You have heard about the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (called the SAFE Mortgage Licensing Act of 2008) unless you’ve been selling real estate on Mars for the past few years. The SAFE Act mandates increased federal regulation of the mortgage lending industry, increased licensing requirements and professional liability for non-compliant mortgage lending originators (MLOs). So if digging your way out of the recession wasn’t challenging enough now you’ve got to clear up additional federal and state hurdles. Learn more about Tustin Mortgage Broker.
How did they do this? In response to the foreclosure epidemic and the global economic crisis that erupted in 2008, devastating the real estate markets and forcing banking institutions to cut down on lending or even close their doors, Congress passed legislation to create more government oversight of individual mortgage credit creators, resulting in increased consumer protection. The legislation stipulated mainly targets for the residential mortgage industry for a National Mortgage Licensing Scheme (NMLS). The SAFE Act mandates that all originators of residential mortgage loans be either federally registered or approved by the State. A creditor of a mortgage loan employed by a federally insured depository institution or any credit union, or a federally overseen owned and controlled subsidiary, must be federally registered. All other providers of mortgage loans must be approved by the State, without exception.
But HUD recognizes that in many jurisdictions, by the time necessary legislation become effective, individuals currently conducting loan originations might not be able to meet the educational, training, and background check requirements. Additionally, HUD is aware that certain states also require loan originator licensing.
In those states that have implemented NMLS, all persons acting as an originator of a residential mortgage loan (RMLO) must establish an account in NMLS, and have filed or filed a Form MU42 with the state regulatory agency via NMLS. Deadlines for filing depend on what form of license is required.
What do you have to do with NMLS requirements and responsibilities? In addition to some other requirements, all MLOs must file a Form MU4 with the Banking Division of their state via NMLS. As a State-licensed loan originator, the applicant must provide the NMLS with certain information including fingerprints for a criminal background check and personal history and experience. Minimum Licensing Standards include: