CSBS/AARMR S.A.F.E. Mortgage Licensing Act Implementation PlanSummaryTo receive current updates for S.A.F.E. and your State updates Register Here
Introduction Title V- The Secure and Fair Enforcement Mortgage Licensing Act (“SAFE Act”)- of the Housing and Economic Recovery Act of 2008 (Public Law 110-289) signed into law on July 30, 2008 requires all states to have in place a system of licensure meeting minimum standards for mortgage loan originators by July 31, 2009. The CSBS/AARMR Model State Law provides states with direction in creating this system of licensure. The CSBS/AARMR S.A.F.E. Mortgage Licensing Act Implementation Plan2 (“SAFE Implementation Plan”) provides direction in implementing this system of licensure for individuals acting as mortgage loan originators in each state.
The SAFE Implementation Plan addresses the major standards under the SAFE Act that state regulatory agencies, mortgage loan originators, and the Nationwide Mortgage Licensing System and Registry (NMLS&R) must meet. These include:
- Criminal History Record Information Checks
- Credit Report Checks
- National Testing of Mortgage Loan Originators
- Nationally Approved Pre-licensure and Continuing Education
- Surety bond/Recovery Fund Requirements
- NMLS&R Mortgage Call Reports
- Public access
- Consumer complaint processing
As with the Model State Law, the SAFE Implementation Plan builds upon states’ extensive experience in mortgage licensing to develop a plan that clarifies the SAFE Act as necessary, meets Congressional intent, and puts forth a sound and consistent standard of oversight. The CSBS/AARMR SAFE Implementation Plan represents the work of state regulators in conjunction with conversations with industry and the U.S. Department of Housing and Urban Development (HUD) and is subject to change over time.
The CSBS/AARMR Model State Law has been drafted by a working group of 10 state mortgage regulators with the goal of developing language to be used by state legislatures and regulatory agencies in enacting laws and promulgating regulations that would comply with the mandates of The SAFE Act. A copy of the most recent version of the CSBS/AARMR Model State Law can be found on the CSBS website at: SAFE Act Information Page
The CSBS/AARMR SAFE Implementation Plan has been developed by a working group of 18 state regulatory agencies with the goal of directing the movement of individuals subjected to state licensure as mortgage loan originators in a manner that meets Congressional intent, improves the supervision of mortgage loan originators, and does not disrupt originations.
The Criminal Justice Information Service (CJIS) of the Federal Bureau of Investigations has certain standards and requirements that may affect some of the implementation standards set forth. CSBS has entered discussions with CJIS to determine exactly how NMLS&R can process fingerprints. The results of these discussions may change some of the standards.
The Fair Credit Reporting Act (FCRA) and other federal laws may limit the processing of credit reports through NMLS&R. CSBS has had preliminary discussions with credit reporting companies. Further discussions will provide details on how NMLS&R plans to process credit reports.
General Consistent with the Model State Law, for each of the requirements, the SAFE Implementation Plan identifies two categories of individuals with two different compliance time frames:
Licensed MLOs are mortgage loan originators who were licensed before July 31, 2009 under a state law that was in existence before July 31, 2008. A state must bring such individuals into compliance with the provisions of the S.A.F.E. Act no later than January 1, 2011.
Non-Licensed MLOs are mortgage loan originators who did not hold a license as of July 31, 2009. This may be due to the fact that no law existed in the state, they were exempt from licensing under the state law, or were not in the industry. A state must bring such individuals into compliance with the provisions of the S.A.F.E. Act no later than July 31, 2010.
NOTE: Each state regulatory agency will establish its own deadlines within the deadlines stated above and provide specific guidance in implementing SAFE Act and state requirements.
Criminal History Record Information ChecksNon-Licensed MLOs: Between July 31, 2009 and July 31, 2010, within a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must provide a set of fingerprints to the NMLS&R for submission to the FBI for a national criminal history background check.
Licensed MLOs: Between July 31, 2009 and January 1, 2011, within deadlines determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must provide a set of fingerprints to the NMLS&R for submission to the FBI for a national criminal history background check.
State criminal background checks cannot be processed through NMLS&R unless state law authorizes the same processing as is available for the national criminal background check through the FBI.
Credit Report ChecksNon-Licensed MLOs: Between July 31, 2009 and July 31, 2010, within a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must provide authorization for obtaining a credit report.
