The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry.
The Secure and Fair Enforcement for Mortgage Lending (SAFE), part of the Housing and Economic Recovery Act of 2008 (HERA), established minimum standards for mortgage training, both pre-licensing and continuing education.
These requirements are currently being implemented throughout the states. The National Mortgage Licensing System (NMLS), which is responsible for implementing these requirements, was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR).
Visit the licensing page for detailed information.
There is noticeable concern in the industry in regards to the required credit report processing by the NMLS for state regulator review. The SAFE Act requires all residential mortgage loan originators (RMLOs) to submit a filing through the NMLS that will authorize NMLS to obtain a credit report on that individual. As part of this process, state mortgage regulators must determine the individual has demonstrated financial responsibility. The following items will trigger a Texas Department of Savings and Mortgage Lending review:
Bankruptcies filed within the last 10 years;
Current outstanding judgments (except judgments solely as a result of medical expenses);
Current outstanding tax liens or other government liens;
History of and current collection accounts;
Foreclosures within the past three years;
Three or more accounts more than 90 days past due;
Multiple Social Security Numbers attached to the individual’s name;
Consumer provided comments;
No credit history for the individual;
Credit items the individual is appealing, if noted in the report; and
Outstanding child support.
Texas SML will not rely on credit scores when determining an individual’s fitness for a license but may look at systemic, long-term financial irresponsibility as a reason to further investigate the information received before a final licensing decision is made. No single item listed above will serve as grounds for ineligibility, but several will cause further investigation and each decision will be made on a case by case basis. For more information visit the TDSML website.
Effective June 1, are we required to have our license number or NMSL number on our business cards, website or other marketing material?
Texas SML indicated to LOs will begin using the number on business cards and all marketing materials when notified by the state that their application has been approved. This notification may come when your name appears as an approved loan originator on the Department website. 5.24.10
Under the SAFE Act the only exemption allowed for a transaction in which an individual sells residential real estate to another individual and
carries the related note is a transaction between relatives. 4.20.10
A loan originator cannot originate residential mortgage loans without being sponsored by an operating entity. That entity can be a proprietorship, partnership or corporation and can change from time-to-time depending upon employment. If a proprietorship, an MU-1 must be on file with NMLS. 4.5.10
The state has provided a window of July 1 through August 31 of this year for existing licensed loan officers to file their MU-4 disclosure form.
The NMLS will not accept the MU-4 until after you have taken and passed the national component of the SAFE Act test. 02.19.10
Your current license will expire on December 31, 2010. In order to have a valid license going into 2011 you will have to take and pass the national component of the SAFE Act exam (can be taken at any time). If you took the Texas state test to obtain your state license your will not be required to repeat the state test. If the state can certify that you have had at least 20 hours of approved training in connection with earning your license plus any subsequent continuing education it will not be necessary for you to take the 20 hours of SAFE Act training. 02.19.10
The bank originators are required under the SAFE Act to be registered at the national level. Guidance for filing the disclosure information for registration is being drafted by the interagency group and to our knowledge no information has been released. Until guides are released, residential loan originators for federally insured depository institutions may legally originate loans in Texas. 02.11.10
Once an LO receives their unique identifier number it is with them for life. When a change of employer is made the LO does have the obligation to affiliate their number with the new employer. 02.11.10
Since you have never been licensed as a mortgage broker or loan officer you will be required to take the 20 hours of pre-licensing training and take and pass both the state and national components of the SAFE Act exam. 02.09.10
Anyone discussing terms and rates relating to residential financing must be licensed in Texas as a mortgage loan originator. The licensing requires compliance with the licensing requirement of the SAFE Act. 02.01.10
The SAFE Act has established no minimum experience requirements to
obtain a MLO license. 01.19.10
The Commissioner is taking a very realistic approach to potential credit issues a LO might have had in the past. A pattern of behavior will present a problem, but isolated situations will not preclude the issuance of a license. 01.14.10
If the counselors discuss rates and/or terms or discuss loan options they must be licensed. Individuals that work with borrowers to modify existing loans must be licensed under the Act. 01.08.10
If you want to obtain or retain a current state broker or loan officer license the 15 hours of state approved training must be completed. The state and national will not mix training. Therefore, you will need to take the 20 hours of SAFE pre-licensing training or complete 5 additional hours of state approved training that the state can certify to NMLS. 12.29.09
If working as a W-2 employee for either company there is no
licensing or registration requirement if responsibilities are confined to
closing activities. 11.03.09
The background check requires new fingerprints and the filing of a
MU4 disclosure form. We are suggesting that you file fingerprints electronically at the time that the MU4 is submitted and the form cannot be submitted until Texas is in the national system and that is expected to occur in late March 2010. Although the MU4 will be filed with NMLS the state will perform the actual check. 11.03.09
The FDIC along with other regulatory agencies is developing procedures for the registration of mortgage loan originators employed by depository institutions. Those procedures have not yet been published. 11.03.09
A LO with LO Texas state license will not have to take the state
component of the SAFE exam if the LO earned the license after 2003. If the
license is active or inactive (not expired) they will not have to take the
20 hours of pre-licensing training if they have taken at least 20 hours of
approved training as a requirement of the state LO license.
