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#1426014 - 08/09/10 05:01 PM SAFE Act and branch staff
NMB Offline
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Southeast Michigan
We are trying to figure out how to exclude many of our branch employees from qualifying as MLOs. Currently they may accept an application or assist the applicant in completing the application for home equity and HELOC loans. The application is then sent to a central loan department to run a credit report and verify information. Then the Consumer Loan Officer underwrites it and tells the branch employee who contacts the applicant to communicate the decision. The branch employee schedules and conducts the closing with documents prepared in the central loan department.

I would like to eliminate the branch employees from the first prong of the MLO test by describing their activities as administrative tasks completed for the Consumer Loan Officer. Is anyone else struggling with this issue? Does the arguement seem logical?
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#1426015 - 08/09/10 05:03 PM Re: SAFE Act and branch staff NMB
Dani York, CRCM Offline
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See my last few posts in this thread. Though not everyone agrees with me....

http://www.bankersonline.com/forum/ubbth...881#Post1425881
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#1426509 - 08/10/10 03:05 PM Re: SAFE Act and branch staff Dani York, CRCM
QCL Offline
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NMB - I was with you, until you said that they conduct the loan closing. That seems like you are stretching, to avoid compliance with the law.

I our shop, I would have those people registered.

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#1426626 - 08/10/10 04:19 PM Re: SAFE Act and branch staff QCL
NMB Offline
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Southeast Michigan
I thought about that, but the act of closing the loan isn't mentioned anywhere as a function of the first or second prong.

I am mulling over the definition of "adminstrative and clerical tasks" to try to figure out what constitutes "information common for the processing . . . of a loan". Could taking application information and forwarding it to the consumer loan officer for review and underwriting fit this exception?
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#1426648 - 08/10/10 04:33 PM Re: SAFE Act and branch staff NMB
Dani York, CRCM Offline
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TN
Originally Posted By: NMB
Currently they may accept an application or assist the applicant in completing the application for home equity and HELOC loans. The application is then sent to a central loan department to run a credit report and verify information. Then the Consumer Loan Officer underwrites it and tells the branch employee who contacts the applicant to communicate the decision. The branch employee schedules and conducts the closing with documents prepared in the central loan department.


Review Appendix A. It gives examples of tasks that qualify and don't qualify an employee as an MLO. Both items in your original post that I have highlighted red would qualify an employee as an MLO(requiring registration) if the tasks are completed by the same person. If you want to exempt them, make sure they only do one of the tasks, otherwise register them.

Here is a link to appendix A:

http://edocket.access.gpo.gov/2010/pdf/2010-18148.pdf

This is the FR publishing. Scroll to page 42 of the PDF, look in the left column (for FDIC). For FRB, scroll to page 37 of the PDF, look in the right column.
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#1428160 - 08/12/10 04:11 PM Re: SAFE Act and branch staff Dani York, CRCM
NMB Offline
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Southeast Michigan
So . . . If we split the functions so that one person takes the application and the other does the notification/negotiation, then you don't have an MLO involved at all! (Actually the branch person would not be registered as a MLO, but the consumer loan officer who communicates the decision will be registered for other reasons.) What do you do then about providing the unique identifier?
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#1428216 - 08/12/10 05:04 PM Re: SAFE Act and branch staff NMB
Dani York, CRCM Offline
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I would only try to separate duties for people who are considered administrative, ie your underwriters, assistants, branch personnel, to get them out of the registration requirement. Get the loan officers registered even if technically they only do one. Separation of duties so you have no MLOs screams avoidance of the law.

To provide the unique identifier, we are going to include it in the officer's signature line on letters, email, etc, on the officer's business card, on the application, on the GFE, counteroffer/adverse action notices, etc. Basically anything written. The identifier must be provided with the first written correspondence before acting as an MLO. the business cards I think would be the best way to do it on the front end.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1420636#Post1420636

this thread has discussion of all of these topics. read through it and it may help you sort this stuff out.
Last edited by Dani York; 08/12/10 05:04 PM. Reason: can't spell
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#1432727 - 08/23/10 04:51 PM Re: SAFE Act and branch staff Dani York, CRCM
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I'm working on my policy and procedures, and I'm having trouble with the "requirement to provide the unique identifier". I see it must be provided "before acting as a mortgage loan originator". We will have more than MLO and the secretary hands out the loan application much of the time. Does the unique identifier have to be included with the loan application? If so, how or where? I was reading the paragraph above where they are putting the number on a lot of things including business cards. We may not know when a customer takes an application which loan officer they will get so should you put each possible loan officer's number on the application somewhere?

