Signed into law on August 2, 2017, the Oregon Mortgage Loan Servicer Practices Act (MLSPA) becomes operative January 1, 2018. Temporary regulations implementing the MLSPA will be published tomorrow, giving covered mortgage loan servicers only 60 days to get licensed.

I participated in the temporary rulemaking advisory committee and got several concerns addressed that are described below. Nobody else participated in the temporary rule's advisory process. There were two scheduled advisory calls. I was the only participant on first call and there was only one other participant on second call who had not read the draft.

In the temporary rule, the Division of Financial Regulations was very accommodating to satisfactorily address the following topics:

1. Clarification that settlement agents and other parties involved in the origination and closing of a loan would not be required to obtain a license. Needed because paying principal, interest, taxes, or other escrows constitutes servicing and a payoff could have met that definition.
2. Clarification that loans made through a mortgage broker will not count toward the 5,000 loan small servicer threshold for the lender who funded the loan. Needed because loans originated by a lender are excluded, but loans originated by a third party could have been included.
3. Exemptions for: a) employees of licensed servicers; and b) entities that own mortgage servicing rights, but use a licensed subservicer to conduct all servicing activities. Needed because the statute was silent as to these roles.
4. Exclude registered agents from requirement to submit fingerprints for background checks. Needed because most registered agents are corporations whose only purpose is to pass on notice and service of process to licensees.
5. Clarification that delayed or failed license renewal does not interfere with the obligation to process the consumers payments in a timely fashion. Needed because the Oregon Mortgage Loan Servicer Practices Act prohibits servicing without a license, but federal law requires posting payments in a timely fashion. Consumer harm would be greater if the servicer failed to process the payment than if it renewed a license 30 days late.

I also asked for clarification on these points that were clarified or expect to be addressed in future rulemaking:

1. Clarify whether attorney’s conducting foreclosure, trustees conducting non-judicial foreclosure, bankruptcy attorneys, or licensed servicers may fall within the definition of residential mortgage loan modification service when conducting those activities. The state confirmed that from that list, only licensed servicers would fall within the definition and must provide the disclosures in Section 14 of the Act. However, this was not clarified in the rule itself.
2. Clarify how annual notices must be provided under Section 9(1)(i). The state said it would clarify in its permanent rulemaking. This request was designed to allow servicers sending annual notices in January as well as new loans being onboarded to avoid having additional notices being sent mid-year to conform to the permanent rulemaking.

Final rulemaking will begin later this month.