Safe act cu 10 13-10


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Safe act cu 10 13-10

  1. 1. S.A.F.E. Act Secure and Fair Enforcement Financial Institution Implementation10/8/2010 0
  3. 3. Housekeeping Use the chat feature to ask your questions Questions will be answered throughout session Email additional questions: 2
  4. 4. WELCOMETheresa Ballard Ginger BellCompliance Specialist – Education Specialist-BFO Solutions Go2Training 3
  5. 5. Introduction Interagency Final Rule effective October 1, 2010 • New employee designation “MLO” Federally insured credit unions and employees who act as an MLO • Registration requirement for MLO • Adopt and follow written policies and procedures • Federal regulations National Credit Union Administration o 12 CFR Part 741 and 761 4
  6. 6. Goals Important dates Understand changes Why duties of employee are important Who is considered to be a MLO De Minimis Exception Who is not considered to be an MLO MLO info required for registration Institution’s requirements 5
  7. 7. Why the changes??? Housing and Economic Recovery Act • Title V S.A.F.E. Act Amendment made July 21, 2010 • Dodd-Frank Wall Street Reform and Consumer Protection Act 6
  8. 8. Dodd-Frank Amendment Expanded definition of “mortgage originator” • Any person who for direct or indirect compensation or gain:  Takes a residential loan application (RML)  Assists a consumer in obtaining or applying to obtain an RML  Offers or negotiates terms of a RML  Represents to public that he/she can or will perform any such services Residential Mortgage Loan (RML) expanded from primary residence to include 2nd home MLO must include on all “loan docs” unique identifier 7
  9. 9. What’s required? Policies to assure each MLO is registered. • Both institution and individual is responsible for compliance. • Both institution and individual must submit information to NMLSR Renewal required annually • Annual renewal period November 1 through December 31 8
  10. 10. Important dates October 1, 2010 • All credit unions that originate any mortgage loans must have written policies and procedures that address the requirements of the SAFE Act 2011 • All credit unions must have MLOs identified and registered within 180 days of the date NCUA provides public notification that registry is open. 9
  11. 11. Purpose of Registration Enhancement of consumer protection • Provides consumers free information about Originator  Employment history  Publicly adjudicated disciplinary history  Enforcement Actions Reduce fraud in residential mortgage originations Increased accountability and tracking Flow of information to and from Regulators improved and combined 10
  12. 12. Mortgage Loan Originator “MLO” An individual who: • Takes a residential mortgage loan application; and • Offers or negotiates terms of a residential mortgage loan for compensation or gain 11
  13. 13. Registered Mortgage Loan Originator An individual who: • Meets the definition of a MLO and • Employee of a Federal Credit Union and • Registered with National Mortgage Licensing System Registry (NMLSR) and • Maintains a unique identifier 12
  14. 14. Unique Identifier A number assigned by NMLSR* Number is a permanent identifier of MLO Will be used for electronic tracking of MLO Will be required on loan applications • FNMA 1003 • FHLMC 65 *National Mortgage Licensing System and Registry 13
  15. 15. De Minimis Exception Any employee of credit union who: • Has never been registered or licensed through the Registry and • Acted as a MLO for 5 or fewer residential mortgage loans during the past 12 months 14
  16. 16. CUSO Employees NCUA does not have direct regulatory oversight or enforcement authority CUSO employees engaging in loan origination activities, whether owned by a state or a federal credit union: • Need to be licensed in accordance with applicable state requirements 15
  17. 17. Others considered NOT to be an MLO? Any individual who performs purely administrative or clerical tasks on behalf of an MLO Any individual who only performs real estate brokerage activities and is licensed or registered as a real estate broker in accordance with applicable State law • Unless individual is compensated by a lender, mortgage broker, or other MLO and meets the definition of mortgage loan originator Any individual or entity solely involved in extensions of credit related to timeshare plans, as that term is defined in 11 U.S.C. 101(53D) 16
  18. 18. Administrative or Clerical Tasks Receipt, collection, and distribution of information common for • Processing or underwriting of a loan in the residential mortgage industry and • Communication with a member to obtain information necessary for the processing or underwriting of a residential mortgage loan 17
