A pair of bills signed into law in North Dakota have established a new licensing scheme for mortgage professionals within the state, including a specific application to reverse mortgage servicing.
North Dakota House Bill 1068 establishes the creation of a North Dakota residential mortgage loan servicing license, which is required in order to engage in such activities within the state, including acting as a mortgage servicer, subservicer or mortgage servicing rights (MSR) investor.
The bill defines a reverse mortgage as “a loan collateralized by real estate, typically made to borrowers over [55] years of age, which does not require contractual monthly payments and is typically repaid upon the death of the borrower through the sale of the home or refinance by the heirs.”
Among the reverse mortgage-related provisions, the new law explicitly restrict from the definition of a “large servicer” the “servicers solely owning or conducting reverse mortgage servicing, or both, or the reverse mortgage portfolio administered by the large servicer.”
The bill’s definition of “residential loan servicing” describes that in the case of either the Federal Housing Administration (FHA)-sponsored Home Equity Conversion Mortgage (HECM) or for reverse mortgages outside the HECM program, “servicing includes making payments to the borrower.”
The performance of reverse mortgage servicing is also codified into the definition of what it means to service a loan.
According to an analysis of the new law by law firm Ballard Spahr LLP, “the statutory language is not clear regarding the types of activities covered by the new licensing requirement.”
North Dakota Senate Bill 2090 also changes the state’s licensing requirements for residential mortgage lending activity, moving the appropriate license from the North Dakota Money Broker License to a new residential mortgage license.
The new license requirements and the law will go into effect on August 1, 2023. North Dakota Gov. Doug Burgum signed HB 1068 into law on April 12, following his March signing of SB 2090.
