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9 June 2009
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[Federal Register: June 9, 2009 (Volume 74, Number 109)]
[Proposed Rules]
[Page 27385-27422]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jn09-15]
[[Page 27385]]
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Part II
Department of the Treasury
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Office of the Comptroller of the Currency
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Federal Reserve System
Federal Deposit Insurance Corporation
Department of the Treasury
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Office of Thrift Supervision
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Farm Credit Administration
National Credit Union Administration
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12 CFR Parts 34, 208, 365, et al.
Registration of Mortgage Loan Originators; Proposed Rule
[[Page 27386]]
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DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 34
[Docket ID OCC-2009-0005]
RIN 1557-AD23
FEDERAL RESERVE SYSTEM
12 CFR Part 208
[Docket No. R-1357]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 365
RIN 3064-AD43
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563
[Docket No. 2009-0004]
RIN 1550-AC33
FARM CREDIT ADMINISTRATION
12 CFR Part 610
RIN 3052-AC52
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 761
RIN 3133-AD59
Registration of Mortgage Loan Originators
AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC);
Board of Governors of the Federal Reserve System (Board); Federal
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision,
Treasury (OTS); Farm Credit Administration (FCA); and National Credit
Union Administration (NCUA).
ACTION: Joint notice of proposed rulemaking.
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SUMMARY: The OCC, Board, FDIC, OTS, FCA, and NCUA (collectively, the
Agencies) are proposing amendments to their rules to implement the
Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E.
Act). The S.A.F.E. Act requires an employee of a bank, savings
association, credit union or other depository institution and their
subsidiaries regulated by a Federal banking agency or an employee of an
institution regulated by the FCA (collectively, Agency-regulated
institutions) who acts as a residential mortgage loan originator to
register with the Nationwide Mortgage Licensing System and Registry
(Registry), obtain a unique identifier, and maintain this registration.
This proposal implements these requirements. It also provides that
Agency-regulated institutions must require their employees who act as
residential mortgage loan originators to comply with the S.A.F.E. 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.
DATES: Comments must be received on or before July 9, 2009. Comments on
the Paperwork Reduction Act analysis set forth in Part II of the
Regulatory Analysis Section of this Federal Register notice must be
received on or before August 10, 2009.
ADDRESSES: Commenters that direct comments to more than one Agency may
send comments to any of the Agencies and need not send copies of the
same comment letter to all of the Agencies. Commenters are encouraged
to use the title ``Registration of Mortgage Loan Originators'' to
facilitate the organization and distribution of comments among the
Agencies. Interested parties are invited to submit written comments to:
Office of the Comptroller of the Currency: Because paper mail in
the Washington, DC area and at the OCC is subject to delay, commenters
are encouraged to submit comments by the Federal eRulemaking Portal or
e-mail, if possible. Please use the title ``Registration of Mortgage
Loan Originators'' to facilitate the organization and distribution of
the comments. You may submit comments by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
http://www.regulations.gov, under the ``More Search Options'' tab click
next to the ``Advanced Docket Search'' option where indicated, select
``Comptroller of the Currency'' from the agency drop-down menu, then
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0005''
to submit or view public comments and to view supporting and related
materials for this proposal. The ``How to Use This Site'' link on the
Regulations.gov home page provides information on using
Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
E-mail: regs.comments@occ.treas.gov.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 2-3, Washington, DC 20219.
Fax: (202) 874-5274.
Hand Delivery/Courier: 250 E Street, SW., Mail Stop 2-3,
Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket Number OCC-2009-0005'' in your comment. In general, OCC will
enter all comments received into the docket and publish them on the
Regulations.gov Web site without change, including any business or
personal information that you provide such as name and address
information, e-mail addresses, or phone numbers. Comments received,
including attachments and other supporting materials, are part of the
public record and subject to public disclosure. Do not enclose any
information in your comment or supporting materials that you consider
confidential or inappropriate for public disclosure.
You may review comments and other related materials that pertain to
this proposal by any of the following methods:
Viewing Comments Electronically: Go to http://
www.regulations.gov, under the ``More Search Options'' tab click next
to the ``Advanced Document Search'' option where indicated, select
``Comptroller of the Currency'' from the agency drop-down menu, then
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0005''
to view public comments for this rulemaking action.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC, 250 E Street, SW., Washington, DC.
For security reasons, the OCC requires that visitors make an
appointment to inspect comments. You may do so by calling (202) 874-
4700. Upon arrival, visitors will be required to present valid
government-issued photo identification and submit to security screening
in order to inspect and photocopy comments.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
Board of Governors of the Federal Reserve System: You may submit
comments, identified by Docket No. R-1357, by any of the following
methods:
Agency Web Site: http://www.federalreserve.gov. Follow the
instructions for submitting comments at http://www.federalreserve.gov/
generalinfo/foia/ProposedRegs.cfm.
[[Page 27387]]
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include the
docket number in the subject line of the message.
Fax: (202) 452-3819 or (202) 452-3102.
