NMLS: WHAT’S AHEAD And a Look at Where NMLS is Today 2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015.

2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

NMLS: WHAT’S AHEADAnd a Look at Where NMLS is Today

Today’s Presentation

• Where we were

• What’s ahead

• NMLS Strategy

NMLS: WHERE WE WEREKeisha Whitehall Wolfe

Assistant Commissioner of Nondepository Oversight

Maryland Department of Labor, Licensing and Regulation

2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

NMLS: Where We Were• Purpose and goals of NMLS

• General snapshot of who is using NMLS for licensing

• Trends we have observed

NMLS – Original Purpose and Goals• Information Sharing for States

• Uniform Application Data• Multiple Regulator Review• NMLS ID – Unique Entity Tracking• Consistent Validation

• Started with mortgage industry then expanded to other supervised financial services in 2012

NMLS To Date• 61 state agencies manage 565 licenses through NMLS.

• 34 agencies managing 167 non-mortgage licenses authorities

• Another 6 agencies plan on adding 13 additional non-mortgage license authorities to NMLS by March of 2016.• Oregon bringing on collection agencies in 2016

• States manage 2,142 checklists through the NMLS Resource Center

Basic to Complex• Basic Goals and Functionality

• Singular Industry• Provide Better Information for Consumers• Uniform forms for applications

• Accomplishments and More Complex Functionality• Facilitated better information sharing for states• Succeeded in providing Better Information for Consumers • Reduced Regulatory Burden for Industry and Regulators by Streamlining

Multiple Processes

Who is in NMLS?

Federally Registered 2013 2014

Institutions 10,848 10,566

MLOs 404,239 398,492

State licensed Entities Licenses Entities Licenses

Companies 18,993 39,903 19,882 44,020

Branches 23,467 43,066 25,583 49,904

MLOs 130,311 331,351 131,725 359,992

2013 2014

Debt Collector Licensees in NMLS

• Companies: 1,047

• Total state licenses held: 2,383

State Agency License Description Approved Licenses

ID Collection Agency License 278

IN-SOS Collection Agency License 729

MA Debt Collector 403

ND Collection Agency License 503

RI Debt Collector Registration 470

Debt Licensees by Size• 46% of the companies are licensed

in more than one state.

1 2 3 4 5-200

100

200

300

400

500

600

700

800

720

13197

131150

Number of NMLS Licenses Held

Nu

mb

er

of

Co

mp

an

ies

Debt Collectors in NMLS

1 2 3 4 5-20 21-50 50+0

50

100

150

200

250

300

350

400

450409

9581 83

152

78

130

Number of States Where Company Conducts Debt Collection

Nu

mb

er

of

Co

mp

an

ies

As reported on company’s NMLS Licensing Form

• Self-reported business activity shows over half of the companies that engage in debt collection do so in more than one state.

Focus on Debt Licensees in NMLS

• Total Debt-related Licenses: 16

• Debt Collection: 6• Debt Management: 4• Debt Adjuster 3• Debt Settlement 2• Debt Negotiator 1

Using NMLS

Consumer loan lend-

ing

Payday lending - storefront

Consumer loan servic-

ing

Sales fi-nance

company activities - motor ve-

hicles

Consumer loan bro-

kering

Title lend-ing

Payday lending -

online

Third party debt collec-

tion

First party debt collec-

tion

Check cashing

Selling money orders

Electronic money

transmit-ting

0

300

600

900

1,200

1,500

1,800

930

679

342 336 329282

61

886

390

1,597

633559

Consumer Finance Debt Money Services

Comparison of Maryland Debt-Related Licensees with Entities in NMLS

License Category No Yes Grand Total

% with likely match in NMLS

1 536 325 861 38%

2 37 164 201 82%

3 43 133 176 76%

4 545 1194 1739 69%

8 25 2 27 7%

9 277 95 372 26%

14 2 37 39 95%

15 14 16 30 53%

28 13 1 14 7%

Grand Total 1492 1967 3459 57%

Maryland Licensee Comparison• Debt Collection – 69 percent overlap• Debt Management – 95 percent overlap

