I had management ask me what the penalties were for non-compliance. I did not see this addressed in the rule. Does anyone know?

Do you sell loans on the secondary market? I do not believe such loans will be accepted by Freddie or Fannie 180 days after the registry is up if they do not contain the registrants (MLO's) number.

While not a penalty, not every bank wants to hold a 30 year mtg in their portfolio.

Not sure if there are penalties. Does the final rule specify any?

Yes, we do. That is a good point!

No, I did not see a penalty section in the final rule.

How about a failure for your compliance program? I can't imagine a failure to comply will be taken lightly by regulators.

We have already had loans suspended on the secondary market for not providing our number and our originator's number. Go Figgure!! We are an FDIC regulated non-member bank.

I'd make a few phone calls to the investors. Keep going up the food chain untilyou get someone who has a clue. Explain that since you are a federally regulated FI you are not able to get any identifiers yet. If they balk, refer them to this page of the NMLS website, then ask them if they know how you can get a number before anyone else.

http://mortgage.nationwidelicensingsystem.org/fedreg/Pages/default.aspx

From a footnote in the discussion section of the SAFE Act:



Review 12 USC 1818 (b)....cease and desist proceedings. It can be invoked for failure to comply with any law or regulation.

I am working on a presentation to the lenders and I wanted to give some detail about the penalty for non-compliance.

I know it could mean a C&D for the bank, and I am assuming the MLO could lose their registration and not be allowed to originate loans any more, etc. But are there more specific details out there somewhere?

Another question....I am revising our Home Equity loan/line applications to include language regarding the SAFE Act. (see below). Should we refer to the MLO's unique identifier as "MLO Unique Identifier" or "NMLS ID"?

"Title V of the Housing Economic Recovery Act of 2008, the Secure and Fair Enforcement Mortgage Licensing Act of 2008 (S.A.F.E. Act) is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of mortgage loan originators (MLO's). Registration is required for MLO's who work for an insured depository institution. The following website will provide you with information about all MLO's who are either licensed or registered, www.nmlsconsumeraccess.org. The registered MLO who is employed by Name of Bank is listed below with their unique identifier. This identifier will be needed to access the information about a particular MLO.

Mortgage Loan Originator Name: _______
MLO Unique Identifier:___________ OR NMLS ID: __________

The MLOs, as bank employees, are "institution affiliated parties" and as such can be put under an order by regulators, up to and including being banned from the industry.

From 12 USC 1818:



EDIT: If you review 12 USC 1818, you will see that there are monetary penalties available as well, both against the bank and employees, directors, etc.

Another question:

As I am reading this, I was wondering if it really applies to us? For example, what kind of third-party vendors is this referring to? We're mostly a commercial bank, but we do a residential loan or a HELOC/HELOAN here and there. The only third party vendors we have would be for obtaining credit reports, AVM's, flood, O&E's and tax service - and none of them would have to be licensed or registered.


"Review all contracts with third-party providers with which the Bank has arrangements related to mortgage loan origination and ensure that they include a provision attesting that the third party complies with the S.A.F.E. Act, including but not limited to appropriate licensing and/or registration of individuals acting as MLOs."

1. An example I can think of off the top of my head is a bank that wanted a third party (a builder) to be able to refer loans for a home improvement - the loans would be secured by the home. The bank wanted to be able to pay a fee to the contractor. The contractor would of course, under RESPA, have to earn the fee which was to include taking the application, etc. That would have required the contractor staff to have been licensed and registered under the state law where they operate. The plan was dropped.

2. Any third parties taking applications for a bank (contract staff perhaps?) could need to be licensed or registered.

3. How about requiring certification from correspondents that handle all or part of the process for the bank? I know some small banks that outsource parts of their process to larger banks, including telephone applications. You would want to make sure that institution was in compliance.

4. Some banks use outsourced call centers - and some of those take phone aps. As non-banks they would need licensing and registration.

Does anyone see a problem with just designating a couple of lenders at each branch to be the go-to for mortgage related transactions?