specific language and requirements in which they are excepted.
c. Do I need to be licensed as a mortgage servicer to service business or commercial loans?
No, Section 6111(c) states that the Act does not apply to mortgage loans made for business or commercial purposes.
d. Do I need to be licensed as a mortgage servicer if I only make or service a few mortgage loans?
Section 6112(3) specifically excepts from the licensing requirements “A person who originates, services or negotiates less than four mortgage loans in a calendar year, unless determined to be engaged in the mortgage loan business by the department.”
e. Does a licensed “Mortgage Consumer Discount Company” need to apply as a Mortgage Servicer to service the mortgage loans that it has originated and owns?
No, a “Mortgage Consumer Discount Company” is a hybrid license type which consists of a Consumer Discount Company License from the Consumer Discount Company Act and a Mortgage Lender license from the Mortgage Licensing Act. As such, a Mortgage Consumer Discount Company would be included in the licensed activity exceptions noted in Section 6111(b)(1)(ii) which states that “(1) A mortgage lender may: (ii) Act as a mortgage servicer without a separate mortgage servicer license for mortgage loans the mortgage lender has originated, negotiated, and owns.”
f. As a bona fide nonprofit organization registered in accordance with Section 6112(8), do I need to be licensed as a mortgage servicer to service mortgage loans which I originated, negotiated and own?
No, refer to Section 6112(8) which provides the specific requirements to qualify for exemption.
g. As an installment seller licensed under the Consumer Credit Code (12 Pa. C.S. Ch. 62) and registered under Section 6112(13), do I need to be licensed as a mortgage servicer to service manufactured home installment sale contracts which I originated, negotiated and own?
No, refer to Section 6112(13) which provides the specific requirements to qualify for exemption.
h. As a sales finance company licensed under Consumer Credit Code (12 Pa. C.S. Ch. 62), do I need to be licensed as a mortgage servicer to service manufactured home installment sale contracts which I purchased from a licensed installment seller which was registered under Section 6112(13)?
No, the exception language in Section 6112(13) includes “…or holder of installment sales contracts secured by, manufactured homes…” entered into by an installment seller registered under Section 6112(13) of the Mortgage Licensing Act.
Yes. Both the owner of master servicing rights and the subservicer are required to obtain mortgage servicer licenses.
4. Do I need a license if I own the loan but not the master servicing rights?
A company which owns a loan but does not service the loan, either as a master servicer or a subservicer, is not required to be licensed as a mortgage servicer. A company which originated and negotiated a mortgage loan, but then sold the loan while retaining servicing rights, either as a master servicer or as a subservicer, is required to be licensed as a mortgage servicer.
5. I am currently a PA licensed Mortgage Lender. Do I need a servicing license to service my loans?
No, as long as you originated, negotiated and own all the loans you service.
6. What does it mean to have “originated, negotiated and own” as in Section 6111 (b)(1)(ii)?
This is referring to the Mortgage Lender who appears on the Closing Disclosure that continues to own the loan after consummation.
7. Can a licensed mortgage servicer provide loan modifications without any separate license?
Yes, a licensed mortgage servicer has the authority to service mortgage loans, which includes offering loan modifications. However, the term mortgage loan modifications, does not include any agreement to refinance a mortgage loan into a new mortgage loan.
8. I am a licensed mortgage lender but I have ceased making new loans. If I surrender my mortgage lender license, do I need a mortgage servicer license to continue to service loans which I made and held when I was licensed as a mortgage lender?
Yes, the authority in Section 6111(b)(1)(ii) for a mortgage lender to service loans which the mortgage lender originated, negotiated and owns is under the heading “Licensed activity exceptions”. Once a lender surrenders or otherwise loses its license, it loses the authority under Section 6111(b)(1)(ii) and would need to be licensed as a mortgage servicer in order to continue servicing such mortgage loans.
9. Are mortgage servicers required to have a licensed mortgage originator?
No, a separate mortgage originator license is not required for the mortgage servicer license.
10. Are mortgage servicers required to have a Qualifying Individual / Branch Manager at each location?
Yes, each licensed location, including branches, must have a Qualifying Individual / Branch Manager who:
11. When can I apply?Applications are being accepted in NMLS beginning on April 1, 2018.
(1) Is a mortgage originator or meets the licensing requirements of a mortgage originator;
(2) Is a management-level officer assigned to the licensed location; and
(3) Lives within 100 miles of the licensed location.
12. Where do I apply for the license? Applications are to be submitted through NMLS.
13. If I need assistance using the NMLS system, who do I contact?
Access the NMLS Resource Center – Getting Started: State-Licensed Companies. In addition, the NMLS call center is available Monday – Friday from 9:00 AM to 9:00 PM Eastern Standard Time and can be reached at 1-855-NMLS123 (1-855-665-7123).
14. What is the deadline for application without penalty for unlicensed activity?
Any person currently engaging in the mortgage servicing business in Pennsylvania MUST submit an application through NMLS by June 30, 2018.
15. What happens if I fail to apply by June 30, 2018 but continue to engage in mortgage servicing?
Anyone operating as a mortgage servicer without having applied for licensure by June 30, 2018, or anyone operating as a mortgage servicer after being denied for licensure will be considered unlicensed and subject to the penalties in Section 6140.
Section 6140. Penalties. (a) Persons operating without licenses.--A person subject to the provisions of this chapter and not licensed by the department who violates any provision of this chapter or who commits any action which would subject a license to suspension, revocation or nonrenewal under section 6139 (relating to suspension, revocation or refusal) may be fined by the department up to $10,000 for each offense.
16. What if I still have questions?
The Department does not provide legal advice so it is important that you consult with your legal counsel and your industry associations. The Department website includes licensing and regulatory information including the Mortgage Licensing Act and Regulations. Act 81 and the updated act incorporating the changes can be found on the General Assembly page.