Hi all,

We recently had a LO leave our company (state licensed, and sponsorship was ended in NMLS) but one of her loans remained under her name through consummation. The Note, finals docs, etc. contained her name and license #. Our LOS performs a check at docs out to ensure that the LC will be licensed under our company at the time of consummation so, in this particular instance, the LOS threw up a fail. The loan still closed under the LO's name despite the fail. Now there's concern over the investor refusing to purchase the loan.

My question - is there guidance in any regulation stating that the loan must close under a LO that is actively sponsored by the company at the time of consummation? I have not been able to find anything under the SAFE Act or TRID.

Additionally, even if there is no specific regulation requiring this, what is best practice?

Your only valid argument is that the loan office was still primarily responsible for the loan at the time the documents were issued. If you had new documents at closing and the LO already left, you have a violation as someone that is not employed cannot be responsible for the loan. Your investor is most likely going to kick that loan back at some point in time.

Paragraph 36(g)(1)(ii)

1. Multiple individual loan originators. If more than one individual meets the definition of a loan originator for a transaction, the name and NMLSR ID of the individual loan originator with primary responsibility for the transaction at the time the loan document is issued must be included.

Rlcarey, we've always valued the opinions that you post on this site. Thank you for your response.

I came out to look this up because this exact scenario was just posed to me. I was surprised to only see 7 posts in the SAFE Act forum.

Out on the NMLS Registry site it lists FHFA's statement for identifying whose NMLS to use:
The loan originator’s unique identifier as assigned by NMLS. The notice stated that the loan originator is the individual who takes and signs the mortgage application form;

FNMA and FLMHC have similar views: If there is more than one loan originator on a particular loan, the loan originator ID and the loan origination company ID entered should be associated with the loan originator who signs the loan application.

Then the CFPB steps in, and part of their official interpretation states: the name and NMLSR ID of the individual loan originator with primary responsibility for the transaction at the time the loan document is issued must be included. If the individual loan originator with primary responsibility for a transaction at the time a document is issued is not the same individual loan originator who had primary responsibility for the transaction at the time that a previously issued document was issued, the previously issued document is not required to be reissued merely to change a loan originator name and NMLSR ID.

Am I understanding this correctly? The CFPB isn't tying the NMLS number to the individual who took the loan application (as FNMA and Freddie and FHFA does), they’re okay tying it to any registered individual who works at the financial institution who is okay assuming responsibility for an application they may not have taken and had nothing to do with.
New for 2018, NMLS identifiers are being reported on the LAR and could be/ will be used to analyze MLO activity. But, the analytics won't be reliable because the NMLS identifier could belong to anyone.

Does any one know if the CFPB is addressing this conflict?

What you put on delivery documents to an investor is governed by the investor. What you print on the documents is governed by Regulation Z. I see no conflict.

My source material was the NMLS Registry web site itself, which does include the link you referenced above. But nothing addresses a situation where the MLO leaves the employ of their company the day before the loan closes. The application wouldn't have been taken by Lender A and referred to Lender B to underwrite and close the loan (I'm not sure if "Lender" means an individual MLO, MLO's don't underwrite).

After I spouted off about HMDA 2018 I looked up the requirement for reporting the NMLS on the LAR...guidance at § 1003.4(a)(34) states to report individual mortgage loan originator with primary responsibility for the transaction as of the date of action taken pursuant to § 1003.4(a)(8)(ii).

"date of action taken" conflicts with "at the time a document is issued"

True, but when you have a number of MLOs who may have been "in charge" of the loan at various times, it can make sense to require the number of the MLO responsible at the time of the event in question.

Actually, there are 637 threads with 4016 comments in this forum. If you scroll down to the bottom of the page, you'll see that only the most recent 3 months posts are displayed. You can change that to go back to the beginning of time if you want to see really old stuff.

It is true that this forum doesn't see as much action as the hot ones like TRID or Lending Compliance or HMDA 2018 Overhaul, but they are much more involved and complex topics than than the SAFE Act.