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State Regulatory Developments

Wisconsin Amends Mortgage Loan Originator Licensing Provisions

13 Dec 2019

Wisconsin recently enacted a bill, Senate Bill 457 (SB 457), which, among other things, amends its mortgage loan originator (MLO) licensing provisions.  The amended licensing provisions went into effect on November 28, 2019.

It appears that this bill incorporates certain changes made to the federal SAFE Act under the Economic Growth, Regulatory Relief, and Consumer Protection Act, which grants authority to individuals on a temporary basis to act as MLOs.  Specifically, the bill provides an applicant for an MLO license with temporary authority to act as an MLO while the application is pending with the Department of Financial Institutions if the individual is employed by a licensed mortgage banker or mortgage broker, was a registered MLO or licensed as an MLO in another state, and meets certain other requirements.

Some of the other changes made by the bill, which became effective on November 27, 2019, include the following:

  • Allows a financial institution which has made a loan to a payable-on-death (POD) account owner to, after the account owner dies, withhold the funds needed to satisfy the account owner’s loan obligations from the distributions to the POD beneficiary.
  • Reduces the number of days after certain checks are issued or guaranteed (e.g., certified checks) before the issuing or guaranteeing bank is required to pay individuals for lost, destroyed, or stolen checks.
  • Specifies that if a financial institution is in possession of property subject to garnishment, such financial institution is “liable for the surrender of that property only upon expiration of a reasonable time to comply with or respond to the garnishee summons and complaint.”

Additionally, effective March 1, 2020, certain specific provisions must be included in contracts between financial institutions and independent data processing servicers.  The bill also states that if a financial institution transfers or otherwise makes available to an independent data processing servicer any data from the financial institution’s records, such data will remain the property of the financial institution.