The purpose of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) is to collect information on Mortgage Loan Originators (MLO) and, in a sense keep tabs on them. The idea is that it helps improve consumer protection and reduce mortgage loan-related fraud, among other things. MLOs are required to be licensed and registered with the Nationwide Mortgage Licensing System (NMLS), but before you even get to that point, you need to first determine who your MLOs are.
Jerod explains more in the video.
Transcript:
Let's go to page three, Roman numeral number six. Okay. Let's spend a little bit more time on this one. This is the mortgage loan originator coverage. This is going to be that employee that works for your organization. Now in letter A, it's a two-part criteria. The person has to be actively taking applications for residential mortgage loans, and then making offers or negotiating with applicants for those applications, and then for compensation. So if we don't take and make offers or negotiate for compensation, then you're not a SAFE Act mortgage loan originator. It's not complicated, but we do have to make sure we check both boxes. Now, this definition comes with some exclusions. We talked about that de minimis rule a little on the previous page, that threshold, as it related to that definition. So if you look in letter B, if you have mortgage loan originators, but they interact less than six times in a rolling 12 months... In other words, when we look back 12 months from today, as long as they have not interacted in a mortgage loan originator capacity more than five times and stay at five or less, they don't have to register.
But before they can have a sixth interaction, they have to have registered. So if I'm sitting at five, and six is walking through the door, I can't work with them. I can't interact. And you might say, "Well, what's the big deal?" Well, the big deal is that the SAFE Act has a fine of up to $30,000 per incident for violations of the SAFE Act, like failing to register. Now, I haven't seen a ton of that public. Okay. So I don't want to be scary here, but that's a pretty big number if somebody wanted to lay that on you, a $30,000 per incident fine for a violation such as not having been registered for the SAFE Act.
There's also an exclusion for administrative and clerical staff, those that help out, and those that are actual mortgage loan originators. Here's the deal with letter B1, though. You need to monitor if you have lenders that dabble in mortgage lending but not enough to go more than five in a rolling 12 months. Because, as I said, at five, they're good. But once they look at six and start interacting, they've gone over the line. They need to register. Now, can you require somebody to register before you get to six? Absolutely. Okay. I don't know if this person's going to do one or four or 74. Have them register so that way there's no question that you're ready to go if you're ever asked, as it relates to that officer.
Published
2022/11/17
