Is the LO credit report requirement retroactive to registered LO's hired before the 1/10/2014 compliance date? We have heard conflicting opinions. We read the commentary to say the criminal and credit histories apply to LO's hired before but for whom there were no applicable statutory standards in effect at the time hired. These are our MLOs and we did not run credit reports on them with their inititial registration process as it was not required.

I didn't think it was retroactive to ones hired prior to 2014.

Check out Comment 36(f)(3)(i)-2:

2. Retroactive obtaining of information not required. Section 1026.36(f)(3)(i) does not require the loan originator organization to obtain the covered information for an individual whom the loan originator organization hired as a loan originator on or before January 10, 2014, and screened under applicable statutory or regulatory background standards in effect at the time of hire. However, if the individual subsequently ceases to be employed as a loan originator by that loan originator organization, and later resumes employment as a loan originator by that loan originator organization (or any other loan originator organization), the loan originator organization is subject to the requirements of § 1026.36(f)(3)(i).

So, that basically cancels the #1 immediately preceding #2 in the commentary, which states it does apply. End result you do not have to go back and run credit reports on MLO/LO hired and registered on or before 1/10/14. Is that correct? Great commentary!

I read that to say that we don't have to go back IF they were screened according to statutory requirements in effect when they were hired. I'm not aware there were any statutory requirements before SAFE, unless it had to do with state law and obtaining an Executive Officers license to lend. Anyone heard definitive opinion on that more recently?

It says "applicable statutory or regulatory background standards". Meaning what ever was applicable at the time so if there were no requirements that is what was applicable at the time.

Wow....I thought I had a grasp on this but after reading this string I am completely confused

On current employees, if they have been run through NMLS system no need to go back and rescreen.

For employees who are not NMLS registered but under the new rule fall under the definition of a MLO we do have to perform credit and criminal history checks.

For new employees qualifying as MLO, after Jan 2014, will run through the criminal and credit history check process.

If the employee needs a NMLS then the check is done annually.
If the employee does not need a NMLS, then the check is a one time only process.

Yes?

Section 19 of the Federal Deposit Insurance Act which has been around since 1950 which put in place statutory or regulatory background standards employees of insured depository institution.

So anyone hired after this would not have been hired when there were no applicable statutory or regulatory background standards in effect at the time of hire.

Right?

I, too, am confused, but River Girl you have come closest to my understanding.

Existing employees who are not registered MLOs, but do discuss mortgage loan products with customers in order assist them and get them to the appropriate MLO who does take the application. These employees will need background and credit checks by January 2014 just like a new-hire employee starting January 2014?

BUT these same LOs who do not fit the two-prong SAFE Act functions required of MLOs, do not have to be registered with the NMLSR under the SAFE Act. Is this correct?

Yes, but only if you haven't already conducted those checks. If you already pulled a CBC and credit report when they we hired to meet FDIA Section 19, then you are done.



Correct. As long as they do not meet the 2 prong test under the SAFE Act, that employee does not have to register.