SAFE ACT Flashcards
Created by the Dodd-Frank Act and the Consumer Finance Protection Act.
CFPB
Who sees compliance over the SAFE Act
CSBS, AARMR, and CFPB
NMLS stands for
Nationwide Mortgage Licensing System & Registry
CSBS/AARMR duties:
maintains the registry, approves mortgage schools and courses, and oversees state compliance.
Took control of Fannie Mae and Freddie Mac in 2008.
Federal Housing Finance
Applicant information is stored in a
National register
Consumers can search for:
non-confidential licensee information.
Federal banking agencies
Federal Reserve System Board of Governors,
National Credit Union Administration, Comptroller of the currency and the Federal Deposit Insurance Corporation.
Loan processors and underwriters who function as independent contractors must be:
state-licensed loan originators and register with the NMLSR.
All applicants need to provide their
fingerprints, credit report and criminal
background check authorizations.
The NMLS does not give a person their license, only a
State can give someone their license
The NMLS uses a generic application, known as the
MU4
Applicants for LO must have no felony for the last
Seven years
FHA Underwriting Machine
Total Scorecard
Continuing education must include
3 hours of federal law, 2 hours of ethics, and
2 hours of training on non-traditional mortgage products.
The NMLS unique identifier is required on
ALL MARKETING MATERIAL
All disclosures require the
MLO’s unique identifier.
A licensed MLO who is an approved instructor may receive credit for their annual CE requirement at the rate of 2 hours’ credit for every 1 hour taught.
instructor credit
Loan originators may not cause a borrower to obtain property insurance coverage in an amount that exceeds the
replacement cost of the improvements as
established by the property insurer.
a quarterly report of the condition an entity submits thru the NMLS.
Mortgage Call Reports
The MCR report is comprised of two parts:
The state-level “Residential Mortgage Loan Activity Report” and the entity level “Financial Condition Report”.
The state-level “Residential Mortgage Loan Activity Report” is completed:
quarterly, within 45 days of the end of the calendar quarter.
The entity level “Financial Condition Report” is completed:
annually, within 90 days of the company’s fiscal year end.
Loan originator organizations can receive compensation for selling additional products such as title insurance, but
individual loan originators may not.
Penalty for violating SAFE Act:
$28,474
occurs when a property is purchased at a low price, appraised at an inflated value without any valid reason for the increase, and then resold at a much
higher price.
Illegal Flipping
an abusive practice in which a loan is refinanced without any tangible net benefit to the borrower.
loan flipping
FHA imposes restrictions requiring the borrower not to resale the property for
the first 90 days
FHA requires the lender to investigate the transfer history of property for _____ before resale, in an attempt to identify potential flipping schemes.
the past three years
Is the intentional hiding or altering of a material fact
such as income or tax documents.
Material misrepresentation
Material misstatements are:
are untrue statements related to financial status.
Omission
is the intentional leaving out of information.
These individuals are allowed to originate loans while completing any state specific requirements for licensure such as education or testing for up to…
120 days while they are applying to the state agency for their new license.
Temporary Authority can be awarded to:
qualified state-licensed MLOs seeking licensure in another state and MLOs who are changing employment from a depository institution to a state-licensed mortgage company
Once unlicensed for five (5) years, the individual must…
Retake and pass the National Exam. Licensing –Additional Info
Title V of HERA is also known as the…
SAFE Act
EXEMPTIONS UNDER THE SAFE ACT:
Any individual who performs administrative or clerical tasks for licensee. Extending credit on timeshare plan. Individuals who negotiate a mortgage loan for themselves or IMMEDIATE family members. Attorneys who negotiate loan terms as an ancillary service and who aren’t compensated by a loan originator or lender.
