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Overview
On
July 28, 2010, the federal agencies issued final rules requiring
residential mortgage loan originators (MLO) who are employees of
national and state banks, savings associations, Farm Credit System
institutions, credit unions, and certain of their subsidiaries
(agency-regulated institutions) to meet the registration
requirements of the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (SAFE Act).
An MLO as an individual who:
(i) takes a residential mortgage loan application; and, (ii) offers
or negotiates terms of a residential mortgage loan for compensation
or gain.
Excluded from
the registration
requirement
are individuals engaged in modifications and assumptions, since
those transactions do not result in the extinguishing of an
existing loan and the replacement with a new loan.
The SAFE Act does not require employees of mortgage loan servicers
to be licensed as MLOs; indeed, the Dodd-Frank Wall Street Reform
and Consumer Protection Act excludes servicers, providing in its
separate definition of "mortgage originator" under the Truth in
Lending Act that those persons, among others, do not include
servicers and their employees, agents, or contractors.
The newly created Consumer Financial Protection Bureau (CFPB)
will be assuming HUD's role of determining whether states have met
the SAFE Act's minimum requirements, and undoubtedly the CFPB will
clarify whether the SAFE Act requires employees of mortgage loan
servicers to be licensed as originators.
As part of this registration process, MLOs must furnish to the
Nationwide Mortgage Licensing System and Registry (Registry)
information and fingerprints for background checks. The SAFE Act
generally prohibits employees of agency-regulated institutions from
originating residential mortgage loans unless they register with
the registry.
The agencies' final rules establish the registration requirements
for MLOs employed by agency-regulated institutions and requirements
for these institutions, including the adoption of policies and
procedures to ensure compliance with the SAFE Act and the final
rules.
Importantly, the agencies
anticipate that the Registry could begin accepting federal
registrations as early as January 28, 2011.
Employees of agency-regulated institutions must not register until
the agencies instruct them to do so. The agencies will provide an advance
announcement of the date when the registry will begin accepting
federal registrations, beginning on the date the Agencies provide
in a public notice that the Registry is accepting initial
registrations, and agency-regulated institutions and their
applicable employees will have 180 days from that date to comply
with the initial registration requirements.
Final
Rule Effective: October 1,
2010.
If you have any questions about this matter or would like
assistance with mortgage compliance, please contact Jonathan Foxx, Managing
Director.
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Highlights
Registration
of Mortgage Loan Originators (MLO)
- Registration requirement.
Each employee of a national bank who acts as a mortgage loan
originator must register with the Registry, obtain a unique
identifier, and maintain this registration in accordance with the
requirements of the final rule.
- Implementation period for
initial registration. An employee of a national bank who is
a mortgage loan originator must complete an initial registration
with the Registry pursuant to the final rule within 180 days from
the date that the OCC provides in a public notice that the Registry
is accepting Registrations.
- Employees previously
registered or licensed through the Registry. In general. If
an employee of a national bank was registered or licensed through,
and obtained a unique identifier from, the Registry and has
maintained this registration or license before the employee becomes
subject to the final rule at this bank, then the registration
requirements of the SAFE Act and the final are deemed to be met,
provided that certain conditions are met.
Policies and Procedures
- A national bank that employs one or more MLOs must adopt and
follow written policies and procedures designed to assure
compliance with the final rule.
- Policies and procedures must be appropriate to the nature,
size, complexity, and scope of the mortgage lending activities of
the bank, and apply only to those employees acting within the scope
of their employment at the bank.
Use of Unique
Identifier
- A national bank shall make the unique identifier(s) of its
registered mortgage loan originator(s) available to consumers in a
manner and method practicable to the institution.
- A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
- Upon request;
- Before acting as a mortgage loan originator; and
- Through the originator's initial written communication with a
consumer, if any, whether on paper or electronically.
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Visit
Library for Issuance
Registration of Mortgage Loan Originators -
Final Rule
Federal Register, Vol. 75, No. 144, Rules and Regulations,
44656-44708, (7/28/10)
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