MBA Calls for More Structured Process for Changes in NMLS Requirements

The Mortgage Bankers Association, in a letter this week to the Conference of State Banking Supervisors, said a proposal to provide more structure in changes to the Nationwide Mortgage Licensing System and Registry should allow for considerably more time to allow effective feedback.

The CSBS proposal ( on Public Comments.pdf) calls for a more structured process for future changes to NMLS requirements. The NMLS, created by CSBS, is the system of record for non-depository, financial services licensing or registration in participating state agencies. NMLS is the official system for companies and individuals seeking to apply for, amend, renew and surrender license authorities by 61 state or territorial governmental agencies.

MBA had urged state regulators to propose such a process for the past two years; however, inn its comments, MBA, noted proposed time frames for comments on changes to NMLS requirements (21 days) appears to be too short.

At the center of MBA’s comments is support for the proposal to establish a period of public comment on all updates of not less than 60 days (and in some cases as long as 180 days) for future changes to NMLS policy. However, MBA expressed concern about the proposed standards which would be used to shorten a comment period to as few as 21 days. MBA noted the “good cause” standard in the proposal is undefined, and suggested that a more suitable standard would establish that 21 days should only be provided when there is a written finding that there is an emergency that threatens to harm the NMLS system and consumers.

“As a general matter, MBA opposes comment periods of fewer than 60 days for NMLS policy initiatives unless there is a very strong and compelling reason,” MBA wrote. “At the very least, if a ‘good cause’ standard is adopted, NMLS should provide examples of the limited circumstances that constitute ‘good cause’ and circumstances that do not.”

MBA also suggested if there is an emergency or other compelling reason to require a comment period of fewer than 60 days, the resulting policy should be assigned a reasonable sunset date, to allow a more thoughtful consideration of the change, and a re-proposal issued after the emergency has been addressed, to provide a more reasonable opportunity for stakeholders to comment.

MBA also expressed concern that the current language also excludes instances where the NMLS Policy Committee determines public comment is not required, without providing examples of circumstances where such a finding would be made. “A better approach would be to delete the exclusion and simply say that, ‘as a general matter, any updates affecting outside parties are covered by the policy,'” MBA said. “If, however, there remains a concern that an exclusion is needed, specific examples of circumstances warranting an exclusion should be identified. A written finding by a key official specifying the reasons for the exclusion should also be required.”