1. NMLS: WHAT’S AHEAD And a Look at Where NMLS is Today 2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

2. Today’s Presentation Where we were What’s ahead NMLS Strategy

3. NMLS: WHERE WE WERE Keisha Whitehall Wolfe Assistant Commissioner of Nondepository Oversight Maryland Department of Labor, Licensing and Regulation 2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

4. NMLS: Where We Were Purpose and goals of NMLS General snapshot of who is using NMLS for licensing Trends we have observed

5. NMLS – Original Purpose and Goals Information Sharing for States Uniform Application Data Multiple Regulator Review NMLS ID – Unique Entity Tracking Consistent Validation Started with mortgage industry then expanded to other supervised financial services in 2012

6. NMLS To Date 61 state agencies manage 565 licenses through NMLS. 34 agencies managing 167 non-mortgage licenses authorities Another 6 agencies plan on adding 13 additional non- mortgage license authorities to NMLS by March of 2016. Oregon bringing on collection agencies in 2016 States manage 2,142 checklists through the NMLS Resource Center

7. Basic to Complex Basic Goals and Functionality Singular Industry Provide Better Information for Consumers Uniform forms for applications Accomplishments and More Complex Functionality Facilitated better information sharing for states Succeeded in providing Better Information for Consumers Reduced Regulatory Burden for Industry and Regulators by Streamlining Multiple Processes

8. Who is in NMLS?

9. Debt Collector Licensees in NMLS Companies: 1,047 Total state licenses held: 2,383 State AgencyLicense DescriptionApproved Licenses IDCollection Agency License278 IN-SOSCollection Agency License729 MADebt Collector403 NDCollection Agency License503 RIDebt Collector Registration470

10. Debt Licensees by Size 46% of the companies are licensed in more than one state.

11. Debt Collectors in NMLS As reported on company’s NMLS Licensing Form Self-reported business activity shows over half of the companies that engage in debt collection do so in more than one state.

12. Focus on Debt Licensees in NMLS Total Debt-related Licenses: 16 Debt Collection: 6 Debt Management: 4 Debt Adjuster3 Debt Settlement2 Debt Negotiator1

13. Using NMLS

14. Comparison of Maryland Debt-Related Licensees with Entities in NMLS License CategoryNoYesGrand Total % with likely match in NMLS 1 53632586138% 2 3716420182% 3 4313317676% 4 5451194173969% 8 252277% 9 2779537226% 14 2373995% 15 14163053% 28 131147% Grand Total 14921967345957%

15. Maryland Licensee Comparison Debt Collection – 69 percent overlap Debt Management – 95 percent overlap Total Overlap (debt, consumer finance, installment loan) - 57 percent overlap

16. Policy Initiatives NMLS Information Since 2008, NMLS data expanded in scope & quality New Analytical tools & data available to states MCR Analytics software Renewal Dashboard Public Comment Uniform Forms Mortgage Call Report NMLS Consumer Access

17. NMLS Enhancements 2015 NMLS Enhancements, First Half 2015 Highlights Mortgage Call Report Enhancements Licensees can report servicing activity and more accurate application information. Changes were deployed starting in April, the first day to report Q1 2015 MCR information. Remove “The Wall” for State & Federal Regulators Per the CFPB contract with SRR, state and federal regulators will have access to information about licensed & registered MLOs through NMLS. PPI/other confidential information not part of this information.

18. NMLS Enhancements 2015 NMLS Enhancements, First Half 2015 Highlights (continued) Improvements to Advanced Change Notice processing Merge ACN list & Regulator Worklists. Redline Display Enhancements New Learning Management System Industry and regulators now have access to live and recorded training webinars. The NMLS Call Center can provide better support callers based on their specific situation. Complete NMLS maintained license and registration history for entities in NMLS Consumer Access and B2B

19. NMLS Enhancements 2015 NMLS Enhancements, Second Half 2015 Highlights Renewal Improvement Individual Renewal Dashboard Better notification on renewal submissions Usability Access to historical document uploads in Composite View Company Name in Banner

20. NMLS: WHAT’S AHEAD Upcoming Enhancements in 2015-2016 Sue Clark Director, Regulatory and Consumer Affairs Banking Division Vermont Department of Financial Regulation Chair, NMLS Policy Committee 2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

21. NMLS Enhancements 2016 and Beyond State Agency Manager’s Dashboard MCR Examiners Report Surety Bond Management FBI RapBack Program Money Services Business (MSB) Call Report

22. NMLS Enhancements 2016 and Beyond Data Analytics & User Reporting NMLS Consumer Access Consumer Complaint Processing Exam Management Tool Suite (EMTS)

23. Exam Management Tool Suite 3 Mission Statement: To develop a full-service examination management suite of tools for state agency use for single, multistate, and state/federal non-depository examinations while adopting and aligning with, to the fullest extent practicable, the examination tool being developed by CFPB. Record retention, file transmission and other functionality will also be available to state agencies for depository examinations.