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#1432807 - 08/23/10 06:40 PM Re: SAFE Act and branch staff Compliance Lover
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good ol south
I am trying to figure out our policies and procedures. Does anyone have a sample they can e-mail me to understand what all is needed?

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#1433177 - 08/24/10 02:03 PM Re: SAFE Act and branch staff CarolinaComplian
Dani York, CRCM Offline
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TN
Originally Posted By: cbp0419
I am trying to figure out our policies and procedures. Does anyone have a sample they can e-mail me to understand what all is needed?


PM me your email address.
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#1433185 - 08/24/10 02:08 PM Re: SAFE Act and branch staff Compliance Lover
Dani York, CRCM Offline
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TN
Originally Posted By: Compliance Lover
I'm working on my policy and procedures, and I'm having trouble with the "requirement to provide the unique identifier". I see it must be provided "before acting as a mortgage loan originator". We will have more than MLO and the secretary hands out the loan application much of the time. Does the unique identifier have to be included with the loan application? If so, how or where? I was reading the paragraph above where they are putting the number on a lot of things including business cards. We may not know when a customer takes an application which loan officer they will get so should you put each possible loan officer's number on the application somewhere?


The identifier must be given with the first written communication before acting as an MLO. For your scenario, I would probably do 1 of 2 things. Either provide a list of all the MLOs and their numbers with every application or have the assigned MLO give out their unique identifier when the loan is assigned (ie maybe a letter stating "I have been assigned to your loan application. I look forward to working with you....." and include their identifier in the signature line or enclose their business card.) You could even identify the MLO on the early disclosures that are sent out.

That being said, make sure that your secretary is not an MLO. If she is, then she would have to provide her identifier with the application.
Last edited by Dani York; 08/24/10 02:10 PM. Reason: add comment
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#1436139 - 08/30/10 04:21 PM Re: SAFE Act and branch staff Dani York, CRCM
NMB Offline
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Southeast Michigan
Originally Posted By: Dani York
I would only try to separate duties for people who are considered administrative, ie your underwriters, assistants, branch personnel, to get them out of the registration requirement. Get the loan officers registered even if technically they only do one. Separation of duties so you have no MLOs screams avoidance of the law.


Dani - Further up this thread, you seemed to imply that our branch staff would qualify as MLOs. However in the comment quoted above, it implies that they may be considered administrative. This is the crux of my dilemna. Do administrative functions cover just processing (verifications, credit report, flood cert., etc.) or does handing out the application, accepting it from the applicant, maybe answereing questions, and maybe actually sitting down with the applicant and helping fill it out meet the first prong?

(I have reviewed the other SAFE Act thread but it doesn't seem to cover my particular branch issues.)
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#1436157 - 08/30/10 04:49 PM Re: SAFE Act and branch staff NMB
#Just Jay Offline
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IMO, it comes down to who is quoting or discussing rates with the applicant. Generally, your branch has one or two indivuals who are trusted enough to discuss lending rates and terms with applicants.

Unless you are going to totally centralize the process (i.e. the branch staff does no more than hand out or accept paper, and all convos and correspondance is from that central location), IMO, you have to have one or two registered MLO's in each branch where you will complete/accept real estate secured consumer apps, if the volume warrants it.

IMO:

Senior teller who assists in completing app, and discusses how we can lower your rate with a direct debit: register.

Peak time teller who can help senior teller by making a call reminding the applicant to bring in paystubs: do not register.

Supervisor who occasionally conducts a closing: do not register.
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#1436323 - 08/30/10 06:45 PM Re: SAFE Act and branch staff NMB
Dani York, CRCM Offline
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TN
You need to read Appendix A to the SAFE Act for the definition of what is considered administrative for the purposes of registering an MLO. If your loan assistants or branch staff both take apps and negotiate loan terms (includes communicating rates and terms, providing GFEs, etc), then they must be registered regardless of their actual job title.

If a teller performs both parts of the test, then they must be registered. The person communicating the terms and rates does not have to have lending authority. So if a line teller accepts an app and the loan officer also has that teller call the customer to say "Officer X has approved you for 36 months at 6.00.", then the teller has just acted as an MLO.
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#1436346 - 08/30/10 06:58 PM Re: SAFE Act and branch staff NMB
Dani York, CRCM Offline
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Dani York, CRCM
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TN
Originally Posted By: NMB
Originally Posted By: Dani York
I would only try to separate duties for people who are considered administrative, ie your underwriters, assistants, branch personnel, to get them out of the registration requirement. Get the loan officers registered even if technically they only do one. Separation of duties so you have no MLOs screams avoidance of the law.