• Total Overlap (debt, consumer finance, installment loan) - 57 percent overlap

Policy Initiatives• NMLS Information

• Since 2008, NMLS data expanded in scope & quality• New Analytical tools & data available to states

• MCR Analytics software• Renewal Dashboard

• Public Comment• Uniform Forms• Mortgage Call Report• NMLS Consumer Access

NMLS Enhancements 2015

NMLS Enhancements, First Half 2015 Highlights

• Mortgage Call Report Enhancements• Licensees can report servicing activity and more accurate application

information.• Changes were deployed starting in April, the first day to report Q1 2015

MCR information.

• Remove “The Wall” for State & Federal Regulators• Per the CFPB contract with SRR, state and federal regulators will have

access to information about licensed & registered MLOs through NMLS. • PPI/other confidential information not part of this information.

NMLS Enhancements 2015• NMLS Enhancements, First Half 2015 Highlights (continued)

• Improvements to Advanced Change Notice processing • Merge ACN list & Regulator Worklists. • Redline Display Enhancements

• New Learning Management System• Industry and regulators now have access to live and recorded training webinars. • The NMLS Call Center can provide better support callers based on their specific

situation.

• Complete NMLS maintained license and registration history for entities in NMLS Consumer Access and B2B

NMLS Enhancements 2015• NMLS Enhancements, Second Half 2015 Highlights

• Renewal Improvement• Individual Renewal Dashboard• Better notification on renewal submissions

• Usability• Access to historical document uploads in Composite View• Company Name in Banner

NMLS: WHAT’S AHEADUpcoming Enhancements in 2015-2016

Sue Clark

Director, Regulatory and Consumer Affairs Banking Division Vermont Department of Financial Regulation

Chair, NMLS Policy Committee

2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

NMLS Enhancements 2016 and Beyond

• State Agency Manager’s Dashboard

• MCR Examiners Report

• Surety Bond Management

• FBI RapBack Program

• Money Services Business (MSB) Call Report

NMLS Enhancements 2016 and Beyond

• Data Analytics & User Reporting

• NMLS Consumer Access

• Consumer Complaint Processing

• Exam Management Tool Suite (EMTS)

Exam Management Tool Suite

3

Mission Statement:

To develop a full-service examination management suite of tools for state agency use for single, multistate, and state/federal non-depository examinations while adopting and aligning with, to the fullest extent practicable, the examination tool being developed by CFPB. Record retention, file transmission and other functionality will also be available to state agencies for depository examinations.

SelectExaminee

ScheduleExamination

Scope Examination

InformationRequests

Conduct Examination

ManageExit Meetings

Report of Examination

Post-ExamActivities

SurveyExaminees

RecoverExam Costs

Archive & Retrieve Exams

Examinee Portal

CORE EXAMINATION MANAGEMENT FUNCTIONS

SystemIntegration

Security/AccessControl

WorkflowManagement

DocumentManagement

Alerting & Notification

Communication

Management

NMLSReporting &

AnalysisPerformanceEvaluation

AdministrationFunctions

Inter-AgencyCoordination

AccountingFunctions

SUPPORTING FUNCTIONS & SYSTEMS

Track Examiner Training

General System

Requirements

Data Presentation

EMTS Components

Version 1.1 01/12/2015

Current Status• RFP for vendor issued July 21st. Vendor selection by end

of the year.• CSBS will continue to work with CFPB to ensure ability to

share information/materials• State Examiner working groups will continue to provide

input and on functionality. • A State Industry working group will provide input on

examinee portal and other elements of the tool

Policy Initiative – FBI Checks for Non-MLOs

• Since 2011, SRR has been seeking approval by the FBI to process criminal background checks on individuals other than MLOs required under state law to have an FBI background check conducted

• The FBI and the Compact Council of state criminal justice agencies have been reluctant to approve because they want all requests to the FBI to go through the state police

• This results in multiple FBI checks when an individual seeks licensure in multiple states

• To address concerns, SRR has proposed the following:• SRR will conduct a single FBI check and facilitate a state check in the home state of

the individual• SRR will collect a surcharge and provide this to the state criminal justice agencies for

the purposes of improving their systems that provide data to the FBI

• The Compact Council has established a working group to develop the details of this proposal and is expected to make an approve/not approve decision by November

• CSBS is also pursing federal legislation that would allow (but not require!) NMLS to process criminal background checks with the FBI when required under state law.