  19. 19. Duties –vs- Title MLO definition based on activities NOT job classification! Individual who engages in activities of mortgage loan origination is considered an MLO Examples of MLO activities found in Appendix A of Final Rule 18
  20. 20. Does Employee take Loan Applications? Does individual receive information provided in connection with a request for a loan to offer or negotiate loan terms? • Can be directly or indirectly Does individual input info into an online application system on behalf of consumer? Individual does not make loan approval decision • If answer is “YES” then individual must Register! 19
  21. 21. Offering or Negotiating Loan Terms Verbally or in writing presenting a loan offer to a consumer • Not limited to providing disclosure of terms after application under TILA, even if: Further verification info is necessary Offer is conditional Other individuals must complete loan process Responding to request from consumer for a lower rate on a pending application 20
  22. 22. Offering or Negotiating Loan Terms – For compensation or gain Offering or negotiating terms of a loan for compensation or gain includes • Engaging in any of the activities of an MLO in the course of carrying out employment duties, even if the employee does not receive a referral fee or commission or other special compensation for the loan. Offering or negotiating terms of a loan for compensation or gain does not include engaging in a seller-financed transaction for the employees personal property that does not involve the credit union. 21
  23. 23. What’s not considered to be “Taking a Loan Application” Contacting borrower to verify info on application (i.e. pay stubs or tax returns) Receiving loan application in the mail and then forwarding to appropriate personnel with no action Clarifying or explaining to borrower what type of information is necessary 22
  24. 24. What’s not considered to be “taking a Loan Application” (continued) Responding to an inquiry regarding a prequalified offer that borrower received • Collecting only basic identifying info about borrower • Forwarding the borrower to the MLO or Receiving info in connection with a modification of an existing loan • Existing Borrower • Part of Credit Union’s loss mitigation efforts 23
  25. 25. What’s not considered to be “Offering/Negotiating Terms” Providing general explanations in response to borrower questions about specific loan products Responding to borrowers request about publicly available loan rates • Applicable only if there’s no discussion of whether or not borrower qualifies for loan product Arranging loan closing or processing loan as long as: • Communication only verifies loan terms already offered or negotiated 24
  26. 26. What’s not considered to be “Offering/Negotiating Terms” (Continued) Provide borrower with info unrelated to loan terms Make underwriting decision Explain loan process Describe criteria necessary to qualify without providing guidance specific to borrower Providing disclosures or communication on behalf of MLO. 25
  27. 27. Employee requirements Any employee considered to be an MLO must obtain a Unique Identifier Register with NMLSR within 180 days from date that NCUA provides in a public notice that the Registry is accepting registrations 26
  28. 28. MLO information required for Registration Name (to include all names previously used and variations) Home address and contact info Address of employee’s principal business and business contact Social Security number Gender Date and place of birth 27
  29. 29. MLO information required for Registration (Continued) Financial Services related employment history for past 10 years • including date of employment with credit union Convictions of any criminal offense involving: • dishonesty, breach of trust, money laundering or agreements to enter a pretrial diversion 28
  30. 30. MLO information required for Registration (Continued) Civil judicial actions against employee with financial services related activities, dismissals with settlements, Judicial findings that the employee violated financial services related statutes or regulations • Exception made for actions dismissed without a settlement agreement 29
  31. 31. MLO information required for Registration (Continued) Actions or orders by State or Federal regulatory agency or foreign financial regulatory authority that found employee to have: • Made false statement or omission, been dishonest, unfair or unethical • Been involved in a violation of a financial services related business that had its authorization to do business denied, suspended, revoked or restricted. 30
