SAFE ACT Flashcards
- SAFE is an acronym for
Secure and Fair Enforcement.
- The purpose of the SAFE Act is to
promote financial stability through accountability and transparency.
- The SAFE Act is part of the
Housing and Economic Recovery Act (HERA) of 2008.
- The Dodd-Frank Act is charged with
overseeing the federal financial laws that specifically protect consumers who deposit their money in banks and credit unions, pay for goods and services with credit cards, and rely on loans to pay for services
- Consumer Financial Protection Bureau (CFPB) was created by
the Dodd Frank Act and the Consumer Finance Protection Act.
- The Conference of State Bank Supervisors (CSBS), the American Association of Residential Mortgage Regulators (AARMR), and the Consumer Financial Protection Bureau oversee compliance with
with the SAFE Act
- NMLSR stands for.
Nationwide Mortgage Licensing System & Registry
- CSBS/AARMR (What does it do)
maintains the registry, approves mortgage schools, and courses, and oversees state compliance.
- Everyone’s loan origination license expires (when)
annually. Most states have a December 31st renewal date.
- The renewal period for the NMLS is (when)
November 1st thru December 31st.
- The Housing and Economic Recovery Act allowed the
Federal Housing Finance Agency to take control of Fannie Mae and Freddie Mac in 2008.
- Applicant information is
stored in a national registry.
- Consumer –
people who keep their money in banks and credit unions, pay for goods and services with credit cards, and rely on loans to buy homes and pay for college, among other services.
- Consumers can search a separate database for
non-confidential licensee information.
- Federal banking agencies include
Federal Reserve System Board of Governors, National Credit Union Administration, Comptroller of the currency and the Federal Deposit Insurance Corporation.
- Immediate family members include a
spouse, parents, stepparents, child, stepchild, sibling, stepsibling, grandparent, grandchild, and adopted members.
- An individual is a
a natural person.
- A person is a
natural person, limited liability corporation, association, company, corporation, and partnership.
- Underwriters and loan processors are
individuals who perform clerical or support tasks at the direction of a state-licensed loan originator or registered loan originator. They don’t negotiate loan terms.
- 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 do not represent to the public that they can perform any of the activities of a loan originator are
not required to be state licensed loan originators.
- Mortgage Loan Originator -
an individual who for compensation or gain, or in expectation of compensation or gain, takes a residential mortgage loan application, offers, or negotiates terms of a residential mortgage loan.
- Registered Mortgage Loan Originator -
any individual who meets the definition of mortgage loan originator and is an employee of a depository institution (Bank).
- State-licensed Mortgage Loan Originator -
any individual who meets the definition of mortgage loan originator and IS NOT an employee of a depository institution (Bank).
- States have the authority to
design application forms; collect transaction fees; conduct background checks; issue licenses; write regulations; deny, suspended revoke licenses; investigate complaints; subpoena witnesses and documents;
assesses penalties, and order the termination of individuals who are regarded as threats to the public welfare.
- Individuals who negotiate a mortgage loan for themselves or family members are
exempt from (do not require) licensing
- Attorneys who negotiate loan terms as an ancillary service and who are not compensated by a loan originator or lender are
exempt from licensing.
- All applicants need to provide their
fingerprints, credit report and criminal background check authorizations
- The NMLS uses a generic application, known as the
MU4. The NMLS does not give a person their license, only a state can give a license to someone. The MU4 is the application for any state, it includes information all states require on their license.
- Applicants must never have had a
loan originator license revoked in any governmental jurisdiction; had no felony conviction during the past seven years or no felony conviction ever if offense is related to fraud, dishonesty, money laundering or breach of trust. The only exception is if he/she has received a pardon.
- Applicant must meet either a
- net worth
2.surety bond requirement - pay into a state fund.
These are the three protection options that each State must have in place.
- A minimum of 20 hours of pre-licensing education is
required for all loan originators.
- Pre-licensing must include.
3 hours of federal law, 3 hours of ethics, and 2 hours of training on non-traditional mortgage products
- A minimum of
8 hours of annual continuing education is required for all loan originators.
- Continuing education must include
3 hours of federal law, 2 hours of ethics, and 2hours of training on non-traditional mortgage products.
- The NMLS unique identifier is
required on all marketing materials.
- If the marketing materials reference the company only, the
company’s unique identifier must be used.
- If the marketing materials and business cards are issued in the name of the mortgage loan originator, then
the marketing materials and business cards require the MLO’s unique identifier.
- All disclosures require the
MLO’s unique identifier.
- If you fail the NMLS Exam, you must
wait 30 days before you can retake the exam.
- If you fail the exam three times, you
must wait 6 months (180 days) before you can retake the exam
(Buy Your Going To Pass)
- Retest after Lapse of License:
A licensed MLO who fails to maintain a valid license (does not renew his/her license) for a period of 5 years shall retake the test.
- Once an individual is unlicensed for three (3) years as an MLO, most states require that
the individual retake the 20hrs of pre-licensing education in order to have his MLO license reinstated.
- Once unlicensed for
five (5) years, the individual must retake and pass the National Exam. If the individual has worked as a registered MLO during this unlicensed period, he is credited for that time.
- Instructor Credit -
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 1hour taught.
- Successive Year Rule -
A licensed MLO may only receive credit for a CE course in the year in which the course is taken.
- Loan originators may not
advertise or commit to loan terms that aren’t currently available.
- Loan originators may not
collect a commission if the loan doesn’t close.
- Loan originators may not
attempt to illegally influence individuals responsible for loan approval including lenders, appraisers, and underwriters.
- Loan originators may not
misrepresent a property.
- MLOs, processors, and underwriters employed by credit unions and depository institutions do not
do not need to be licensed under the SAFE Act - employees of these institutions must be registered through the NMLS and Registry and have an NMLS Unique Identifier.
- Loan originators may not
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
- Mortgage companies and lenders must submit Mortgage Call Reports (MCR) to the
NMLSR Quarterly, regarding the condition of the business. The MCR is a quarterly report of the condition an entity submits thru the NMLS.
- The MCR report is comprised of two parts: The
The state-level “Residential Mortgage Loan Activity Report”
and the entity level “Financial Condition Report”.
- The state-level “Residential Mortgage Loan Activity Report” –
(When is it completed?)
completed quarterly, within 45 days of the end of the calendar quarter.
- The entity level “Financial Condition Report” –
(When is it completed?)
completed annually, within 90days of the company’s fiscal year end.
- Loan servicers or employees who assist in refinancing a loan or changing the terms on an existing loan are considered -
considered loan originators.
- Loan originator ORGANIZATIONS can receive compensation for
for selling additional products such as title insurance, but individual loan originators may not.
- Loan originator organizations must keep a
record of payments from a creditor and payments to individual originators for three years.
( The files must also contain a copy of the compensation agreements that govern the payments. )
- Creditors may not
include mandatory arbitration clauses or waivers of the consumer’s right to file a lawsuit alleging federal violations in transactional agreements.
- It is a penalty of $ 30,058 for violating the
the SAFE Act.
