Are You SAFE?

Is your company prepared for the significant changes that result from the implementation of the SAFE Act and the accompanying amendments to state laws and regulations?

Issues to Consider:

• Have you confirmed the effective dates of the various new requirements?
  • Example: In Maryland, mortgage loan originators (MLOs) seeking to apply for an initial license or renew an existing license must meet certain of the new prelicense requirements (i.e. 20 hours of education and a national and state exam) no later than December 31, 2010.
• Does your license exemption still apply?
  • Example: FHA-approved entities are no longer exempt from the Missouri residential mortgage loan broker license.
• Has an amendment changed the scope of your licensable activity?
  • Example: Effective January 1, 2010, companies that only hold the supervised lender license will no longer be permitted to make residential mortgage loans in South Carolina.
• Do you still need an in-state office?
  • Example: Effective January 4, 2010, New Jersey residential mortgage lender and broker licensees will not be required to maintain an in-state office, as long as the licensee is qualified to conduct business in New Jersey and maintains a registered agent for service of process.
• As a servicer, do your employees or independent contractors need a loan originator license in order to conduct loan modifications?
  • Example: In Michigan, individuals employed exclusively by mortgage servicers, who perform loan modification activities, must obtain a license by July 31, 2011, provided that HUD does not issue any contrary guideline or regulation.
• Can your loan originators pass the background check requirements?
  • All states that have enacted SAFE Act provisions prohibit the licensing of any MLOs who do not pass certain background check standards
  • Example: In Nebraska, effective July 31, 2010, an MLO license may not be granted to: (i) an individual who previously had a loan originator license or registration revoked, except that revocations that have been formally vacated or set aside will not be deemed a revocation for the purposes of this provision; (ii) an individual who has been found guilty of or pled nolo contendere to: (a) any felony; or (b) any misdemeanor involving fraud, dishonesty, breach of trust or money laundering; or (iii) an individual who has not demonstrated financial responsibility, character and general fitness to warrant a determination that the individual will operate honestly, fairly and effectively.
• Are you aware of the new fees for loan originator licensing?
  • All mortgage licensees, particularly those with a retail presence, should anticipate that their licensing costs will increase significantly as state regulatory agencies implement their SAFE Act licensing requirements.
  • Example: In Delaware, an MLO license application and licensing fees total $530. An annual assessment of $500 for each MLO licensee also is required.
  • Example: In Kentucky, the MLO license fee is $80.