The final rules to implement the SAFE Act requirements for the registration of mortgage loan originators (MLOs) take effect Oct. 1, 2010. Employees of federally-regulated and other depository institutions who meet the definition of an MLO must be registered by the end of the initial transition period. The National Mortgage Licensing System and Registry (NMLS&R) is projected to begin receiving registrations as early as Jan. 28, 2011.
Each agency will be providing advanced notice when the NMLS&R will formally begin accepting federal registrations. Agency-regulated institutions and their MLOs will have a 180-day initial registration period during which time they may continue to originate. MLOs subject to this rule should not attempt to register before the initial transition period begins.
During the 180-day transition period, MLOs must register themselves through the NMLS&R to obtain a unique identifier. All regulated institutions will be required to provide certain limited information to the Registry specific to the entity, which will enable the MLO to complete their registration process. The MLO must also provide additional information that will include:
►The MLO’s fingerprints for submission to the Federal Bureau of Investigation (FBI) to perform a national criminal background check, and
►Information regarding the MLO’s employment history and any relevant civil or criminal history.
Certain limited information on the MLO and identifying information of the institution will then be available to consumers using the Registry by accessing its public Web site. Once registered, the MLO must maintain their registration by renewing annually between Nov. 1 and Dec. 31.
The unlevel playing field
The most hotly debated issue since the passage of the SAFE Act has been the fairness of requiring full licensure of non-depository MLOs while only requiring registration for MLOs working for depository institutions. Opinions vary and, as with any contentious issue, there are two sides that can basically be summarized:
►Non-Depository Licensees will tell you the banks cut a deal with congressional leaders to exempt themselves in order to create a competitive advantage in the marketplace.
►Agency-regulated Depository institutions are on record saying they should not be penalized for the inappropriate actions of other lenders that led to the enactment of the SAFE Act.
No matter how it’s rationalized, the depository institutions think they are above licensure for MLOs. For the time being, we will live with an unlevel playing field and MLOs working for depository institutions will face the registration process.
Possible SAFE leveling
At the recent American Association of Residential Mortgage Regulators (AARMR) Conference, the functions of the new Consumer Financial Protection Bureau were outlined for this gathering of state regulators. Peggy Twohig of the U.S. Treasury Department, in charge of standing up to this new 'Bureau' said, “… (we) intend to level the playing field between depository and non-depository institutions regarding the SAFE Act.”
This was big news and it took the conference by surprise. It remains to be seen if the Bureau will have the intestinal fortitude to stop playing politics and truly level our field of play.
Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to AbacusMortgageTraining.com to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.