Policy Initiative – FBI Checks for Non-MLOs

NMLS STRATEGYBill Matthews

President and CEO, SRR

2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

NMLS Modernization• Phase 1-SRR Transition & Modernize selected functions

• Vendor reliance• Shifting to primary from secondary role on key functions

• Phase 2-Strategy Development• Review and assessment of NMLS Code• Strategic Business and IT drivers and considerations• Selecting a modernization solution

• Phase 3-Strategy Implementation• Modernizing current system and functionality• Future functionality

31

NMLS Strategy DriversSTRATEGY

• CSBS strategy requires a system that supports the current strategic plan:

• System enhancements

• Expansion industries

• NMLS back office

• State IT needs

• The current core licensing code:

• Does not meet current business needs

• Is not well suited to serve as a solid foundation for new functionality and capabilities

BUSINESS CHALLENGES AND CONSIDERATIONS

(Details on next slide)

TECHNOLOGY CHALLENGES AND CONSIDERATIONS

(Details on next slide)

32

BUSINESS CHALLENGES AND CONSIDERATIONSCulture: CSBS culture is risk adverse.

Reputation: NMLS performance, reliability, security and accuracy which impact CSBS reputation.  

Policy: Changes in regulatory requirements and user needs may require changes that introduce significant risks (cost, reliability, etc.).

IT Management: SRR is evolving to transition from a secondary role to a primary role in managing and modernizing NMLS.

Financial: Current core NMLS licensing system is unnecessarily costly to maintain and modify going forward.

Contract: Current NMLS support contract expires April 2018. The timing of modernization strategies (roadmaps) should consider this constraint.

TECHNOLOGY CHALLENGES AND CONSIDERATIONS

Application Architecture: NMLS has an architecture that is risky, error prone and difficult to change and is not able to support future needs.

Code Quality: Independent analysis by two vendors identified numerous challenges and issues in the quality of NMLS code. Both vendors independently suggested a system rewrite.

Database Architecture: NMLS uses aging (inefficient and complex) methods to manage and store data and adds unnecessary risk.

Customer Experience: Multiple stakeholders of NMLS have consistently reported that the usability of the system is not intuitive.

33

Strategy Development

StrategyRecommendation

• Risks• Benefits• Cost• Approach• Schedule• Staffing

StrategicRequirements

Analysis

• Support for New License Types (Expansion)• Support for New Functions• Better Usability

NMLS Code Analysis

• Assessment of Code Quality

• Assessment of Software Architecture

• Assessment of Usability

StrategyAlternatives

The current system state is just one of numerous criteria that was taken into consideration by the strategy consultant (Booz, Allen, Hamilton) in arriving at a strategy recommendation.

34

Platform Subscription

b

Strategy Alternatives Considered

Fix Current Solution

Rebuild

Software Subscription

Status Quo

1

2

a

c

Continue to use existing system and accept associated risks, costs, and limitations.

Make improvements to existing system in order to address some risk, cost and limitations.

Build a new system with custom code that will use modern technologies and best practices.

Build on top of an existing platform (e.g., Salesforce) that supports most current/future needs. Custom “Software” layer enables flexibility on user interface.

Integrate multiple software solutions that support current/future needs, with little or no customization.

Infrastructure

Platform

Software

Infrastructure

Platform

Software

Infrastructure

Platform

Software

Developed and Managed by CSBS

Subscribed as a Service

Rep

lace

3