Mail: Address to Jennifer J. Johnson, Secretary, Board of
Governors of the Federal Reserve System, 20th Street and Constitution
Avenue, NW., Washington, DC 20551.
All public comments will be made available on the Board's Web site
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as
submitted, unless modified for technical reasons. Accordingly, comments
will not be edited to remove any identifying or contact information.
Public comments may also be viewed electronically or in paper in Room
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between
9 a.m. and 5 p.m. on weekdays.
Federal Deposit Insurance Corporation: You may submit comments,
identified by RIN number, by any of the following methods:
Agency Web site: http://www.FDIC.gov/regulations/laws/
federal/notices.html. Follow instructions for submitting comments on
the Agency Web site.
E-mail: Comments@FDIC.gov. Include the RIN number on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW.,
Washington, DC 20429.
Hand Delivery: Comments may be hand delivered to the guard
station at the rear of the 550 17th Street Building (located on F
Street) on business days between 7 a.m. and 5 p.m.
Instructions: All comments received must include the agency name
and RIN for this rulemaking and will be posted without change to http:/
/www.fdic.gov/regulations/laws/federal/propose.html, including any
personal information provided.
Office of Thrift Supervision: You may submit comments, identified
by OTS-2009-0004, by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
http://www.regulations.gov, under the ``more Search Options'' tab click
next to the ``Advanced Docket Search'' option where indicated, select
``Office of Thrift Supervision'' from the agency drop-down menu, then
click ``Submit.'' In the ``Docket ID'' column, select ``OTS-2009-0004''
to submit or view public comments and to view supporting and related
materials for this proposed rulemaking. The ``How to Use This Site''
link on the Regulations.gov home page provides information on using
Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
E-mail address: regs.comments@ots.treas.gov. Please
include OTS-2009-0004 in the subject line of the message and include
your name and telephone number in the message.
Mail: Regulation Comments, Chief Counsel's Office, Office
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552,
Attention: OTS-2009-0004.
Facsimile: (202) 906-6518.
Hand Delivery/Courier: Guard's Desk, East Lobby Entrance,
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention:
Regulation Comments, Chief Counsel's Office, Attention: OTS-2009-0004.
Instructions: All submissions received must include the
agency name and docket number for this rulemaking. All comments
received will be entered into the docket and posted on Regulations.gov
without change, including any personal information provided. Comments,
including attachments and other supporting materials received, are part
of the public record and subject to public disclosure. Do not enclose
any information in your comment or supporting materials that you
consider confidential or inappropriate for public disclosure.
Viewing Comments On-Site: You may inspect comments at the
Public Reading Room, 1700 G Street, NW., by appointment. To make an
appointment for access, call (202) 906-5922, send an e-mail to
public.info@ots.treas.gov, or send a facsimile transmission to (202)
906-6518. (Prior notice identifying the materials you will be
requesting will assist us in serving you.) We schedule appointments on
business days between 10 a.m. and 4 p.m. In most cases, appointments
will be available the next business day following the date we receive a
request.
Farm Credit Administration: We offer a variety of methods to
receive your comments. For accuracy and efficiency reasons, commenters
are encouraged to submit comments by e-mail or through the FCA's Web
site or the Federal eRulemaking Portal. As faxes are difficult for us
to process and achieve compliance with section 508 of the
Rehabilitation Act, we are no longer accepting comments submitted by
fax. Regardless of the method you use, please do not submit your
comment multiple times via different methods. You may submit comments
by any of the following methods:
E-mail: Send us an e-mail at reg-comm@fca.gov.
FCA Web site: http://www.fca.gov. Select ``Public
Commenters,'' then ``Public Comments,'' and follow the directions for
``Submitting a Comment.''
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Gary K. Van Meter, Deputy Director, Office of
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive,
McLean, VA 22102-5090.
You may review copies of comments we received at our office in
McLean, Virginia, or from our Web site at http: //www.fca.gov. Once you
are in the Web site, select ``Public Commenters,'' then ``Public
Comments,'' and follow the directions for ``Reading Submitted Public
Comments.'' We will show your comments as submitted, but for technical
reasons we may omit items such as logos and special characters.
Identifying information that you provide, such as phone numbers and
addresses, will be publicly available. However, we will attempt to
remove e-mail addresses to help reduce Internet spam.
National Credit Union Administration: You may submit comments by
any of the following methods (please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/
RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the
instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Notice of Proposed Rulemaking Part 761, Registration
of Mortgage Loan Originators'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Mary Rupp, Secretary of the Board,
National Credit Union Administration, 1775 Duke Street, Alexandria, VA
22314-3428.
Hand Delivery/Courier: Address to Mary Rupp, Secretary of
the Board, National Credit Union Administration. Deliver to guard
station in the lobby of 1775 Duke Street, Alexandria, VA 22314-3428, on
business days between 8 a.m. and 5 p.m.
[[Page 27388]]
Public inspection: All public comments are available on
the agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/
comments as submitted, except as may not be possible for technical
reasons. Public comments will not be edited to remove any identifying
or contact information. Paper copies of comments may be inspected in
NCUA's law library, at 1775 Duke Street, Alexandria, VA 22314, by
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment,
call (703) 518-6546 or send an e-mail to OGCMail@ncua.gov.
