Agencies Issue Rules on Mortgage Loan Originators

In a move to tighten down mortgage loan originators' credentials and stronger background checks, the federal financial institution regulatory agencies on Monday issued proposed rules that will require mortgage loan originators to meet registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act).

The SAFE Act requires the federal agencies to collectively develop and maintain a system for registering residential mortgage loan originators who are employees of agency-regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions and certain subsidiaries.

Under the proposed rule, mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry, a database established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the states.

Mortgage loan originators, as part of this process, must provide to the registry background information and fingerprints for a background check. The SAFE Act generally prohibits employees of an agency-regulated institution from originating residential mortgage loans without first registering with the registry.

The proposal, which is being issued jointly by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Farm Credit Administration, and National Credit Union Administration, establishes the registration requirements for mortgage loan originators employed by agency-regulated institutions as well as requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the SAFE Act and final rule.

By law, the proposal requires these mortgage loan originators to obtain a unique identifier through the registry that will remain with that originator, regardless of changes in employment. When the system is fully operational, consumers will be able to use the unique identifiers to access employment and other background information of registered mortgage loan originators. Pursuant to the SAFE Act, the proposal further requires these mortgage loan originators to provide their unique identifiers to consumers in certain circumstances and agency-regulated institutions to make them available to consumers.

The proposed rule will be delayed because modification of the registry to accept federal registrations involves complex technical issues. The Federal Register notice and proposed rule are here: The proposed rules are open to public comment for 30 days.

About the Author

Linda McGlasson

Linda McGlasson

Managing Editor

Linda McGlasson is a seasoned writer and editor with 20 years of experience in writing for corporations, business publications and newspapers. She has worked in the Financial Services industry for more than 12 years. Most recently Linda headed information security awareness and training and the Computer Incident Response Team for Securities Industry Automation Corporation (SIAC), a subsidiary of the NYSE Group (NYX). As part of her role she developed infosec policy, developed new awareness testing and led the company's incident response team. In the last two years she's been involved with the Financial Services Information Sharing Analysis Center (FS-ISAC), editing its quarterly member newsletter and identifying speakers for member meetings.

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