SAFE Act Flashcards
What did the SAFE act mandate?
A nationwide licensing and registration system for residential MLOs.
The SAFE act prohibits individuals from engaging in business of residential mortgage loan origination without first obtaining and maintaining what annually?
- For individuals employed by a covered financial institution, registration as a mortgage loan originator and a unique identifier (federal registration); or
- For all other individuals, a state license and registration as a mortgage loan originator, and a unique identifier (state licensing/registration).
The SAFE Act requires that federal registration and state licensing/registration be accomplished through the same online registration system, the Nationwide Mortgage Licensing System and Registry (Registry).
When is the annual renewal period under the act?
Nov 1st through Dec 31st of each year.
What is the definition of Administrative or clerical tasks under the act?
means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the residential mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan.
What is a covered financial institution under the act?
means any national bank, Federal branch and agency of a foreign bank, member bank, insured state nonmember bank (including state-licensed insured branches of foreign banks), savings association, or certain of their subsidiaries; branch or agency of a foreign bank or commercial lending company owned or controlled by a foreign bank; Farm Credit System institution; or federally insured credit union, including certain non-federally insured credit unions
What is the definition of an MLO under the act? (2)
What does this definition not include (3)
MLO is an individual who:
- takes a residential mortgage loan application and
- offers or negotiates terms of a residential mortgage loan for compensation or gain.
An MLO does not include:
- an individual who performs purely admin or clerical tasks on behalf of an MLO
- an individual who only performs real estate brokerage activities and is licensed or registered. Unless they are compensated by a lender, mortgage broker, or other MLO.
- individual or entity solely involved in extensions of credit related to timeshare plans.
What is the definition of a registered MLO? (4)
Individual who:
- Meets MLO definition
- is an employee of a covered financial institution
- is registered with NMLS
- maintains a unique identifier through the registry
What is the definition of a residential mortgage loan under the act?
means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in Section 103(v) of the Truth in Lending Act, 15 USC Section 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling (including manufactured homes) and includes refinancings, reverse mortgages, home equity lines of credit, and other first and additional lien loans.
What is the De Minimis Exception under the act?
The SAFE Act regulation provides an exception to the MLO registration requirements for any employee of a covered financial institution who has never been registered or licensed through the Registry as an MLO if during the past 12 months the employee acted as an MLO for five or fewer residential mortgage loans.
When an institution relies on the de minimis exception in lieu of registration, the MLO employee must register prior to originating the sixth residential mortgage loan within the past 12 months. Covered financial institutions are prohibited from engaging in any acts or practices to evade the registration requirement.
What are the MLO registration requirements under the act? (4)
- Each MLO employed by a covered institution must register with the registry
- obtain a unique identifier
- maintain the registration by updating certain info with 30 days of specified changes, and
- renew the registration each year during the annual renewal period.
Upon initial registration, and MLO must submit what information to the registry? (4)
- Identifying information, including name, home address, social security number, gender, date of birth, and principal business location;
- Financial-services-related employment history for the prior 10 years;
• Disclosure of specified criminal, civil judicial, or state, federal, or foreign financial authority regulatory actions
against the employee; and
• Fingerprints, for purposes of a Federal Bureau of Investigation background check.
What are the renewal requirements for an MLO registration?
An MLO must renew his or her registration during the annual renewal period by confirming and updating his or her registration records.
This requirement does not apply to an MLO who completed his or her initial registration less than six months prior to the end of the annual renewal period.
Any registration that is not renewed during this period will become inactive, and the individual cannot act as an MLO at a covered financial institution until the registration requirements are met.
Individuals who fail to update their registrations during this two-month renewal period may renew their registration at any time and need not wait until the start of the next annual renewal period.
When is an MLO required to update their registration?
An MLO must update his or her registration within 30 days for specified significant changes, including name changes, employment termination, and reportable changes to legal or regulatory actions.
What are the registration requirements for previously registered MLOs who experienced a change of employment?
Assume the employee maintained the registration.
Such an employee must update certain information, provide the required attestation and authorizations, and submit new fingerprints unless the employee has fingerprints on file with the Registry that are less than three years old. There is no grace period in this situation. An employee must update his or her Registry record before acting as a loan originator for the new employer.
What are the registration requirements for an MLO who was previously registered, maintained registration, but went through a merger, acquisition or reorganization?
A registered or licensed MLO whose employment changes as the result of a merger, acquisition, or reorganization has 60 days from the effective date of a merger, acquisition, or reorganization to update information in the Registry.