FOR FURTHER INFORMATION CONTACT:
OCC: Michele Meyer, Assistant Director, and Heidi Thomas, Special
Counsel, Legislative and Regulatory Activities, (202) 874-5090, and Nan
Goulet, Senior Advisor, Large Bank Supervision, (202) 874-5224, Office
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC
20219.
BOARD: Anne Zorc, Counsel, Legal Division, (202) 452-3876, Virginia
Gibbs, Senior Supervisory Analyst, (202) 452-2521, and Stanley Rediger,
Supervisory Financial Analyst, (202) 452-2629, Division of Banking
Supervision and Regulation, Board of Governors of the Federal Reserve
System, 20th and C Streets, NW., Washington, DC 20551.
FDIC: Thomas F. Lyons, Examination Specialist, (202) 898-6850,
Victoria Pawelski, Policy Analyst, (202) 898-3571, or John P. Kotsiras,
Financial Analyst, (202) 898-6620, Division of Supervision and Consumer
Protection; or Richard Foley, Counsel, (202) 898-3784, or Kimberly A.
Stock, Counsel, (202) 898-3815, Legal Division, Federal Deposit
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
OTS: Charlotte M. Bahin, Special Counsel (Special Projects), (202)
906-6452, Vicki Hawkins-Jones, Special Counsel, Regulations and
Legislation Division, (202) 906-7034, Debbie Merkle, Project Manager,
Credit Risk, (202) 906-5688, and Rhonda Daniels, Senior Compliance
Program Analyst, Consumer Regulations, (202) 906-7158, Office of Thrift
Supervision, 1700 G Street, NW., Washington, DC 20552.
FCA: Gary K. Van Meter, Deputy Director, Office of Regulatory
Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA,
(703) 883-4414, TTY (703) 883-4434; Richard A. Katz, Senior Counsel,
Office of General Counsel, Farm Credit Administration, McLean, VA
22102-5090, (703) 883-4020, TTY (703) 883-4020; or Jennifer Cohn,
Senior Counsel, Office of General Counsel, Farm Credit Administration,
McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.
NCUA: Regina Metz, Staff Attorney, Office of General Counsel, at
the above address or 703-518-6561; or Roger Blake, Program Officer,
Division of Supervision, Examination & Insurance, at the above address
or 703-518-6385.
SUPPLEMENTARY INFORMATION:
I. Background
A. Statutory Requirements
The S.A.F.E. Act,\1\ enacted on July 30, 2008, mandates a
nationwide licensing and/or registration system for mortgage loan
originators. Specifically, the Act requires all States to provide for a
licensing regime for mortgage loan originators within one year of
enactment (or two years for States whose legislatures meet biennially)
and prohibits an individual employed by a State-regulated institution
from engaging in the business of residential mortgage loan origination
without first obtaining and maintaining a license and registration and
obtaining a unique identifier (State licensing).\2\
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\1\ The S.A.F.E. Act was enacted as part of the Housing and
Economic Recovery Act of 2008, Public Law 110-289, Division A, Title
V, sections 1501-1517, 122 Stat. 2654, 2810-2824 (July 30, 2008),
codified at 12 U.S.C. 5101-5116. Citations in this preamble are to
the ``S.A.F.E. Act'' by section number in the public law.
\2\ If the Secretary of Housing and Urban Development (HUD)
determines that any State fails, within the statutorily prescribed
time frame, to establish a licensing regime that meets the
requirements of the S.A.F.E. Act, the Secretary is required to
establish a system for the licensing and registration of mortgage
loan originators in that State. S.A.F.E. Act at section 1508. HUD
has reviewed the model legislation developed by the Conference of
State Bank Supervisors and the American Association of Residential
Mortgage Regulators to assist States in meeting the minimum
requirements of the S.A.F.E. Act and found it to meet these
requirements. See 74 FR 312 (Jan. 5, 2009) and http://www.hud.gov/
offices/hsg/sfh/mps/smlicact.cfm.
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With respect to mortgage loan originators employed by Agency-
regulated institutions, the Act requires the OCC, Board, FDIC, OTS and
NCUA,\3\ through the Federal Financial Institutions Examination Council
(FFIEC), and the FCA to develop and maintain a Federal registration
system, and to implement this system by July 29, 2009 (Federal
registration). The S.A.F.E. Act specifically prohibits an individual
employed by an Agency-regulated institution from engaging in the
business of residential mortgage loan origination without first
obtaining and maintaining annually a registration as a registered
mortgage loan originator and obtaining a unique identifier. This
rulemaking implements these requirements for Agency-regulated
institutions.
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\3\ The OCC, Board, FDIC, OTS, and NCUA are referred to both in
the S.A.F.E. Act and in this rulemaking as the ``Federal banking
agencies.''
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The S.A.F.E. Act requires that Federal registration and State
licensing and registration must be accomplished through the Registry.
