SAFE Act

Did Dodd-Frank take HELOCs out of the definition of mortgage loan for the SAFE Act?

I don't know, but I would go with the final rule that was issued by the Agencies (which includes HELOCs). I'm not changing our SAFE Act policy unless the Agencies issue new guidance.

I haven't studied Dodd-Frank in depth, but it's my understanding it increased the categories of financial institution employees that are potentially subject to licensing and registration. Dodd-Frank essentially goes back to the beginning and includes people that were intentionally left out of the original SAFE Act. And HELOCs I believe are still absolutely included.

I think if you operate on the principle that nothing ever gets easier or less burdensome, you won't be far wrong.

Agreed.

I see nothing in the Dodd-Frank Act that makes substantive changes to the provisions of the SAFE Act. There's a lot of language that transfers responsibility from HUD to the Bureau, and an addition to TILA that calls for the Fed to issue some regs (presumably as part of Reg Z), but there's no change in definitions that I could find.

If someone is aware of specific changes, please cite a Dodd-Frank Act section number for us to home in on.

Per Title X of the Frank Dodd Act, the compliance for Federal-related banking institutions has been pushed out to July 2011.

Here is the excerpt from F-D:

On a related note, I received an email from BVS (our online training system) stating that policies and procedures must be in place by October 1, 2010. Is this true?

I've written a draft of our SAFE Act policies and procedures, but I was holding off on taking it to the Board until the registry was up and running. To me, it didn't make sense to take something to the Board if we aren't able to do anything yet. But a lot of this new legistation does not make sense. Do I need to make sure that the Board approves the policy prior to October 1, 2010? Any help is apprecaited.

Since the reg is effective on 10/1 and it requires policies and procedures, you will need to have the policies and procedures by that date. We just left a blank in ours for the date when the registry becomes available.

We are holding off on the Policy and Procedures until we get a little more clarification.

We have discussed SAFE Act compliane with our loan service center and with bank line managers as well, but we're holding off on the policy, and we feel comfortable with that for now.

We will have our policy approved at this month's board meeting - in time to be in place by 10-1-10. Our procedures will be draft procedures that I can use for training until we get more info from the registry. Can't tell folks where to go for fingerprints if they (the regulators) haven't provided approved vendors.

Ditto Waldensouth.

Ditto Waldensouth here, too.

Same here Waldensouth. We're having our Policies and Procedures in place and plan to mae the needed amendments when we receive more infomration on the Registry.

Can someone give me the exact excerpt where it states that a policy is due by 10/1/10? I reviewed it but couldn't find it.
Thanks.

There is none. They just have to be in place prior to starting your registration process.

This final rule’s requirement to adopt
these policies and procedures applies to
all Agency-regulated institutions that
employ individuals who act as mortgage
loan originators, regardless of the
application of any de minimis exception
to their employees. These policies and
procedures should be in place at an
institution prior to the registration of its
employees pursuant to this rule.

Thanks Dan for the clarification!

Yes, thanks Dan, very valuable information.

Actually, the Federal Register on July 28, 2010 has the Oct. 1, 2010 deadline for policies and procedures.

Where? The above quote was taken from the July 28, 2010 release of the final rule and in my search I found no such requirements. The only place I found October 1, 2010 mentioned was

DATES: This final rule is effective on
October 1, 2010. Compliance with
§ __.103 (registration requirement) of the
final rule is required by the end of the
180-day period for initial registrations
beginning on the date the Agencies
provide in a public notice that the
Registry is accepting initial
registrations.

I also located the following in the July 28 release;

This in effect
provides institutions with an
implementation period longer than 180
days as institutions and their employees
can begin to implement the final rule’s
requirements before the Registry is
operational, i.e., develop policies and
procedures, train employees, gather
information needed for registration, and
program and implement system controls
before registration is required.

But no where did I find reference to October 1, 2010 as being the deadline for the policy and procedures to be in place, nor did I find any other "effective" date for policies and procedures other than what I quoted above. I'm not saying they're not there just that I didn't find any such requrement in my search, so if you have the citation please post it for the rest of us.

