SAFE Act - Part 1 (Free Tutorial)

Welcome to the eighth episode of the National Mortgage Exam Tutorials & Practice Tests videos. The series will be following the sequence of topics as presented in the NMLS test content outline at https://bit.ly/NMLSoutline. You can purchase The SAFE Mortgage Loan Originator National Exam Study Guide at https://amazon.com/author/patriciaoco.... It is available in kindle and paperback versions. There are hundreds of questions and two practice exams. Please take a moment to subscribe at https://bit.ly/mortgage-exam. First, go to Settings/Privacy in your profile and make subscriptions public. You have to do this before you subscribe. Starting with Video #7, practice quizzes are only provided to subscribers who follow the instructions at the end of each video. Requesters' names must be public (so I can see them) and match the name of a valid subscriber. Once you receive one quiz, you may make your name private again if you wish. Names and emails are kept strictly confidential and are not shared with anyone ********************************************************************************************. Safe Act – Part 1 Video #8 Scope and Purpose • SAFE = Secure and Fair Enforcement for Mortgage Licensing Act • Included in the 2008 Housing and Economic Recovery Act • Residential mortgage licensing and origination • Sets minimum state standards for licensing and renewal Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) created the Nationwide Mortgage Licensing System and Registry (NMLSR) o One portal to access all the states applications o Majority of states licenses renew 12/31 o Established minimum CE requirements Documents Filed for Public Record The NMLS Consumer Access database (NMLSConsumerAccess.org) allows public viewing of company, branch, and individual MLO information including: • NMLS ID # and full legal name – No SSN • 10-year work history • States in which MLO is licensed • Status of license in each state • State regulatory (disciplinary) actions State Mortgage Regulatory Agencies Regulatory Powers and Responsibilities • Design the license application form. • Assessing the fitness and character of applicant • Collect transaction-processing fees. • Establish minimum net worth or bonding requirements or establish a recovery fund which is funded by loan originators (fines, application and renewal fees) • Conduct background checks. • Issue licenses and write procedural regulations. • Deny, suspend and revoke licenses. • Audit loan origination records. • Interpret, administer and enforce the SAFE Act within the state NMLS Registry and relationship with state regulators Licensees access state processing through the NMLS portal. The state then collects the licensee’s fees and updates the registry with the new information. If a state fails to sufficiently regulate, the national agencies (CSBS/AARMR ) will assume the responsibility. CSBS/AARMR Responsibilities • Maintenance of the national registry. • Approval of course material, schools and exams. • Monitor the status of licensees. • Request result of fingerprint background check from the FBI on behalf of the state. • Assign unique identifier to MLO. • Set penalty limits. • Write Loan Originator Rule (prohibits dual compensation from consumer and lender) License Law and Regulation The definition of a licensed loan originator includes the following duties: • Take a loan application. • Arrange a credit transaction. • Assist a consumer in applying for credit. • Offer or negotiate loan terms. • Make an extension of credit. • Refer a consumer to a creditor or loan originator for compensation. • Advertise your loan origination services. Allowable Activities by Underwriters, Clerical Staff, and Loan Processors • Handling a loan application, without review, and forwarding it to loan approval personnel. • Helping a borrower fill out a loan application without discussing particular loan products. • Providing general explanations in response to consumer queries. • Arranging the loan closing or other aspects of the loan process, without discussing any new loan terms with the borrower. • Providing a borrower with information unrelated to loan terms. • Describing the steps that a borrower or prospective borrower would need to take to obtain a loan offer without providing specific details related to a borrower’s individual situation. • Volunteering without receiving or expecting to receive anything of value. Entities Requiring Licensed MLO The law states that loan processors and underwriters who function as independent contractors must be state-licensed loan originators and register with the NMLSR. Supervised loan processors and underwriters who don’t represent to the public through any means, including business cards, that they can or will perform any of the activities of a loan originator aren’t required to be a state-licensed loan originator.