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The State Licensing System

State regulators oversee more than banks.  State regulators also license and regulate consumer finance companies, payday lenders, check cashers, debt collectors, money service businesses, mortgage companies, mortgage loan originators, and a host of other financial services providers.

State regulators are the front line for non-depository supervision.  This is because many of these businesses center on single transactions with local customers, a model that necessitates local accountability.

The most powerful tool in the nation for supervising licensed non-depository companies is the Nationwide Multi-state Licensing System and Registry.

What is NMLS?

State regulators developed and launched NMLS in 2004 as a way to license and monitor mortgage loan originators (MLOs) across state lines.  NMLS allows regulators to better coordinate and share information, provides a more streamlined process for licensing, and, through a searchable consumer portal, allows consumers to obtain the licensing status and employment history of their financial services provider.

In the wake of 2008 financial crisis, Congress recognized the value of having a uniform system for accountability and embraced NMLS as the national platform for mortgage supervision.

Building on the success of NMLS as a regulatory and licensing system for the mortgage industry, in recent years state regulators have expanded their use of the System to include other industries such as check cashing, debt collectors, and money service businesses.

Expanding and Improving NMLS

Since establishing NMLS into federal law in 2008, Congress has consistently affirmed the value of NMLS and expanded its role in the licensing of non-banks.

In 2015, Congress passed legislation allowing for a more efficient background check process for all non-banks licensed through NMLS. Whereas a state wishing to conduct a criminal background check through traditional means may wait several weeks and sometimes even months for a response, NMLS communicates directly with the FBI and often receives the same results in just 24 hours.  

Additionally, at the end of 2016, Congress passed legislation allowing state regulators to better share information with one another through NMLS, regardless of the type of non-depository financial service the state regulator supervised.

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