CUNA Regulatory Comment Call

June 5, 2009

Proposed SAFE Act Rules for Registration of Mortgage Lenders


Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Senior Vice President and Deputy General Counsel Mary Dunn at and to Senior Assistant General Counsel Jeff Bloch at; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you have questions or would like a copy of the proposed rules. You may also access a copy here.


The SAFE Act was enacted last year and requires a nationwide licensing and/or registration system for residential mortgage loan originators. For financial institutions, the respective Agency must develop a registration system by July 29, 2009. However, under the proposal, the initial registrations do not have to be completed until 180 days after the Registry is capable of receiving them, which is not expected until mid-year 2010. At that time, employees will not be able to originate residential mortgage loans until they register and obtain a unique identifier that is associated with the originator within the Registry system. The Agencies will issue a formal announcement in advance of the date when the Registry will begin accepting registrations.

Those not regulated by an Agency must be licensed and registered under State law, and the SAFE Act requires all States to have such a system in place by July 29, 2010. This would include CUSOs and their employees. Employees who originate residential mortgage loans for the CUSO and the credit union would be subject to both the State licensing system and the requirement under these proposed rules. The Registry is used for both the State system and for the registration system outlined in these proposed rules.

The SAFE Act requires the development of a registration system for financial institution employees through the Registry, which is an Internet-based system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. Information that is to be submitted to the Registry includes the mortgage loan originators fingerprints for criminal background checks, as well as personal history, experience, and information related to administrative, civil, or criminal matters.

The Agencies expect to enter into an agreement with the Registry that addresses other requirements and issues, such as fees, security, and other operational matters. However, this agreement will not be completed until this proposal is finalized.

The Registry will serve as a repository of information on mortgage loan originators. The financial institution will be responsible for reviewing employee submissions and reports that are received from the Registry.


Residential mortgage loan originators must register if they are employees of a financial institution or a subsidiary of a financial institution that is regulated by an Agency. This would not include CUSOs as they are not regulated by NCUA, although CUSO employees would have to comply with the State registration and licensing requirements.

Under the proposed rules, the mortgage loan originator must register with the Registry, maintain and renew that registration, and obtain a “unique identifier,” which is a number or other means of identification that is associated with the loan originator within the Registry system. The unique identifier remains the same, even when the employee changes employment, moves, or changes his or her name. This identifier tracks the loan originator and facilitates public access to the employment history and any disciplinary or enforcement actions that have been initiated against the loan originator. The financial institution must require its employees to comply with the proposed rules and cannot allow them to originate loans until they are in compliance.

A “mortgage loan originator” means an individual who takes a residential mortgage loan application and offers or negotiates the terms of a mortgage loan in exchange for compensation. This would not include an individual who performs purely administrative or clerical tasks on behalf of a loan originator or an individual who only performs real estate brokerage activities. This would also not apply to those who originate timeshare loans. The term “administrative or clerical” tasks means: 1) the receipt, collection, and distribution of information common for the processing or underwriting of a residential mortgage loan; and 2) communication with a consumer to obtain information necessary for the processing or underwriting of the mortgage loan.

The proposal includes an appendix that provides numerous examples of activities that would cause an employee to be considered a “mortgage loan originator” for purposes of these rules, which are not all inclusive. These include examples of when an employee:

The proposed rules only apply to residential mortgage loans that are used for personal, family, or household use. This also includes refinancings, reverse mortgages, home equity lines of credit, and other first and second lien loans.

The proposed rules will not apply to an employee if during the previous 12 months: 1) the employee acted as a loan originator for five or fewer residential mortgage loans; and 2) the financial institution employs originators who meet this threshold who in aggregate originate 25 or fewer residential loans. The employee would have to register if either the individual or aggregate threshold is exceeded. However, once registered, the employee must continue to be registered until he or she stops making mortgage loans, even if the employee falls below the above threshold in any one specific year. Also, these thresholds are voluntary and loan originators are permitted to register if they choose or if their employer requires registrations.

The loan originator must renew his or her registration annually during the period between November 1 and December 31 of each calendar year, regardless of the date of the initial registration. To renew, the loan originator must confirm that the information in the Registry is still accurate and complete and must update any information, if necessary. In addition to providing an update during the renewal period, the information also needs to be updated when:

The initial registration is effective as of the date the registrant receives notice from the Registry that the process is complete. A renewal or update is effective when the registrant receives notice from the Registry that the renewal or update is complete. Here is the employee information that has to be submitted to the Registry:

The financial institution may either provide the required information to the Registry or request that the employee do so. Either way, the employee must attest to the correctness of the information and must provide authorization for the Registry or the financial institution to obtain information related to any administrative, civil, or criminal findings in which the employee is a party. The employee must authorize the Registry to make the following information publicly available:

The nonpublic information submitted to the Registry will be available to the Agencies and to State mortgage regulators, as appropriate. The financial institution must have policies and procedures for confirming the adequacy and accuracy of employee registrations, which must also cover updates and renewals.

The financial institution is also required to provide certain information to the Registry, which includes the institution’s name, main office address, primary Federal regulator, primary point of contact information, and contact information for “system administrators,” who will have the authority to provide this information to the Registry and keeping it and its list of registered employees current. System administrators, who may not serve as loan originators, must update the information within 30 days after it becomes inaccurate.

In addition, the financial institution must confirm to the Registry that it employs the registrant after all the other information about the employee is provided. Within 30 days after the registrant is no longer an employee, the financial institution must notify the Registry of the date that he or she ceased being an employee.

Employees who are registered will not have to re-register when they change their place of employment and continue to originate mortgage loans provided that:

These re-registration requirements apply when transferring from one financial institution to another when both are covered under these rules, regardless of whether either is a bank, thrift, or credit union. They also apply when the originator was State-licensed under the SAFE Act prior to transferring to a financial institution that is covered under these rules. In addition, the rules provide a 60-day grace period to comply with these re-registration requirements when employment changes as a result of an acquisition, merger, or reorganization.

Financial institutions must implement written policies and procedures that are intended to assure compliance with these rules. These must be appropriate to the nature, size, complexity and scope of the institution’s mortgage activities and must include the following:

(The Agencies have specifically requested comment on the issues raised in these questions.)

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Deputy General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Luke Martone • Senior Regulatory Counsel • (202) 508-6743 •