SAFE Act Registration to Begin in Late January

Credit Union Association of Rhode Island
January 10, 2011 | COMMENTS

The initial period for federal registration of residential mortgage loan originators under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) will begin on or around January 31, according to the National Credit Union Administration (NCUA).

This initial registration period will likely end in late July, the agency added.

The NCUA, the Federal Deposit Insurance Corporation, the Federal Reserve, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Farm Credit Administration will individually confirm the start date just prior to the beginning of the registration period.

A notice will also be published in the Federal Register.

Under the SAFE Act, employees of financial institutions, or their subsidiaries that act as residential loan originators, are required to register with the Nationwide Mortgage Licensing System and Registry. The SAFE Act requires mortgage originators to obtain a unique identifier, and to maintain their registration.

One of the most troublesome aspects of the new provisions relates to the application of the registration requirements to members of the board of directors. In general, the Federal Credit Union Act requires all loans by federal credit unions to be approved by a credit committee or loan officer. Similar provisions apply to state-chartered credit unions and/or their boards of directors. Under the new rules, these individuals will be considered “mortgage loan originators.” Credit union volunteers who meet the definition of “mortgage loan originator” will also be subject to these rules, assuming they otherwise act as employees in that the credit union controls, or has the right to control, the performance of the volunteer’s work

Financial institutions that are subject to the SAFE Act requirements must require employees acting as residential mortgage loan originators to comply with the act's requirements to register and obtain a unique identifier, and must adopt and follow written policies and procedures designed to assure compliance with these requirements.

With respect to compliance implications, the Association and the Credit Union National Association worked tirelessly to secure a recent interpretation by the NCUA to provide greater flexibility to credit unions in this area and to reduce the regulatory burden. If there is a SAFE-registered employee handling the application and taking it to the credit committee or the board of directors when action by such committee or board is required, then the employee can fulfill the requirements and be the registered person. Therefore, no volunteer needs to be registered. For credit unions with only a credit committee and no loan officers, only one member of the committee needs to be registered. Furthermore, if certain loans are approved by a credit committee, such as those over a specified dollar amount, even though the credit union has registered loan officers, members of the credit committee do not have to register.

Reprinted with permission from the Credit Union Association of Rhode Island.