The S.A.F.E. Act provides that the objectives of the Registry, among
other things, are to aggregate and improve the flow of information to
and between regulators; provide increased accountability and tracking
of mortgage loan originators; enhance consumer protections; reduce
fraud in the residential mortgage loan origination process; and provide
consumers with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.\4\
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\4\ See S.A.F.E. Act at section 1502.
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The S.A.F.E. Act specifically requires the Agencies to jointly
develop and maintain a system for registering mortgage loan originators
employed by Agency-regulated institutions with the Registry. In
connection with this registration, the Agencies at a minimum must
furnish or cause to be furnished to the Registry information concerning
the mortgage loan originator's identity, including: (1) Fingerprints
for submission to the Federal Bureau of Investigation (FBI) and any
other relevant governmental agency for a State and national criminal
background check; and (2) personal history and experience, including
authorization for the Registry to obtain information related to any
administrative, civil, or criminal findings by any governmental
jurisdiction.\5\
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\5\ Id. at section 1507(a).
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B. Implementing the Requirements for Federal Registration
The Registry is a Web-based system developed and maintained by the
Conference of State Bank Supervisors (CSBS) and the American
Association of Residential Mortgage Regulators (AARMR). The Registry
was launched in January of 2008 for State licensing and registration
purposes in participating States.\6\ Mortgage loan originators in
[[Page 27389]]
those States complete a single uniform form (known as the MU4)
electronically. The data provided on the form is stored electronically
in a secure, centralized repository available to State mortgage
regulators who use it to process license applications and for
supervisory purposes.
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\6\ As of the date of this proposal, 26 States use this system
to manage the processing of their mortgage licenses. This system is
owned and operated by the State Regulatory Registry LLC (SRR), a
limited-liability company established by CSBS as a wholly-owned
subsidiary to develop and operate nationwide systems for State
regulators in the financial services industry, and has been built
and is maintained by the Financial Industry Regulatory Authority
(FINRA), which operates similar systems in the securities industry.
To obtain more information on this system, see http://
www.stateregulatoryregistry.org. (For purposes of this rulemaking,
reference to the Registry refers, as applicable, to the system
itself and to CSBS and SRR.)
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The Federal banking agencies, through the FFIEC, and the FCA are
working with CSBS to modify the Registry so that it can accept
registrations from mortgage loan originators employed by Agency-
regulated institutions. As indicated above, the Registry currently
supports the licensing of State mortgage lending institutions and their
mortgage loan originators, a process that involves State authorization
of individuals to engage in mortgage loan origination. It was not
originally designed to support the Federal registration of Agency-
regulated institution employees, who do not need additional
authorization from the appropriate Federal agency to engage in mortgage
loan origination activities. Furthermore, the S.A.F.E. Act requires new
enhancements to the current system, such as public access to certain
mortgage loan originator data and processing of fingerprints through
the Registry. These differences between the current Registry and the
Federal registration system required by the S.A.F.E. Act, as well as
the resulting modifications necessary to support both State licensing
and Federal registration functions, require careful analysis and raise
complex legal and system development issues that the Agencies are
addressing through both this rulemaking and modifications to the
Registry. These issues include: Consistency of data requirements for
mortgage loan originators subject to Agency jurisdiction and those
subject to State jurisdiction; modification to Web-page navigation in
the current system; registration functionality for the anticipated
hundreds of thousands of Federal registrants; Federal procurement and
contracting issues; data privacy and security requirements; and
protocols for submitting mortgage loan originators' fingerprints to the
FBI. Furthermore, the modified system is expected to support mortgage
loan originators who move between the Federal registration and the
State licensing regimes due to employment changes or who are licensed
under one or more State regimes and also registered under the Federal
regime.\7\ The Agencies and CSBS have made substantial progress in
resolving these issues, and the Agencies expect to enter into an
agreement with the Registry that will provide for appropriate
consultation between the Agencies and the Registry concerning
registrant information requirements and fees, system functionality and
security, and other operational matters. However, final determination
of system costs, funding, design, development and deployment will not
be completed until after the Agencies adopt a final rule establishing
registration requirements.
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\7\ The Agencies note that some employees of Agency-regulated
institutions may also be subject to the State licensing and
registration regime. For example, employees who act as mortgage loan
originators for a bank and a nondepository subsidiary of a bank
holding company would be subject to both regimes.
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This proposal provides for a 180-day period within which to
complete initial registrations after the Registry is capable of
accepting registrations from employees of Agency-regulated
institutions. During this period, employees of Agency-regulated
institutions would not be subject to sanctions if they originate
residential mortgage loans without having completed their registration.
The Agencies expect that this time period would provide mortgage loan
originators and the Agency-regulated institutions that employ them
adequate opportunity to prepare for the registrations required under
this proposal. The Agencies intend to make a formal public
announcement, in advance, of the date when the Registry will begin
accepting registrations from employees of Agency-regulated
institutions.
