From the Surety & Fidelity Association of America
States are moving quickly in 2009 to implement Title V of the Housing and Economic Recovery Act of 2008, a sweeping housing bill Congress enacted last year. Among other provisions, the new federal law contains a comprehensive new system for licensing and regulating mortgage originators. Under the new federal law, state mortgage originators will have to be state-licensed under new minimum licensing standards that the law creates for the states. Among the licensing requirements is a net worth or surety bonding requirement. This means that every state must have either a net worth requirement, surety bond or a recovery fund in place for mortgage originators in the next two years.
Many states are using the model legislation of the Conference of State Bank Supervisors (CSBS) as a basis for their legislation to comply with the new federal requirements. The model legislation merely instructs the states to choose one of the three required options and gives the state banking commissioner the authority to promulgate regulations implementing the option chosen. SFAA and AIA have focused on addressing two major issues in connection with this legislation: bills with high bond amounts that may make the bond hard to obtain, and use of a recovery fund or net worth requirement instead of a bond. The following is the status of bills that have been moving within the last month, as well as new introductions since SFAA’s January report.
