Mortgage Broker/Lender Examinations Overview
Pursuant to the Official Code of Georgia Annotated (O.C.G.A.) Section 7-1-1009, the Department of Banking and Finance may investigate or examine any mortgage broker or mortgage lender required to be licensed or registered under the Georgia Residential Mortgage Act.
The Department may conduct such investigations and examinations as often as it deems necessary in order to carry out the purposes of this article but shall conduct such investigations and examinations at least once every 60 months.
FAILURE TO SUBMIT TO AN INVESTIGATION OR EXAMINATION SHALL LEAD TO AN ADMINISTRATIVE ACTION AND FINE AGAINST THE LICENSEE.
Mortgage Industry Frequently Asked Questions: https://dbf.georgia.gov/mb-brokers-lenders-and-originators/mortgage-faq
Notification and Requests for Information
Typically, the licensee’s Primary Company Contact in NMLS will receive an Exam Initiation Letter or, if the examination is conducted through the State Examination System (SES), the notice will be provided to the Primary Company Contact via the SES. In addition, the Primary Company Contact will receive a phone call and an email from the Examiner-In-Charge the same day the initiation letter or SES notification is sent.
Information requests will also be sent to the licensee with instructions and deadlines for responses. If the examination is through SES, the information requests will be accessible to the licensee’s participants in the open examination module.
Exam Scheduling and Location
Exams may be conducted offsite or onsite. If a portion of the examination is to be conducted onsite at a location of the licensee, the Examiner-In-Charge will discuss this with the Primary Company Contact or designated liaison upon initiation of the examination.
Scope of Examination
The examination scope may vary based on the licensee’s business activity and risk profile and may only target a certain part of the licensee’s mortgage operations. However, most examinations will consist of a risked-based scope covering a two to five year look back starting from the date of the exam initiation letter or date of notification.
Examiner review of the licensee’s books, records, and other information is conducted offsite once information is received, as well as onsite if an onsite examination is performed. The licensee’s timely and complete response to information requests is important to achieve a smooth examination. Withholding information or refusing to submit requested documents is a violation of the GRMA and subjects the licensee to administrative action, including revocation of their license.
After the examiner review is complete, the EIC will schedule an Exit Meeting with representatives of the licensee to discuss the preliminary findings of the examination, including any violations identified during the course of the examination and the associated potential fines and penalties.
The Exit Meeting is the licensee’s opportunity to:
- Make known any information that was omitted or missed during the examination
- Ask questions about or dispute the facts supporting the examination
- Get started on corrective action without having to wait on the Report of Examination
The Exit Meeting is an important part of the examination, and the Department encourages senior officials of the licensee to participate.
Report of Examination (ROE)
Following the Exit Meeting, the EIC will prepare a Report of Examination (ROE). The EIC will submit a final draft of the ROE to the NDFI Division’s Director, who reviews the final draft and prepares the finished ROE for transmission to the licensee.
The Director will also prepare a Transmittal Letter to attach to the front of the ROE document. The Transmittal Letter provides a summary of the conclusions and findings of the examination, a notice of the assessment of examination fees and also of any fines, and other instructions or notices to the licensee, such as instruction to submit a written response or notice of the possibility of forthcoming administrative action based on the findings of the examination.
All ROEs are transmitted electronically to the licensee’s Primary Company Contact or a specified control person or officer of the company. The Department is not responsible for a licensee’s failure to receive a ROE because of a missing contact or IT restrictions.
Response to the ROE
A licensee may be required to respond in writing to the ROE within 30 days from the date of the Transmittal Letter. However, unless the licensee is expressly directed to provide such a written response, the licensee may:
- Submit a written response to the NDFI Director at its discretion.
- If the exam is performed in SES, acknowledge the receipt of the ROE through the company response function in SES.
Examination Fees and Fines
Examination fees and fines related to examinations are posted to the licensee’s Georgia license in NMLS via Agency Fee Invoices.
- Examination Fees are based on a rate of $65 per examiner hour. The minimum examination fee is $500. Examination fees are due and payable immediately from the date the licensee receives the invoice for the examination fee.
- Fines related to the examination findings are assessed the day the ROE is issued or shortly after. The Transmittal Letter will identify the amount assessed. Fines are due and payable within 30 days of the date the licensee receives invoices for the fine amount.
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