I guess I tied it in with the OCC's release which states in part:

The final rule requires federal agency-regulated institutions, by October 1, 2010, to adopt written policies and procedures to assure compliance with the registration requirements. MLOs should direct inquiries about registration to their employing institutions.

I forget not everyone is OCC regulated.

The OTS said something similar.

IMPORTANT NOTE: The agencies expect the registry to begin accepting federal registrations in early 2011 and will make a public announcement when the date is determined. However, OTS regulations require institutions to adopt written policies and procedures by October 1, 2010, to assure compliance with the law's requirements.

I got this wording from the following page.
http://www.ots.treas.gov/?p=RegistrationOfMortgageLoanOriginators

Has the FDIC released a statement?

The OCC BULLETIN 2010-33 states "The final rule is effective on October 1. National banks must establish the policies and procedures required by the final rule by that date." So if you are an OCC bank, you have a couple of weeks left.

Does this policy require board approval?

Irishguy, here's the FIL from the FDIC dated July 30th. http://www.fdic.gov/news/news/financial/2010/fil10043.html
"The rule takes effect on October 1, 2010, and institutions will be expected to implement appropriate policies, procedures and management systems to ensure compliance."

It would have been clearer if the phrase "by October 1, 2010" followed, but it does not. What do you think, is that what is implied here? It sure seems like it.

Our internal auditors agree with you, Dan.

Per the regulation:

[i][i]DATES: b]This final rule is effective on
October 1, 2010.[/b] Compliance with
§ __.103 (registration requirement) of the
final rule is required by the end of the
180-day period for initial registrations
beginning on the date the Agencies
provide in a public notice that the
Registry is accepting initial
registrations.[/i][/i]

The way I interpret it, everything except the registration is effective October 1st. The policy goes to our Board tomorrow for approval, and we'll have draft procedures in place by then, which I'm sure will be revised once more information about the Registry is available.

That's the way I interpret it, too, sewanee. We will have our policy and draft procedures approved by our board prior to 10/1. While I think it's important to read the supplementary material that is published when a reg is issued, the reg is the reg and this one says it's effective 10/1 (except the registration piece).

The effective date of the Reg is 10/1/10 however the section I quoted above from the Reg indicates you only have to have the policies and procedures in place prior to your registration process, which that process is not yet in place.

If your regulator issued a statement as shown above then by all means you should have your policies and procedures in place, but, depending on your interpretation, the FDIC did not state that as fact. At least now I know I wasn't going crazy and where everyone else was getting the idea they had to be ready by 10/1/10.

BTW, our HR person should be taking ours to the board on 9/16.

Can anyone clarify for me whether the procedures also need to go to the board. I thought I read that they both had to be approved; then I have seen where some of you are only having the policy approved? I just want to make sure I am doing this correctly.

FWIW, I am also on the team that thinks the policies and procedures are to be in place by October 1. That being said, if examiners walked in my shop on December 1, would I be too worried if they are not in place? No. I think I will have a whole lot more to worry about than SAFE (TILA, RESPA, FACTA, etc).

I searched the final rule again, and I don't see where the procedures must be approved by the Board (as is the case with CIP). §____.104 says "A bank .... must adopt and follow written policies and procedures designed to assure compliance..."

MarkB

The first sentence of section _____.104 of the final rule read thus:

"A [financial institutuion] that employs one or more mortgage loan originators must adopt and follow written policies and procedures designed to assure compliance with this subpart." {emphasis mine}

There's nothing in the regulation that specifically requires that the SAFE Act compliance policy be approved by your board. Some banks, however, take all policies there for approval. There's definitely no reason, however, to walk your procedures through the boardroom.

Good point, John.

Pretty much policies are board approved, procedures are from management. Who else is approving your bank policies, and what is that doing to them under Reg O?

My policy is going to the board for approval on Oct 20th. I hope that's soon enough. Have the procedures ready to go for training.

Thanks Dan, I've been sweating a 10/1 deadline too, but my poicy is going to the board for approval 10/20. I feel so much better now...you made my weekend.

I posted this in another SAFE Act thread, but if you read the commentary within the final rule, it states, as Dan said on page 1 of this thread that the P&Ps must be in place before you begin registering. It does not say 10-1.