SAFE Act / Types of LOs FAQ 1 – What are the categories of loan originators in the SAFE Act?

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Q:  What are the categories of loan originators in the SAFE Act?
 
A:  Under the SAFE Act, to engage in the business of being a residential mortgage loan originator, an individual must meet one of the following sets of requirements: 
  • Registered Loan Originator. For individuals who are employees of covered financial institutions (generally including employees of federally regulated depository institutions, such as banks or credit unions), loan originators must obtain and annually maintain registration with the NMLSR system. Regulation G describes the requirements to become a registered loan originator. 12 USC §§ 5102(8) and 5103(a) ; 12 CFR § 1007.103. 
  • State-Licensed Loan Originator. For individuals who are not employees of a covered financial institution (in general, employees of non-depository institutions), loan originators must obtain and annually maintain a valid loan originator license from a state and obtain registration with the NMLSR system, which generally is accomplished through the licensing process. State law implements the SAFE Act’s requirement to obtain a loan originator license in a state. A loan originator should check with their state to determine the full set of state law requirements for obtaining a loan originator license. 12 USC §§ 5102(12) and 5103(a) ; 12 CFR § 1008.103.
  • Loan Originator with Temporary Authority. As of November 24, 2019, certain loan originators have temporary authority to act as a loan originator in a state for a limited period of time while applying for a state loan originator license in that state. Not all loan originators are eligible for temporary authority. Temporary authority applies to loan originators who were previously registered or state-licensed for a certain period of time before applying for a new state license. Additionally, loan originators are eligible for temporary authority only if they have applied for a license in the new state, are employed by a state-licensed mortgage company in the new state, and satisfy certain criminal and adverse professional history requirements described in the SAFE Act. More information about these requirements can be found in the SAFE Act, 12 USC § 5117 .
Note:  Registered Loan Originators and State-Licensed Loan Originators are types of loan originators initially established by the SAFE Act when it was enacted in 2008. Loan Originators with Temporary Authority were added to the SAFE Act by § 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), effective as of November 24, 2019. 
Updated Sept. 25, 2019
 
 
The CFPB’s SAFE Act FAQs pertain to compliance with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) as of November 24, 2019, the effective date of the 2018 amendments to the statute.  Information may be found here:  https://www.consumerfinance.gov/policy-compliance/guidance/secure-fair-enforcement-for-mortgage-licensing-act/secure-and-fair-enforcement-mortgage-licensing-act-faqs/
 
Reviewing these questions and answers is not a substitute for reviewing the SAFE Act or the Bureau’s Regulation G or Regulation H. The statute and Regulations G and H are the definitive sources of information regarding the requirements. 
 

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