When fully operational, mortgage loan originators and their Agency-
regulated institution employers are expected to have access to the
Registry, seven days a week, to establish and maintain their
registrations. Furthermore, the CSBS plans to phase-in system
enhancements to provide consumers with access to certain information
from the Registry in order for them to obtain information on State-
licensed and Federally-registered mortgage loan originators.
As indicated above, and consistent with the S.A.F.E. Act, the
Registry will not screen or approve registrations received from
employees of Agency-regulated institutions. Instead, it will be the
repository of, and conduit for, information on those employees who are
mortgage loan originators at Agency-regulated institutions. As provided
in Sec. ----.104(d) and (h) of the proposed rule, it will be the
responsibility of the Agency-regulated institution to review its
employees' submissions as well as any reports received from the
Registry.
II. Overview of the Proposal
The proposed rule implements the S.A.F.E. Act's requirements with
respect to Agency-regulated institutions. It requires individuals
employed by these institutions who act as mortgage loan originators to
register with the Registry, obtain unique identifiers, and maintain
their registrations. The proposal also directs Agency-regulated
institutions to require compliance with these requirements.
Furthermore, the proposal requires Agency-regulated institutions to
adopt and follow written policies and procedures to assure such
compliance.
A detailed section-by-section description of this proposal with a
request for comments is set forth below.
III. Section-by-Section Description of the Proposed Rule
Section ----.101--Authority, Purpose, and Scope
Section ----.101 \8\ states that this rule implements the S.A.F.E.
Act's Federal registration requirements, which apply to individuals who
originate residential mortgage loans, and describes the objectives of
the S.A.F.E. Act's registration mandate. This section also identifies
the entities that employ individual mortgage loan originators--entities
referred to in this preamble discussion as Agency-regulated
institutions--and that also are covered by this proposal. Under the
S.A.F.E. Act, a mortgage loan originator must be Federally-registered
if that individual is an employee of a depository institution, an
employee of any subsidiary owned and controlled by a depository
institution and regulated by a Federal banking agency, or an employee
of an institution regulated by the FCA. Collectively, the Agencies'
proposed rule applies to a depository institution, any subsidiary of a
depository institution that is regulated by a Federal banking agency,
and an institution regulated by the FCA. Section 1503(2) of the
S.A.F.E. Act provides that ``depository institution'' has the same
meaning as in section 3 of the Federal Deposit Insurance Act (FDI
Act),\9\ and
[[Page 27390]]
includes any credit union. The Agencies note that because the
definition of ``depository institution'' in the FDI Act and in the
S.A.F.E. Act does not include bank or savings association holding
companies or their non-depository subsidiaries, employees of these
entities who act as mortgage loan originators are not covered by the
Federal registration requirement and, therefore, must comply with State
registration and licensing requirements.
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\8\ Because each Agency's proposed rule will amend a different
part of the Code of Federal Regulations but will have a similar
numbering, relevant sections are cited, for example, as ``Sec. --
--.101'' unless otherwise noted.
\9\ Section 3 of the FDI Act defines ``depository institution''
as any bank or savings association. The term ``bank'' in section 3
of the FDI Act means any national bank, State bank, Federal branch,
and insured branch and includes any former savings association. The
term ``savings association'' means any Federal savings association,
state savings association, and any corporation other than a bank
that the FDIC and the OTS jointly determine to be operating in
substantially the same manner as a savings association. 12 U.S.C.
1813.
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Each Agency's proposed rule indicates the specific entities covered
by the proposal. With respect to the OCC, this rule applies to national
banks, Federal branches and agencies of foreign banks, their operating
subsidiaries, and their employees who are mortgage loan
originators.\10\ For the Board, this rule applies to member banks of
the Federal Reserve System (other than national banks), their
respective subsidiaries that are not functionally regulated within the
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended
(12 U.S.C. 1844(c)(5)); and branches and agencies of foreign banks
(other than Federal branches, Federal agencies and insured State
branches of foreign banks) and commercial lending companies owned or
controlled by foreign banks \11\ and their employees who act as
mortgage loan originators. For the FDIC, this rule applies to insured
State nonmember banks (including State-licensed insured branches of
foreign banks) and their subsidiaries (except brokers, dealers, persons
providing insurance, investment companies, and investment advisers) and
their employees who are mortgage loan originators. For the OTS, this
rule applies to savings associations and their operating subsidiaries,
and their employees who are mortgage loan originators. For the FCA,
this rule applies to Farm Credit System (FCS or System) institutions
that originate residential mortgage loans under sections 1.9(3), 1.11
and 2.4(a)(2) and (b) of the Farm Credit Act of 1971, as amended, 12
U.S.C. 2017(3), 2019, and 2075(a)(2) and (b), and their employees who
are mortgage loan originators.\12\ For the NCUA, this rule applies to
Federally-insured credit unions and their employees who are mortgage
loan originators.
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\10\ The S.A.F.E. Act's definition of depository institution
includes Federal branches of foreign banks but not Federal agencies
of foreign banks. However, the OCC has applied the Federal
registration requirements to these entities because they are
Federally regulated and have the authority to originate residential
mortgage loans and, therefore, should not be treated differently
from other Federally regulated or Federally insured institutions.