Dani - Further up this thread, you seemed to imply that our branch staff would qualify as MLOs. However in the comment quoted above, it implies that they may be considered administrative. This is the crux of my dilemna. Do administrative functions cover just processing (verifications, credit report, flood cert., etc.) or does handing out the application, accepting it from the applicant, maybe answereing questions, and maybe actually sitting down with the applicant and helping fill it out meet the first prong?

(I have reviewed the other SAFE Act thread but it doesn't seem to cover my particular branch issues.)


BTW, my comment that you quoted was directed at your statement that if you separate duties for all staff you could have no MLOs to register. Anyone other than your loan officers could be considered administrative and have duties separated out to not qualify for registering; however, you need to apply the APpendix A definitions to each job in your bank and see if they qualify or not as MLOs. If you choose to separate duties make sure you have appropriate controls to keep staff from inadvertently becoming MLOs (like my previous post example of the teller).
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#1436756 - 08/31/10 02:11 PM Re: SAFE Act and branch staff Dani York, CRCM
auditgirl6 Offline
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I read that refi's do count...what about modifications?

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#1436947 - 08/31/10 04:38 PM Re: SAFE Act and branch staff auditgirl6
Kathleen O. Blanchard Offline

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Originally Posted By: auditgirl6
I read that refi's do count...what about modifications?

Both refinances and modifications are dependent upon the activities conducted, not what the transaction is called. There is a lengthy discussion in the Section by Section Discussion.

"The determining factor in whether the S.A.F.E. Act applies to residential mortgage loanrelated transactions is whether the employee engaged in the transaction meets the definition of “mortgage loan originator.” In general, neither modifications nor assumptions result in the extinguishment of an existing loan and the replacement by a new loan, but rather the terms of an existing loan are revised or the loan is assumed by a new obligor. Thus, Agency-regulated institution employees engaged in these activities typically do not take loan applications, within the meaning of the S.A.F.E. Act. Therefore, the Agencies conclude that the S.A.F.E. Act’s definition of “mortgage loan originator” generally would not include employees engaged in loan modifications or assumptions because they typically would not meet the two-prong test of this definition. However, if an employee engaged in a transaction labeled a loan “modification” or “assumption” can be found to meet the definition of “mortgage loan originator,” due to the nature of the specific transaction in question, he or she would be subject to the S.A.F.E. Act and this final rule. The substance of a transaction, not the label attached to it, is determinative of whether the Agency-regulated institution employee associated with it is a mortgage loan originator for purposes of this rule. For example, the Agencies believe that Agency-regulated institution employees engaged solely in bona fide cost-free loss mitigation efforts which result in reduced and sustainable payments for the borrower generally would not meet the definition of “mortgage loan originator.” In this regard, it should be noted that third parties involved in foreclosure prevention activities for compensation or gain, although outside the scope of this rulemaking, may be subject to licensing and registration pursuant to state law.

The Agencies sought comment on whether the individuals who engage in certain refinancing transactions, specifically cash-out refinancing with the same lender, should be excluded from the definition of residential mortgage loan originator. Some industry commenters did not believe that such an exclusion was appropriate primarily because of the nature of a refinancing as a new loan and the potential for consumer abuse in these transactions. Other commenters also requested that we exclude individuals engaged in refinancings from the final rule’s definition of mortgage loan originator, and that refinancings be excluded from the final rule’s definition of residential mortgage loan, if the refinancing involves the same lender and the borrower obtained no cash proceeds. We decline to make this change. Refinancings are new loans, regardless of the lender, the loan terms, or proceeds, that involve a new application and an offer or negotiation of new loan terms. If an individual engaged in a refinancing transaction of a residential mortgage loan meets the two prongs of the definition of mortgage loan originator, he or she must comply with the requirements of the S.A.F.E. Act and this final rule."
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#1532011 - 04/06/11 02:48 PM Re: SAFE Act and branch staff Kathleen O. Blanchard
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Kathleen, hello! Do you have any insight into what constitutes a "cost-free loss mitigation" effort? What is and is not considered "cost-free"? Is charging for an appraisal but not charging processing fees considered "cost-free"? I cannot find a definition in the Act of anywhere else. Thanks!
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