Much like the days leading up to Christmas are when Santa Claus and his elves really feel the crush of getting everything ready, and much like the industry felt in the days leading up to the enactment of Regulation F last month, the Nationwide Multistate Licensing System is seeing an onslaught of applications from companies seeking new accounts as they attempt to file their paperwork for a license to collect debt in California. And California’s Department of Financial Protection and Innovation wants companies to know that it will not go all Grinch on them and that it “will not take any action against a debt collector solely on the basis of the temporary slowdown with NMLS,” it said, according to the DFPI.
California is set to become the latest state or municipality requiring collectors to be licensed in order to collect on January 1. The state enacted a law in late 2020 that established the licensing requirement, and applications have been available to be submitted for months, but with getting ready for the enactment of Regulation F — which went into effect on November 30 — many companies put their California licensing application on the backburner and only started working on it this month.
Collectors that file applications before December 31 will be allowed to continue to collect debt in California while their applications are being processed. Collectors that do not file their applications before December 31 will be forced to wait for their applications to be approved in order to be licensed to collect debt in the state. And judging by the rush and pace of the application process, that could take a year or longer.
Here is the full statement released by the DFPI yesterday:
The DFPI is aware of the temporary slowdown in obtaining a new Nationwide Multistate Licensing System or NMLS account. With various DFPI year-end deadlines, the NMLS team is experiencing an unprecedented volume of account requests. The DFPI acknowledges the predicament this puts entities in who are trying to comply with the new debt collector licensing requirement to apply for a license by Dec. 31, 2021. We would like to assure you that DFPI is aware of this issue and will not take any action against a debt collector solely on the basis of the temporary slowdown with NMLS. We are working cooperatively with the NMLS team to be able to verify those that have attempted to apply. Thank you for your patience.
Earlier this week, the DFPI’s Commissioner officially adopted the regulations setting forth the licensing application and procedures for applying for a license with the agency.