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#1949950 - 08/06/14 10:38 PM LOAN OFFICER SIGNATURE
Complianceking Offline
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We had a loan officer to resign over the weekend. He has loans that are currently in-process that will be funded as they will be going into document drawing. The question is will the Loan Officer who resigned be required to sign the final 1003 application and other documents such as the Per Diem Disclosure etc. Would this be an issue under the SAFE Act? By the way, he is a registered MLO under our NMLS Registry. Where would I go to search in the regulations if warranted? I’ve never dealt with such a scenario. Any guidance would be greatly appreciated.

Regards,

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#1949997 - 08/07/14 12:57 PM Re: LOAN OFFICER SIGNATURE Complianceking
rlcarey Online
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He is no longer an employee of the bank - how can he sign documents??? Assign a new MLO.
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#1950150 - 08/07/14 03:32 PM Re: LOAN OFFICER SIGNATURE Complianceking
Complianceking Offline
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Thank you Rlcarey. That is exactly what I am recommending, as I spoken with the loan production manager on this issue. He thought that he would be in violation of SAFE Act from a signature standpoint. However, this would not be the case, as I've spoken with other contacts that have registered MLOs at their shops. Basically, it's best to have a written process in place requiring the Loan Officer manager to be registered with an NMLSR. It is their name and NMLS number that goes on the final 1003, Note and Security instrument, in the event that the originating loan officer is no longer an employee of the bank. By adopting this process, it will also provide a point of contact for the borrower should they have questions at closing.

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#1950219 - 08/07/14 04:16 PM Re: LOAN OFFICER SIGNATURE Complianceking
rlcarey Online
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Well, if there is something wrong with the loans, the number and name is on them so the regulator knows who to prosecute. It has nothing to do with customer service.

Whoever told you that might want to re-think the process. It is not correct unless the person listed has been charged "with primary responsibility for the origination."
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#1950290 - 08/07/14 05:27 PM Re: LOAN OFFICER SIGNATURE Complianceking
Complianceking Offline
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My recommendation would be to establish a process in the event a registered MLO who is no longer with the bank resigns, then the Loan Production Manager with an NMLS number through the Registry can step in and would be able to facilitate the closing of the loan. Perhaps, I did not clearly state in my original posting what prompted this. (See below)

If a Loan Consultant (MLO) leaves the company between the date he took the application and the closing of loan he/she took the application on, who signs the relevant closing documents as the MLO at the closing?

Blank - With notation?
Another MLO?
Loan Sales Manager – who is registered with NMLS ?

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#1950349 - 08/07/14 06:03 PM Re: LOAN OFFICER SIGNATURE Complianceking
rlcarey Online
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I guess I am a little confused. You keep saying who "signs" the closing documents. As far as I know, it is the borrower.

If you are requiring your MLOs to sign any documents, that is far outside any of the SAFE Act or Regulation Z requirements.

The loan documents that must include the names and NMLSR IDs are:

(i) The credit application;

(iii) The note or loan contract; and

(iv) The security instrument.

No where do you find a signature requirement.
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#1950405 - 08/07/14 06:29 PM Re: LOAN OFFICER SIGNATURE Complianceking
John Burnett Offline
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And nowhere will you find a requirement that the MLO who is the first to make contact with the applicant must be the LO or MLO who negotiates the rate or terms or that the same individual has to be the one who closes the loan. In fact, it would be unlikely, in many banks, to see the same MLO Unique Identifier throughout the file from application to closing.
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#1950434 - 08/07/14 06:48 PM Re: LOAN OFFICER SIGNATURE Complianceking
Complianceking Offline
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This is very confusing and I am getting the information from two different individuals in our production dept. Very frustrating to say the least. It is my understanding that they were referring to the final 1003 application. The reason for them asking is because they understood that the Credit Application requires the unique ID number (NMLSR). Therefore, it came down to would it be appropriate for a non- registered MLO employee to sign the 1003 (Loan Originator's Signature Page 3 Credit Application) on behalf of the MLO who has left the company. Obviously, the answer would be no. That's when it would be necessary to assign the Loan Sales Manager who has a registered NMLSR number to the former Loan Officer's loan and have that manager to sign the final 1003. Yes it's understood that the borrower must sign the closing or final 1003, but the Loan Originator would want to sign as well.

