UST: Compliance

Question 1

How does the SAFE Act address the issue of compliance?

Answer 1

• Establishing requirements for individuals to obtain a license before engaging in loan originator activities, and
• Establishing authority for the CFPB to determine whether a state licensing program for loan originators meets the standards established under the S.A.F.E. Act

Question 2

What are considered prohibited acts for an MLO to engage in?

Answer 2

-Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders, or to defraud any person
-Engage in any unfair or deceptive practice toward any person
-Obtain property by fraud or misrepresentation
-Solicit or enter into a contract with a borrower that provides, in substance, that the person or individual may earn a fee or commission through “best efforts” to obtain a loan even though no loan is actually obtained for the borrower
-Solicit, advertise, or enter into a contract for specific interest rates, points, or other financing terms unless the terms are actually available at the time of soliciting, advertising, or contracting
-Conduct any business without holding a valid license as required, or assist any unlicensed person in the conduct of loan origination business
Fail to:
-Make disclosures as required under applicable state or federal law and regulations
-Comply with the state’s S.A.F.E. Act, or rules or regulations promulgated under it
-Comply with any other state or federal law, rules or regulations applicable to any business authorized or conducted under the S.A.F.E. Act
-Make, in any manner, any false or deceptive statement or representation, including any statement or representation related to the rates, points, or other financing terms or conditions for a residential mortgage loan
-Engage in bait-and-switch advertising
-Negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any information or reports:
1. Filed with a governmental agency or the NMLS, or
2. In connection with any investigation conducted by the state licensing agency or another governmental agency
-Make any payment, threat, or promise, directly or indirectly, to influence the independent judgment of any:
1. Person in connection with a residential mortgage loan, or
2. Appraiser of a property with respect to the value of the property
-Collect, charge, attempt to collect or charge, or use or propose any agreement for the purpose of collecting or charging any fee prohibited by law
-Cause or require a borrower to obtain property insurance coverage in an amount that exceeds the replacement cost of the improvements as established by the property insurer
-Fail to truthfully account for monies belonging to a party to a residential mortgage loan transaction

Question 3

What are the violations and penalties for engaging in proibited activity as an MLO?

Answer 3

• Deny, suspend, revoke, condition, or decline to renew a license:
  1. For a violation of the state’s S.A.F.E. Act, rules and regulations issued under the Act, or any order or directive issued under the Act
  2. If an applicant or licensee at any time:
  a. Fails to meet the requirements for the issuance of a license or renewal, or
  b. Withholds information or makes a material misstatement in an application for a license or renewal of a license
• Order that restitution be paid by a person who has violated the state’s S.A.F.E. Act
• Impose fines
• Issue orders or directives, including immediate temporary orders to cease and desist from conducting business or from any harmful activities or violations of the Act
• Enter an immediate temporary order requiring a person to cease business under a license or interim license if it is determined that:
  1. The license was erroneously granted, or
  2. The licensee is currently in violation of the state S.A.F.E. Act
• Order and direct other affirmative action as it deems necessary

Question 4

What is the maximum amount of penalty for act or omission?

Answer 4

25,000 for each violation, pending a hearing