\11\ The Board notes that it proposes to cover branches and
agencies of foreign banks (other than Federal branches, Federal
agencies and insured State branches of foreign banks); and
commercial lending companies owned or controlled by foreign banks
pursuant to its authority under the International Banking Act (IBA)
(Chapter 32 of Title 12) to issue such rules it deems necessary in
order to perform its respective duties and functions under the
chapter and to administer and carry out the provisions and purposes
of the chapter and prevent evasions thereof. 12 U.S.C. 3108(a). The
Board notes that the IBA provides, in relevant part, that the above
entities shall conduct their operations in the United States in full
compliance with provisions of any law of the United States which
imposes requirements that protect the rights of consumers in
financial transactions, to the extent that the branch, agency, or
commercial lending company engages in activities that are subject to
such laws, and apply to State-chartered banks, doing business in the
State in which such branch or agency or commercial lending company,
as the case may be, is doing business. 12 U.S.C. 3106a(b)(1). Under
the Board's proposal the above entities would be subject to the same
Federal registration requirements as Federal branches, Federal
agencies and insured State branches of foreign banks, which are
covered in the OCC and FDIC rules, respectively.
\12\ Some FCS associations may not exercise their statutory
authority to make residential mortgage loans, and FCS banks no
longer engage in residential mortgage origination activities because
they have transferred their direct lending authority to their
affiliated associations. The FCA emphasizes that employees of FCS
banks and associations that do not engage in residential mortgage
loan origination activities are not subject to the registration
requirements of the S.A.F.E. and these regulations. The Federal
Agricultural Mortgage Corporation (Farmer Mac) is an FCS institution
that among other activities operates a secondary market for rural
residential mortgage loans. The FCA determines that Farmer Mac
employees are not subject to the registration requirements of the
S.A.F.E. Act and these implementing regulations because Farmer Mac
does not engage in mortgage loan origination activities for rural
residents. The Farmer Mac secondary market is modeled after Fannie
Mae and Freddie Mac, and the provisions of the S.A.F.E. Act do not
expressly apply to employees at Fannie Mae and Freddie Mac.
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Section 1507 of the S.A.F.E. Act requires the Federal banking
agencies to make such de minimis exceptions ``as may be appropriate''
to the Act's requirements to register and obtain a unique
identifier.\13\ Section ------.101(c)(2) of the proposed rule states
that these registration requirements do not apply to an employee of an
Agency-regulated institution if during the last 12 months: (1) The
employee acted as a mortgage loan originator for 5 or fewer residential
mortgage loans; and (2) the Agency-regulated institution employs
mortgage loan originators who, while excepted from registration
pursuant to this section, in the aggregate, acted as a mortgage loan
originator in connection with 25 or fewer residential mortgage
loans.\14\ An employee must register with the Registry prior to
engaging in mortgage loan origination activity that exceeds either the
individual or aggregate limit. The Agencies solicit comment on whether
the proposed exception adequately and appropriately covers
circumstances that are truly de minimis and whether any de minimis
exception is appropriate. \15\
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\13\ See S.A.F.E. Act at sections 1507(c) (de minimis
exceptions), 1504(a)(1)(A) (requirement to register), 1504(a)(2)
(requirement to obtain a unique identifier).
\14\ For example, assume an Agency-regulated institution has six
employees, A, B, C, D, E, and F who are not registered loan
originators for an Agency-regulated institution. Employees A, B, C,
and D have acted as mortgage loan originators on five mortgage loans
each during the same 12-month period, while employee E has acted as
a mortgage loan originator with respect to four mortgage loans
during this same time. Employee F has not acted as a mortgage loan
originator during this 12-month period. The institution has not
exceeded its aggregate exception limit of 25 mortgage loans.
Employees A, B, C, and D must register before acting as a mortgage
loan originator with respect to any additional mortgage loan during
this 12-month period because any one of them would exceed the
individual exception limit of five mortgage loans each. Employee E,
who has acted as a mortgage loan originator with respect to four
loans may act as a mortgage loan originator with respect to one more
loan because he or she would not exceed the individual exception
limit of five mortgage loans and the institution would not exceed
the aggregate exception limit of 25 mortgage loans. After employee E
acts as a mortgage loan originator with respect to his or her fifth
loan, and the 25th loan for the institution, the exception in ----
--.101(c) is no longer available to any employee (A, B, C, D, E, or
F) who acts as a mortgage loan originator at the institution during
this 12-month period.
\15\ The FCA joins the Federal banking agencies in proposing a
de minimis exception pursuant to its authority under section
5.17(a)(11) of the Farm Credit Act of 1971, as amended, 12 U.S.C.
2252(a)(11) to ``exercise such incidental powers as may be necessary
or appropriate to fulfill its duties * * *'' In this case, the FCA
is exercising its incidental powers to fulfill the requirement in
the S.A.F.E. Act that it work together the Federal banking agencies
to develop and maintain a system for registering residential
mortgage loan originators at Agency-regulated institutions with the
Registry. A coordinated and uniform approach to the de minimis
exception among the Agencies is appropriate because it best fulfills
the objectives of the S.A.F.E. Act.
