In 2008 and 2009, in an effort to protect consumers, federal legislators rolled out mountains of legislation to help prevent mortgage fraud. The Secure and Fair Enforcement for Mortgage Licensing (S.A.F.E. Act) is a key component of the Housing and Economic Recovery Act (HERA ) of 2008 that was signed into law on July 30, 2008, according to the HUD website.
Also known as Public Law 110-289, HERA is a housing law to assist with the recovery and the revitalization of America's residential housing market. Beginning the 1st of August 2009, any individual who, “for compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a Mortgage Loan Originator,” according to the S.A.F.E. Act.
Regulations.gov, says “Loan originators who are employees of federally regulated depository institutions and their subsidiaries are required to register through the NMLSR, but are not subject to State licensing requirements.” Additionally, the Board of Governors of the Federal Reserve System issued a press release on June 1, 2009, which said, “Because modification of the Registry to accept federal registrations involves complex technical issues, the proposed rule provides for a delay in implementation of the registration requirements until 180 days after the Registry becomes operational and available for initial federal registrations.”
HUD.gov further explains that, “The provision in the definition that loan originators are individuals who take an "application" implies a formality and commercial context that is wholly absent where an individual offers or negotiates terms of a residential mortgage loan with or on behalf of a member of his or her immediate family. State legislation that excludes from licensing and registration requirements an individual who offers or negotiates terms of a residential mortgage loan only with or on behalf of an immediate family member will not be found to be out of compliance with the SAFE Act merely because of such exclusion."
To recap, if a family member is part of a referral marketer service offering a residential mortgage loan, they do not fall within the guidelines of the S.A.F.E. Act. Loan originators working for a bank or federally regulated depository institution, are not required to pass any state exam or education requirements, they are only required to register with NMLSR. Those individuals, who are required to register with the Nationwide Mortgage Licensing System and Registry (NMLSR), are not even required to meet the registration requirements for 180 days after the Registry becomes operational.
Do you feel safer now?