What is HEA 1440 and how does it affect Indiana loan brokers?
Starting July 1, 2019, Indiana Secretary of State’s House Enrolled Act No. 1440 (HEA 1440) impacts the way loan brokers conduct their business. HEA 1440 accounts for advancements in technology and current industry practices used by loan brokers. In this article, we highlight the changes in the process of getting and renewing an Indiana loan broker license brought on by this bill, which passed in office on March 26, 2019.
Changes to Indiana legislature for loan originator license regulations are happening.
What surety bond amount is needed for an Indiana loan broker license?
Prior to HEA 1440, Indiana mortgage loan originators needed a surety bond within a range between $50,000 to $75,000. The bond amount was determined by the loan originators loan volume for the previous year. The new bond requirement simplifies this process by requiring a flat amount of $60,000. Due to the reduced bond amount requirement, loan originators with higher loan volumes will most likely have a lower premium at renewal. Indiana loan broker license bonds (Indiana loan broker ESB) are still required to be electronically submitted to the NMLS.
"A static bond amount for the Indian Loan Broker Bond is a welcome change as it makes ongoing license compliance that much easier for licensees. Further, the adoption and use of the ESB over a paper bond increase automation, security and licensing improvements for the mortgage and surety industry."
Changes to the internal management structure within loan broker offices.
The internal management structure of loan broker offices is set to change with HEA 1440. Previously, principal managers could only operate a single loan broker office. Under HEA 1440, all loan broker offices are still required to have a principal manager, however, they can now manage up to five loan broker offices. Modern advancements in technology have made working remotely easier, so loan broker offices don’t need to have a unique principal manager. The principal manager is required to perform an annual audit for each loan broker office they manage.
Branch offices now require a designated branch manager. The Indiana Secretary of State, Securities Division issues the required license to the branch managers. The designated branch manager can be either a mortgage loan originator or a principal manager. The branch manager is responsible for all the branch office employees’ actions.
Does HEA 1440 affect third-party loan processing companies?
Third-party loan processing companies are now required to submit a notice filing yearly through the NMLS and pay a $25 filing fee. Previously, these third-party loan processing companies operated in Indiana with no regulatory oversight. Employees of loan processing companies will need to be licensed as mortgage loan originators. Just as loan brokers are subject to record retention, loan processing companies now are as well. Loan brokers are not allowed to engage with loan processing companies that have not fulfilled their notice filing requirements with the NMLS. Loan brokers are held responsible for thoroughly reviewing work completed by the loan processing company.
When does the license need to be renewed?
License holders are required to submit renewals at least 30 days before the expiration of their license. Licenses expire every year on December 31, so December 1 is the latest a license renewal can be submitted. Late filers were allowed to use the NMLS reinstatement period, however, this isn’t an option anymore. If the filer misses the renewal period, they cannot conduct business until their renewal submission is reviewed by the Indiana Securities Division.
Filing license renewals late isn't allowed going forward. Don't miss your renewal date!
Get free quotes for your Indiana loan broker license surety bond.
The state of Indiana requires loan brokers have a $60,000 surety bond to get their license. The Indiana loan broker ESB is filled with the NMLS. Find out how much a loan broker license bond will cost you using our easy-to-use online application.