SAFE Act – In Regulation G, what are the policy and procedures requirements?

Compliance > Regulation G - SAFE Act
Q:  In Regulation G, what are the policy and procedures requirements?
 
A:  Policies and Procedures – 12 CFR 1007.104
 
Covered financial institutions that have one or more MLO employees must adopt and follow written policies and procedures to carry out their SAFE Act responsibilities. The requirement to adopt and follow policies and procedures applies to all covered financial institutions that employ individual MLOs, where MLOs act within the scope of their employment, and regardless of the application of any de minimis exception to their employees. In addition, covered financial institutions must conduct annual independent compliance tests to ensure compliance with the regulation. The policies and procedures must be appropriate to the nature, size, complexity, and scope of the institution’s mortgage lending activities and apply only to those employees acting within the scope of their employment at the institution. The policies and procedures must:
  • Establish a process for identifying which employees of covered financial institutions must be registered;
  • Require that all employees who are MLOs be informed of the registration requirements of the SAFE Act and SAFE Act regulation and instructed on how to comply;
  • Establish procedures to comply with the SAFE Act regulation's unique identifier requirements;
  • Establish reasonable procedures for confirming the adequacy and accuracy of MLO employee registrations, including updates and renewals, by comparisons with its own records;
  • Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements andprocedures;
  • Provide for annual independent testing for compliance with the SAFE Act regulation by institution personnel or an outside party;
  • Provide for appropriate action if an employee fails to comply with the registration requirements of the SAFE Act regulations or the institution’s related policies and procedures, including prohibiting such employees from acting as MLOs or other appropriate disciplinary actions;
  • Establish a process for reviewing employee criminal history background reports received pursuant to the regulation, taking appropriate action consistent with applicable federal and implementing regulations with respect to the reports, and maintaining records of the reports and actions taken with respect to applicable employees; and
  • Establish procedures designed to ensure that any third party with which the institution has arrangements related to mortgage loan origination has policies and procedures to comply with the SAFE Act and SAFE Act regulation, including appropriate licensing and/or registration of individuals acting as MLOs.
 
This can be found in the Bureau of Consumer Financial Protection’s Regulation G, 12 CFR 1007, which may be found here:   https://www.ecfr.gov/cgi-bin/text-idx?SID=1b79f32f7881a1ba9f373f9eefbc84e8&mc=true&node=se12.8.1007_1101&rgn=div8

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