Experience is not addressed under the SAFE Act. LO's that have never been
licensed will be required to take 20 hours of pre-licensing and both the
state and national component of the SAFE exam. Once a LO sets up an account
with NMLS (national) they can take both the state and national component
tests at any time. 11.03.09
The industry through the trade associations has requested that mortgage brokers and their loan officers be required to participate in both required and supplemental training in order to obtain a license in Texas. As a result of this request mortgage brokers and loan officers must take the 20 of training mandated under the SAFE Act and an additional 10 hours if experienced and an additional 40 if inexperienced before obtaining a license in Texas.
If you are a broker with an active or inactive Texas Brokers License the Texas SML will certify the education required to obtain your license and fulfill your continuing education requirements. If the SML certifies 20 or more hours of classes you have taken, you will not be required to take the 20 hours of pre-licensing training mandated by the SAFE Act.
All individuals involved in the loan originator process in Texas that work for a mortgage broker or mortgage banker must be licensed. Mortgage brokers and their loan offices should be registered now and mortgage banker loan originators must be licensed by March 31, 2010.
A mortgage lender will have to file MU disclosures but cannot do so until the State of Texas joins the NMLS program and it is anticipated that this will be done by the end of March 2010. Originators other than those working for depository institutions do have to be licensed by TSML and do have to have an employer that has filed an MU disclosure with the NMLS. 09.17.09
NMLS has mandated that the 20 hours of pre-licensing training must be taught classroom or classroom equivalent (multiple locations teleconferenced). Online courses will be allowed for continuing education courses. 09.16.09
The Dept. of Savings and Mortgage Lending has not established a standard or "set criterion" for disapproving an applicant based on credit. The Commissioner has indicated that a history of improperly handling one's credit will most like disqualify an applicant and it is possible that a poor credit history alone would be a cause for disqualification. A bankruptcy at some point in the past would not necessarily trigger a disqualification. 09.16.09
Mortgage bankers are not required to obtain a mortgage broker license. The license the mortgage banker will earn is a state specific license obtained by passing the national and state components of the SAFE mandated test and completing 20 hours of pre-licensing training. 09.09.09
If an individual holds an unexpired Texas Mortgage Broker license they will be required to take and pass the national component of the SAFE Act test. If they took the state exam to obtain their license in Texas they will not be required to take the state component of the SAFE Act test in order to receive a Texas license under the Act. If the broker license is expired they must take the 20 hours of pre-licensing training. 09.11.09
Credit union (not CUSO) loan originators are required to register under the Act. Originators are not required to participate in training or sit for the SAFE Act test. The federal regulators are developing the systems to accommodate the registration process.
CU originators may go to the NMLS website and open an account and receive a unique identifier number and then standby for the credit union regulators to give further direction. 09.11.09
Mortgage loan originators employed by the department of a federally insured depository institution are not required to be licensed. Originators are required to be register through the Nationwide Mortgage Licensing System (NMLS) but the process is pending regulator development. 09.15.09
A loan originator is defined in the SAFE Act as "an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain." The State of Texas definition of a loan originator includes any individual that assists a customer by advising on terms, rates, fees or other costs and includes anyone involved in loss mitigation services.
Mortgage loan originators employed by federally regulated depository institutions must register. The timetable is being developed by the regulators and will be communicated to depository institutions at a later date. 09.14.09
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