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In addition, the Agencies specifically invite comment on: whether
the individual and institution-wide limits on the number of residential
mortgage loans for which employees may act as a mortgage loan
originator without registering and obtaining a unique identifier are
appropriate; whether the proposed exception is adequately structured to
prevent manipulation or ``gaming'' of the registration requirements;
whether an institution should aggregate its residential mortgage loans
with its subsidiaries when calculating the number of mortgage loans
originated for purposes of this exception; whether monitoring for
compliance with the proposed exception would be unduly burdensome for
Agency-regulated institutions, and if so, how such burden could be
minimized; and whether the proposed exception is consistent with the
[[Page 27391]]
consumer protection and fraud prevention purposes of the S.A.F.E. Act.
The Agencies also solicit comment on whether an asset-based
threshold is appropriate or whether other types of limits or
thresholds, or other ways of structuring a de minimis exception, would
be more appropriate. For example, should the proposed de minimis
exception be applicable only to Agency-regulated institutions with
total assets that do not exceed the amount that the Board establishes
annually for banks, savings associations, and credit unions as an
exception from the Home Mortgage Disclosure Act (HMDA)? \16\
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\16\ For 2009, that amount is $39 million. See 73 FR 78616 (Dec.
23, 2008). Pursuant to the HMDA (12 U.S.C. 2808) and Board
Regulation C (12 CFR 203.2(e)(1)(i)), the asset-size threshold is
adjusted annually based on year-to-year changes in the Consumer
Price Index for Urban Wage Earners and Clerical Workers.
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Furthermore, please provide comment on whether alternatively, or in
addition to the foregoing, a de minimis exception should be crafted to
be event specific. For example, a de minimis exception might provide
that the registration requirements would not apply to an employee who
does not regularly function as a mortgage loan originator and who
originates no more than a small number of loans within a 12-month
period during the absence (such as vacation or illness) of the
individual that regularly functions as the Agency-regulated
institution's mortgage loan originator.
The Agencies note that the de minimis exception contained in the
proposed rule would be voluntary; it would not prevent a mortgage loan
originator who meets the criteria for the exception from registering
with the Registry if the originator chooses to do so or if his or her
employer requires registration.
Section ------.102--Definitions
Section ----.102 defines the various terms used in the proposal. If
a term is defined in the S.A.F.E. Act, the proposal generally
incorporates that definition. The proposal has adopted other
definitions used by the Registry in order to promote consistency and
comparability, insofar as is feasible, between Federal registration
requirements and the States' licensing requirements.
Annual renewal period. The proposal requires that a mortgage loan
originator renew his or her registration annually during the annual
renewal period. The annual renewal period is November 1 through
December 31 of each calendar year and a registered mortgage loan
originator must renew during this period regardless of the date of the
initial registration. For example, an employee who registered in
October 2010 would have to renew between November 1, 2010 and December
31, 2010. This is the same annual renewal period provided to State
mortgage loan originators by the Registry. However, the Agencies and
the Registry are discussing whether an alternate annual renewal period
for Agency-regulated institutions at a different time of year from the
annual renewal period of the State mortgage loan originators may be
more desirable from a technical and operational standpoint. For example
the final rule may designate the annual renewal period during another
two-month time period during the year instead of the proposed renewal
period. Furthermore, the Agencies are considering whether the rule
should provide for a method in which the rule's registration
requirements may be temporarily waived, or the initial registration or
renewal period extended, in case of emergency, systems malfunction, or
other event beyond the control of the Agency-regulated institution or
the mortgage loan originator.
Mortgage loan originator. The proposed definition of ``mortgage
loan originator'' is based on the definition of the term ``loan
originator'' included in the S.A.F.E. Act at section 1503(3).
Specifically, this term means an individual who takes a residential
mortgage loan application and offers or negotiates terms of a
residential mortgage loan for compensation or gain. The term does not
include: (1) Any individual who performs purely administrative or
clerical tasks on behalf of an individual who is a mortgage loan
originator; (2) any individual performing only real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) \17\
and is licensed or registered as a real estate broker in accordance
with applicable State law, unless the individual is compensated by a
lender, a mortgage broker, or other loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator; or (3) any individual
or entity solely involved in extensions of credit related to timeshare
plans, as that term is defined in 11 U.S.C. 101(53D).\18\ For purposes
of this definition, the proposal defines ``administrative or clerical
tasks'' to mean: (1) The receipt, collection, and distribution of
information common for the processing or underwriting of a residential
mortgage loan; and (2) communication with a consumer to obtain
information necessary for the processing or underwriting of a
residential mortgage loan. The Agencies note that the appendix to the
proposal includes examples of the types of activities the Agencies
consider to be both within and outside the scope of residential
mortgage loan origination activities.
