Secure and Fair Enforcement for Mortgage Licensing Act of 2008
The SAFE Act
As originally enacted, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008. The new federal law gave states one year to pass legislation requiring the licensing of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan originators.
Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. All other mortgage loan originators (MLOs) are licensed by the states. The SAFE Act requires state-licensed MLOs to pass a written qualified test, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check; and state-licensed MLOs to provide authorization for NMLS to obtain an independent credit report. The Agencies published a final rule regarding the registration requirements in July 2010.
The Wall Street Reform and Consumer Financial Protection Act of 2010 (“the Dodd-Frank Act“) transferred the authority to develop and maintain the Federal Registry from the Agencies to the CFPB. The SAFE Act statute requires individual mortgage loan originators employed by “Agency-regulated” institutions to be registered with the Nationwide Mortgage Licensing System and Registry (Federal Registry), a database established previously 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.
Continuing Education (CE) is mandated for licensees to be aware of the new and changing federal mortgage legislation and developments. CE will keep students abreast of the latest changes in the mortgage industry, helping to maintain the highest level of control of their business and professional success.
Continuing education is a requirement for loan originators to renew their license to originate loans. Typical subjects covered at this time should result in proficiency in the following learning objectives:
- Review the requirements of RESPA and their impact on business activities of originators
- Investigate the Good Faith Estimate and HUD-1 section-by-section
- Consider a number of discussion scenarios and case studies related to RESPA compliance
- Review the Final Rule on loan originator compensation issued by the Board of Governors of the Federal Reserve
- Explore how the Final Rule affects loan origination activities on a day-to-day basis
- Consider the requirements of federal legislation requiring determination of a borrower’s ability to repay a loan
- Study updates to the Home Ownership and Equity Protection Act (HOEPA) and discover how the Act now covers an expanded number of mortgage loans
- Learn about the new federal Bureau of Consumer Financial Protection
- Discuss the harm that fraud causes the mortgage industry
- Investigate the common types of mortgage fraud and methods mortgage loan originators can employ to identify and avoid fraud
- Review the revised definition of nontraditional mortgage products
- Examine the history of nontraditional mortgage products, including the boom in the subprime market
- Compare and contrast traditional and nontraditional mortgage products
- Study the various types and components of adjustable-rate mortgages
- Explore the basics of securitization and the role of the secondary market
- Take a quick look into government loan programs
- Review the privacy expectations in several aspects of mortgage transactions including:
- Completion and processing of loan applications
- Settlement and servicing of loans
- Repayment of loan
This series of articles takes loan officers through a review of new and changing federal mortgage legislation and developments. This will keep licensed mortgage professionals abreast of the latest changes in the mortgage industry, helping to maintain the highest level of control of their business and professional success.
RESPA revisions went into effect in 2010. Exposure and publicity regarding these changes has settled down so take a look at the shake-out in the Recent RESPA Revisions and New MLO Responsibilities. This article explains the most pertinent RESPA changes impacting the operations of the MLO.
The Dodd-Frank Act has become a hot topic for the economy. In the module Ethical Dilemmas and their Legislative Impact on Consumer Protection, you will learn about this recent legislation and what it means for the mortgage lending business. It reviews the Final Rule on loan originator compensation, recent changes to the Home Ownership and Equity Protection Act and the new federal Bureau of Consumer Financial Protection. Ethical Dilemmas and their Legislative Impact on Consumer Protection also addresses the topic of mortgage fraud, providing information for mortgage professionals on detecting and avoiding fraudulent loan transactions.
The Redefining of Nontraditional Mortgage Products touches on the definition of nontraditional mortgage products, released in the S.A.F.E. Act of 2008. Students will take a look at the marketplace using the mindset framed by the legislation and the more broad definition. It offers a review of traditional and nontraditional mortgage products as well as recent updates to FHA.
Consumer privacy is an issue with a large, supportive following. Privacy concerns are rampant in the mortgage industry with the collection and distribution of personal financial data. In the article A Borrower’s Right to Privacy, we will review privacy requirements throughout each stage of the loan origination process including solicitations, completion and processing of loan applications, settlement and servicing of loans and repayment of loans.