NMLS Mortgage Continuing Education Fraud Settlement

February 12th, 2022 by Sean A. Stephens, Esq., CMB®

Update – NMLS Mortgage Continuing Education Fraud Settlement

I previously posted about an NMLS Continuing Education Cheating Scheme Investigation. This involved a multi-state fraud scheme where a mortgage education course provider gave false continuing education certificates to mortgageNMLS Mortgage Continuing Education Fraud Settlement loan originators (“MLOs”) in order to meet their education requirements.

The cheating scheme resulted in a mortgage continuing education fraud settlement due to the separate administrative actions brought by the California Department of Financial Protection and Innovation, Oregon Division of Financial Regulation, and the Maryland Office of the Commission of Financial Regulation.

As published on Oregon.gov , the actions were against Danny Yen and his family for “providing false certificates and taking courses on behalf of mortgage loan originators through other education providers in violation Mortgage Education Fraud Settlementof the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act).”

It further reported that the settlement included that the Yen family agree to a “lifetime ban from direct and indirect involvement in businesses that provide mortgage lending-related education”, a $75,000 fine, and an agreement for full cooperation by the Yen family. Any violation can have severe implications because it would obligate them to pay a “$15 million noncompliance penalty.”

On other related notes, the CSBS reported that this action followed a separate multi-state settlement that involved forty-four state financial agencies who reached settlements with 441 MLOs. The MLOs in question had deceptively claimed to have obtained their annual continuing education (“CE”) per state and federal requirements.

As a reminder, the SAFE Act requires that MLOs obtain at least 20 hours of pre-licensure education along with a minimum of eight hours of continuing education on an annual basis.Multi-State Mortgage Continuing Education Fraud Settlement

Additionally, the CSBS explained that through the settlements entered into by the MLOs, they agreed to surrender their licenses for a period of three months, pay a $1,000 fine to each participating state where they are licensed, and complete continuing education beyond what is request by federal and state SAFE Act requirements.

Moreover, for anyone who thinks three months is a slap on the wrist, just remember that when they re-apply after the three months have expired, it does not guarantee their license will be approved by the state regulators. Additionally, those MLOs will need to provide adequate disclosures where applicable regarding their involvement in the cheating scheme.

Sean A. Stephens, Esq., CMB® 

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