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#1950459 - 08/07/14 07:18 PM Re: LOAN OFFICER SIGNATURE Complianceking
rlcarey Online
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rlcarey
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Any requirement for a "final" 1003 is a requirement imposed by either your investors or it is self-imposed. There is no regulatory requirement for an MLO signature on any loan document. You are trying to refer to regulatory requirements for guidance in a situation in which there are none.

If you are being required to do this by an investor, you would be best to ask them about it for guidance. If this is self imposed, then pick a path and stick with it.

I do agree that no one should sign a document "on behalf" of another employee or former employee.
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#1951764 - 08/11/14 09:09 PM Re: LOAN OFFICER SIGNATURE Complianceking
Princess Romeo Offline

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I also think this is where the whole NMLS system becomes a bit useless. Yes - there is a final 1003 that is formalized and signed by both the borrower and loan originator, and every investor in the planet (Freddie, Fannie, etc.) requires it to be in the "package."

So imagine the hapless new LO who gets assigned the pending loans after "John Shifty" LO leaves, and "Henry Hapless" name and number are now on these loans. Does Henry Hapless now become the focus of investigation and potential prosecution if these loans go bad?
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#1951786 - 08/11/14 09:31 PM Re: LOAN OFFICER SIGNATURE Complianceking
Kathleen O. Blanchard Offline

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Presumably the bank records will demonstrate that the new officer stepped in at the last moment.
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#2050199 - 11/17/15 11:11 PM Re: LOAN OFFICER SIGNATURE Princess Romeo
Dan Offline
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Washington, DC
Just and FYI - following the 2015 AARMR conference AllRegs published an Ask a Regulator in which NY, ND, MS and NH responded to questions about having the MLO sign the 1003. Here is Mississippi's Q&A:

Q. Does the state have any specific requirements for the Mortgage Loan Originator to
execute the Residential Mortgage Loan Application (1003)? If so, does this include both the
initial and final application?

A. Yes, a signature is required by the Mortgage Loan Originator per the Mississippi S.A.F.E.
Mortgage Act (81-18-33) & (Regulations 1.8).

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#2050229 - 11/18/15 02:37 PM Re: LOAN OFFICER SIGNATURE Complianceking
rlcarey Online
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rlcarey
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Dan,

§ 81-18-5. Exemptions

The following are exempt from the provisions of this chapter:

(a) Registered mortgage loan originators, when acting for an entity described in Section
81-18-3(ii).

If you are an employee of a financial institution, you are exempt from all of the provisions in Chapter 18.
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#2050657 - 11/20/15 03:10 PM Re: LOAN OFFICER SIGNATURE Complianceking
Compliance101 Offline
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We have a credit union that just lost their NMLS registered employee- she resigned her position. She is working for them as a consultant however. They do have a contract between the two of them for her to continue to assist them with items that they need while they are training and educating new employees. The question they have is can she continue use her NMLS on the loan documents?

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#2050673 - 11/20/15 03:46 PM Re: LOAN OFFICER SIGNATURE Complianceking
Dani York, CRCM Offline
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TN
The NMLS number stays with the person forever. She can use it on whatever she wants....it's just a number. She is only REQUIRED to use it if she meets the definition of LO under the SAFE Act (meets the 2-prong test),

Her biggest issue now is she is no longer an employee of a federally registered financial institution, and probably would fall under the licensing rules....meaning she needs to get training as outlined by your state's SAFE Act law. There is a good chance that her registration, while still owned by her, is not in compliance with your state's SAFE Act rules for MLOs that are not employees of federally regulated institutions.
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