The Secure and Fair Enforcement for Mortgage Licensing Act

Question 1

What is The Secure and Fair Enforcement for Mortgage Licensing Act

(S.A.F.E. Act)

Answer 1

An effort to regulate the mortgage industry on a national level

Passed in 2008 in response to the mortgage lending crisis and the abuses which led to it

Question 2

Scope of the S.A.F.E. Act

Answer 2

1. Established minimum standards for licensure
2. Requires mortgage loan originators be either state-licensed or federally registered

Question 3

Loan originator licensing requirements

Answer 3

• Background checks
• Criminal history : a license applicant may not have:
  
  • A felony conviction in the seven years prior to application, or
  • A financial- or fraud-related felony at any time; such a felony might include fraud, dishonesty, breach of trust, or money laundering
• Financial responsibility
• Pre-licensing education : a license applicant must complete at least 20 hours of pre-licensing education, which must include
  
  • Three hours of federal law
  • Three hours of ethics coursework, and
  • Two hours of coursework related to nontraditional mortgage products
• Testing : a license applicant must pass the licensing examination with a score of 75% or better. If they fail the test, a waiting period of at least 30 days is required before retaking the exam. After failing three consecutive times, an applicant must wait six months before taking the exam again.
• Continuing education : a licensee is required to take a minimum of eight hours of continuing education each year, which must include:
  
  • Three hours of federal law
  • Two hours of ethics instruction, and
  • Two hours of coursework on nontraditional mortgage products