24. Select Examinee Schedule Examination Scope Examination Information Requests Conduct Examination Manage Exit Meetings Report of Examination Post-Exam Activities Survey Examinees Recover Exam Costs Archive & Retrieve Exams Examinee Portal C ORE E XAMINATION M ANAGEMENT F UNCTIONS System Integration Security/Acces s Control Workflow Management Document Management Alerting & Notification Communicatio n Management NMLS Reporting & Analysis Performance Evaluation Administration Functions Inter-Agency Coordination Accounting Functions S UPPORTING F UNCTIONS & S YSTEMS Track Examiner Training General System Requirements Data Presentation EMTS Components Version 1.1 01/12/2015

25. Current Status RFP for vendor issued July 21 st. Vendor selection by end of the year. CSBS will continue to work with CFPB to ensure ability to share information/materials State Examiner working groups will continue to provide input and on functionality. A State Industry working group will provide input on examinee portal and other elements of the tool

26. Policy Initiative – FBI Checks for Non-MLOs Since 2011, SRR has been seeking approval by the FBI to process criminal background checks on individuals other than MLOs required under state law to have an FBI background check conducted The FBI and the Compact Council of state criminal justice agencies have been reluctant to approve because they want all requests to the FBI to go through the state police This results in multiple FBI checks when an individual seeks licensure in multiple states

27. To address concerns, SRR has proposed the following: SRR will conduct a single FBI check and facilitate a state check in the home state of the individual SRR will collect a surcharge and provide this to the state criminal justice agencies for the purposes of improving their systems that provide data to the FBI The Compact Council has established a working group to develop the details of this proposal and is expected to make an approve/not approve decision by November CSBS is also pursing federal legislation that would allow (but not require!) NMLS to process criminal background checks with the FBI when required under state law. Policy Initiative – FBI Checks for Non-MLOs

28. NMLS STRATEGY Bill Matthews President and CEO, SRR 2015 NACARA Annual Conference | Denver, CO | September 28-30, 2015

29. NMLS Modernization Phase 1-SRR Transition & Modernize selected functions Vendor reliance Shifting to primary from secondary role on key functions Phase 2-Strategy Development Review and assessment of NMLS Code Strategic Business and IT drivers and considerations Selecting a modernization solution Phase 3-Strategy Implementation Modernizing current system and functionality Future functionality

31. NMLS Strategy Drivers STRATEGY CSBS strategy requires a system that supports the current strategic plan: System enhancements Expansion industries NMLS back office State IT needs The current core licensing code: Does not meet current business needs Is not well suited to serve as a solid foundation for new functionality and capabilities STRATEGY CSBS strategy requires a system that supports the current strategic plan: System enhancements Expansion industries NMLS back office State IT needs The current core licensing code: Does not meet current business needs Is not well suited to serve as a solid foundation for new functionality and capabilities BUSINESS CHALLENGES AND CONSIDERATIONS (Details on next slide) BUSINESS CHALLENGES AND CONSIDERATIONS (Details on next slide) TECHNOLOGY CHALLENGES AND CONSIDERATIONS (Details on next slide) TECHNOLOGY CHALLENGES AND CONSIDERATIONS (Details on next slide) 31

32. BUSINESS CHALLENGES AND CONSIDERATIONS Culture: CSBS culture is risk adverse. Reputation: NMLS performance, reliability, security and accuracy which impact CSBS reputation. Policy: Changes in regulatory requirements and user needs may require changes that introduce significant risks (cost, reliability, etc.). IT Management: SRR is evolving to transition from a secondary role to a primary role in managing and modernizing NMLS. Financial: Current core NMLS licensing system is unnecessarily costly to maintain and modify going forward. Contract: Current NMLS support contract expires April 2018. The timing of modernization strategies (roadmaps) should consider this constraint. BUSINESS CHALLENGES AND CONSIDERATIONS Culture: CSBS culture is risk adverse. Reputation: NMLS performance, reliability, security and accuracy which impact CSBS reputation. Policy: Changes in regulatory requirements and user needs may require changes that introduce significant risks (cost, reliability, etc.). IT Management: SRR is evolving to transition from a secondary role to a primary role in managing and modernizing NMLS. Financial: Current core NMLS licensing system is unnecessarily costly to maintain and modify going forward. Contract: Current NMLS support contract expires April 2018. The timing of modernization strategies (roadmaps) should consider this constraint. TECHNOLOGY CHALLENGES AND CONSIDERATIONS Application Architecture: NMLS has an architecture that is risky, error prone and difficult to change and is not able to support future needs. Code Quality: Independent analysis by two vendors identified numerous challenges and issues in the quality of NMLS code. Both vendors independently suggested a system rewrite. Database Architecture: NMLS uses aging (inefficient and complex) methods to manage and store data and adds unnecessary risk. Customer Experience: Multiple stakeholders of NMLS have consistently reported that the usability of the system is not intuitive. TECHNOLOGY CHALLENGES AND CONSIDERATIONS Application Architecture: NMLS has an architecture that is risky, error prone and difficult to change and is not able to support future needs. Code Quality: Independent analysis by two vendors identified numerous challenges and issues in the quality of NMLS code. Both vendors independently suggested a system rewrite. Database Architecture: NMLS uses aging (inefficient and complex) methods to manage and store data and adds unnecessary risk. Customer Experience: Multiple stakeholders of NMLS have consistently reported that the usability of the system is not intuitive. 32

33. Strategy Development Strategy Recommendation Strategy Recommendation Risks Benefits Cost Approach Schedule Staffing Strategic Requirements Analysis Strategic Requirements Analysis Support for New License Types (Expansion) Support for New Functions Better Usability NMLS Code Analysis Assessment of Code Quality Assessment of Software Architecture Assessment of Usability Strategy Alternatives Strategy Alternatives The current system state is just one of numerous criteria that was taken into consideration by the strategy consultant (Booz, Allen, Hamilton) in arriving at a strategy recommendation. 33

34. Platform Subscription b Strategy Alternatives Considered Fix Current Solution Rebuild Software Subscription Status Quo 1 2 a c Continue to use existing system and accept associated risks, costs, and limitations. Make improvements to existing system in order to address some risk, cost and limitations. Build a new system with custom code that will use modern technologies and best practices. Build on top of an existing platform (e.g., Salesforce) that supports most current/future needs. Custom “Software” layer enables flexibility on user interface. Integrate multiple software solutions that support current/future needs, with little or no customization. Infrastructure Platform Software Infrastructure Platform Software Infrastructure Platform Software Developed and Managed by CSBS Subscribed as a Service Replace 3 34