Licensed MLOs: Between July 31, 2009 and January 1, 2011, within a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must provide authorization for obtaining a credit report.
National Testing of Mortgage Loan OriginatorsAll mortgage loan originators are required to pass the NMLS&R developed national test, including relevant state components, regardless of prior testing, experience, or other criteria. Non-Licensed MLOs: Between July 31, 2009 and July 31, 2010, within a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must pass the NMLS&R SAFE Mortgage Loan Originators Test. Licensed MLOs: Between July 31, 2009 and January 1, 2011, within a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must pass the NMLS&R SAFE Mortgage Loan Originators Test in order to maintain their license. The NMLS&R SAFE Mortgage Loan Originators Test will contain a federal component and a state component for each participating state. The federal portion of the Test need only be taken once, unless an individual is unlicensed for a period of five or more years. Licensed mortgage loan originators must take only the state portion of the test when applying for licenses in additional states. Nationally Approved Pre-Licensure and Continuing EducationWith the following exception, all mortgage loan originators are required to successfully complete 20 hours of pre-licensure education courses regardless of prior testing, experience, education or other criteria. Non-Licensed MLOs: Before July 31, 2010, by a deadline determined by the regulator of the state in which they conduct origination activity, mortgage loan originators must complete 20 hours of NMLS&R approved education. Licensed MLOs: Before January 1, 2011 mortgage loan originators must complete 20 hours of NMLS&R approved education, except that this requirement can be met if the mortgage loan originator completes or has completed pre-licensure or continuing education as a part of his or hers existing state licensure requirement and the state regulatory agency can certify that the 20 hours of state-required education has been completed.. Once NMLS&R approved pre-licensure education has been completed and recorded in NMLS&R, mortgage loan originators do not need to take pre-licensure education again, even when applying for subsequent mortgage licenses. With the following exception, all mortgage loan originators will be required to complete eight hours of NMLS&R approved education annually. States with existing pre-licensure and/or continuing education course approval programs may continue those programs through calendar year 2009 (and possibly into 2010). Such courses would be considered acceptable under the pre-licensure education guidelines above.
Mortgage loan originators do not need to take continuing education in the calendar year in which their first state license was granted.
Surety Bond/Recovery Fund Requirements States must adopt a surety bond requirement on companies employing state-licensed mortgage loan originators that is based on the sum total of originations of the state-licensed loan originators working for that company or implement a recovery fund paid into by state-licensed mortgage loan originators or their employing company.
In states that do not license mortgage companies, states must adopt a surety bond requirement or implement a recovery fund paid into by state-license mortgage loan originators. For the purposes of consumer protection and complying with the SAFE Act, states should not require net worth on mortgage loan originators or on companies. States will find it worthwhile to maintain net worth standards on licensed companies for other purposes. In states choosing to implement a recovery fund, the fund would be administered by the state and under the terms as established by the state. NMLS&R Mortgage Call ReportsAll companies state-licensed or state-registered through NMLS&R that employ state-licensed mortgage loan originators will be required to complete the NMLS&R Mortgage Call Report on an annual basis.
A NMLS&R Mortgage Call Report is a statement of condition on the company and its operations including financial statements and production activity volumes reported on a per state basis. Companies not required to be licensed in a state but employing licensed mortgage loan originators should register through their state with NMLS&R in order to complete the mortgage call report on behalf of their mortgage loan originators. States are strongly encouraged to align the coverage of their licensing or registration laws for companies with those for mortgage loan originators under the SAFE Act. Public AccessAs functionality is available, NMLS&R will provide public access to information about state licensed and federally-registered mortgage loan originators and state-licensed companies through a website accessible over the internet. Information that will be available to the public concerning mortgage loan originators shall consist of license status(es), employment history, and publicly adjudicated disciplinary and enforcement actions.
Information that will be available to the public concerning state-licensed mortgage companies shall consist of license status(es), address, branches, Other Trade Names, and publicly adjudicated disciplinary and enforcement actions.
Consumer Complaint ProcessingAs functionality is available, NMLS&R will facilitate the collection of consumer complaints on behalf of state and federal mortgage regulators and transmittal to the relevant regulator. NMLS&R will track complaints and make information available to all participating regulators.
Complaints submitted through NMLS&R will not be made public through NMLS&R.
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