Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act – Overview and Summary of Requirements

  • By: Staff Editor
  • Date: September 30, 2011
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The SAFE Act of 2008 required the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the former Office of Thrift Supervision, the National Credit Union Administration, and the Farm Credit Administration, to jointly develop and maintain a Federal Registry for individual employees of Agency-regulated institutions who engage in the business of residential mortgage loan origination. The Agencies published a final rule regarding the registration requirements in July 2010.

The Federal Registry was established by the Conference of State Bank Supervisory CSBS and the American Association of Residential Mortgage Regulators and has been operational since January 2011. After the passing of the Dodd-Frank Act, the authority to develop and maintain the Federal Registry was transferred to the Consumer Financial Protection Bureau or CFPB.
Requirements under final rule
The final rule issued by the agencies continues to apply to their regulated institutions unless the CFPB issues new rules. Under this final rule,
  • Individual residential mortgage loan originators employed by agency-regulated institutions must:
    • Register with the Registry and maintain their registration.
    • Obtain a unique identifier through the Registry that will remain with that originator, regardless of employment changes. Mortgage loan originators and their employing institutions must provide MLO unique identifiers to consumers.
  • Agency-regulated institutions must:
    • Require their employees who are mortgage loan originators to comply with these requirements.
    • Adopt and follow written policies and procedures to assure compliance with the registration requirements.
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License/ registration requirements for loan originators
An individual may not engage in the business of a loan originator without first obtaining and annually renewing:
  • A registration as a registered loan originator
  • A license and registration as a State-licensed loan originator
Loan originators should also obtain a unique identifier.
Registration should only be issued after background checks of the applicant.
Minimum standards for licensing and registration
The minimum standards for licensing and registration as a State-licensed loan originator should include:
  • The applicant should never have had a loan originator license revoked in any governmental jurisdiction.
  • The applicant should not have been convicted of, or pled guilty or nolo contendere to, a felony in a domestic, foreign, or military court in a seven year period prior to applying for the license or be guilty of a felony act involving fraud, dishonesty, breach of trust or money laundering.
  • The applicant should demonstrate financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently within the purposes of this title.
  • The applicant should complete the pre-licensing education requirement
  • The applicant should pass a written test that meets the test requirement
  • The applicant should meet either a net worth or surety bond requirement, or paid into a State fund, as required by the State
Requirements for pre-licensing education
Loan originators should undergo a 20 hour pre-licensing educational course that has at least:
  • 3 hours of Federal law and regulations
  • 3 hours of ethics which should include instruction on fraud, consumer protection and fair lending issues
  • 2 hours of training related to lending standards for the nontraditional mortgage product marketplace
Testing of loan originators
Loan originators applying for a license should pass a qualified that covers:
  • Ethics
  • Federal law and regulation pertaining to mortgage origination
  • State law and regulation pertaining to mortgage origination
  • Federal and State law and regulation, including instruction on fraud, consumer protection, the nontraditional mortgage marketplace, and fair lending issues
Additional resources:
Read the SAFE Act in full


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