  32. 32. MLO information required for Registration (Continued) Actions or orders by State or Federal regulatory agency or foreign financial regulatory authority that: • Deny, suspend or revoke the employees registration or license to engage in financial service related activity • Barred the employee from association with an entity or its officers regulated by the agency or authority or from engaging in financial service related business. 31
  33. 33. MLO information required for Registration (Continued) Revocation or suspension of employee’s authorization to act as an attorney, accountant or State or Federal contractor Customer initiated financial services related arbitration or civil settlements • Includes settlements and judgments 32
  34. 34. MLO information required for Registration (Continued) Fingerprints • Submitted to FBI • Used for back ground check • Prints previously provided not acceptable. New set of prints to be provided • Fingerprinting to be completed through a nationwide vendor to be determined. There is no Grandfathering! 33
  35. 35. Institution’s requirements Determine which employees are considered to be an MLOs • Remember it’s DUTIES not title Require each employee MLO to register with NMLSR Not allow any employee who is considered to be an MLO to act as an MLO until Registered! 34
  36. 36. Institution’s requirements Develop, adopt and follow written policies and procedures to assure compliance Required by October 1, 2010. P&P must be appropriate to the: • Nature • Size • Complexity and scope of mortgage lending activities • Must be approved by Board of Directors 35
  37. 37. Institution’s requirements Policy & Procedures Establish process for identifying MLO Require all MLOs to be registered Instruct each MLO on how to comply Establish procedures on compliance with unique identifier Establish procedures for confirming adequacy and accuracy of employee registration 36
  38. 38. Institution’s requirements Policy & Procedures (Continued) Establish procedures and tracking systems for monitoring compliance • Registration • Renewal (must renew annually) Provide for independent testing for compliance • At least annually by bank personnel or by an outside party 37
  39. 39. Institution’s requirements Policy & Procedures (Continued) Provide action steps for employee who fails to comply with registration requirements Establish process for review of employee criminal history background reports received from Registry Establish procedures to ensure third party MLO is in compliance with SAFE Act 38
  40. 40. Development ofSAFE Act Policy & Procedures Can prepare your Policy and Procedures for you! Phone: 619-397-5191 Email: 39
  41. 41. Resource Materials AGENCY WEB ADDRESSFederal Reserve Board www.federalreserve.govNational Credit Union Administration www.ncua.govDepartment of Housing and Urban www.hud.govDevelopmentConference of State Bank Supervisors www.csbs.orgAmerican Association of Residential www.aarmr.orgMortgage RegulatorsState Regulatory Registry, LLC www.stateregulatoryregistry.orgFinancial Industry Regulatory Authority 40
  42. 42. Theresa Ballard Phone - 619-397-2603 Email - Services offered*Quality Control Program Development and Review*Due Diligence Review*Loan Guaranty (VA) and Loan Endorsement (FHA) Submissions*Post Closing and Delivery of Files to Investor 41
  43. 43. Thank You!American Family Funding 42
  44. 44. DisclaimerThis publication is designed for use in conjunction with Go2Comply and BFO SolutionsIncorporated training programs, and is believed to be accurate and current as of the dateof printing, but is not guaranteed, and due to industry and regulatory changes is subject tochange at any time. This information is provided with the express understanding that BFOSolutions Incorporated, its agents and/or representatives are not engaged in the providingof financial, legal or accounting advice. Users should consult with appropriateprofessionals for further clarification of contents contained within if desired, and agrees tohold harmless BFO Solutions Incorporated, its employees, representatives, trainers,consultants, program sponsors and affiliates from any liability resulting from use orreliance of any material contained within.Sources used in this presentation: Go2Training BFO Solutions Incorporated National Credit Union Association (NCUA) Federal National Mortgage Association (FNMA) Federal Home Loan Mortgage Corporation (FHLMC) Bankers On Line Pegasus Educational Services, LLC Metavante Regulatory Services 43