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\17\ The S.A.F.E. Act defines ``real estate brokerage activity''
to mean any activity that involves offering or providing real estate
brokerage services to the public, including: (i) Acting as a real
estate agent or real estate broker for a buyer, seller, lessor, or
lessee of real property; (ii) bringing together parties interested
in the sale, purchase, lease, rental, or exchange of real property;
(iii) negotiating, on behalf of any party, any portion of a contract
relating to the sale, purchase, lease, rental, or exchange of real
property (other than in connection with providing financing with
respect to any such transaction); (iv) engaging in any activity for
which a person engaged in the activity is required to be registered
or licensed as a real estate agent or real estate broker under any
applicable law; and (v) offering to engage in any activity, or act
in any capacity, described in clause (i), (ii), (iii), or (iv).
S.A.F.E. Act at Sec. 1503(3)(D). Nothing in this proposal would
constitute an authorization for Agency-regulated institutions to
engage in real estate brokerage, or any other activity, for which
the institution does not have independent authority pursuant to
Federal or State law, as applicable.
\18\ ``Timeshare plan'' is defined in 11 U.S.C. 101 (53D) as an
interest purchased in any arrangement, plan, scheme, or similar
device, but not including exchange programs, whether by membership,
agreement, tenancy in common, sale, lease, deed, rental agreement,
license, right to use agreement, or by any other means, whereby a
purchaser, in exchange for consideration, receives a right to use
accommodations, facilities, or recreational sites, whether improved
or unimproved, for a specific period of time less than a full year
during any given year, but not necessarily for consecutive years,
and which extends for a period of more than three years. A
``timeshare interest'' is that interest purchased in a timeshare
plan which grants the purchaser the right to use and occupy
accommodations, facilities, or recreational sites, whether improved
or unimproved, pursuant to a timeshare plan.
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To the extent it is within the scope of the S.A.F.E. Act, the
Agencies are requesting comment on whether the definition of ``mortgage
loan originator'' should cover individuals who modify existing
residential mortgage loans. If so, the Agencies seek comment on whether
these individuals should be excluded from the definition. For example,
the Agencies are considering whether the final rule should exclude from
this definition persons who modify an existing residential mortgage
loan, pursuant to applicable law, provided this modification does not
constitute a refinancing (that is, the satisfaction or extinguishment
of the original obligation and replacement by a new obligation) and is
completed in accordance with a contract between the parties, including
any workout agreement.
[[Page 27392]]
The Agencies seek comment on whether an exclusion for individuals
who modify existing residential mortgage loans would be appropriate in
light of the S.A.F.E. Act's objectives of providing increased
accountability and tracking of the mortgage loan originators, enhancing
consumer protection, reducing fraud in the residential mortgage loan
origination process, and providing consumers with easily accessible
information at no charge regarding the employment history of, and
publicly adjudicated disciplinary and enforcement actions against,
mortgage loan originators. Comment is also requested on whether the
final rule should delay the registration requirement for individuals
engaged in loan modifications for only a specified period in light of
current economic conditions and the national importance of encouraging
mortgage lenders to engage in foreclosure mitigation activities.
Moreover, the Agencies solicit comment on whether individuals who
engage in approving mortgage loan assumptions should be excluded from
the proposed definition of ``mortgage loan originator'' and whether
such approach is consistent with the S.A.F.E. Act's objectives.
In particular, commenters are encouraged to: (1) Describe the
extent to which loan modification and assumption activities are staffed
and managed separately from loan origination activities within the
institution; (2) provide the number of employees who engage in loan
modifications or assumptions and do not otherwise act as mortgage loan
originators; (3) describe the types of contact that staff engaged only
in modifications or assumptions has with customers and the extent to
which such staff initiate contact with customers; (4) discuss whether
loan modification staff ever process loan refinancings; and (5) discuss
the extent of the information that is gathered from customers in the
context of the loan modifications and assumptions. With respect to loan
modifications, describe what staff would handle the transaction if the
modification process becomes a refinancing of a loan or if a new
borrower is added in addition to the original borrower (i.e., adding a
cosigner).
With respect to assumptions, describe: (1) Whether the loan
transactions offered by your institution are typically assumable; (2)
the types of assumptions that are permitted, if any; (3) the type of
contact between the employee and the new borrower; and (4) differences,
if any, between underwriting practices for a loan assumption
transaction and a new loan origination. Comment is also specifically
requested on whether the exclusion of personnel solely engaged in loan
modifications and loan assumptions affects a consumer's ability to
assess the competency and credentials of these personnel, keeping in
mind the consumer protection and fraud prevention purposes of the
S.A.F.E. Act.
To the extent it is within the scope of the S.A.F.E. Act, the
Agencies also seek comment on whether individuals who engage in certain
refinancing transactions should be excluded from the definition of
mortgage loan originator (and, correspondingly whether certain types of
refinancing transactions should be excluded from the definition of
residential mortgage loan). Specifically, should an individual who
engages in refinancings that do not involve a cash-out and are with the
same lender be excluded from the definition of mortgage loan
originator? With respect to these specific types of refinancing
transactions, the Agencies request comment on: (1) Whether such
transactions have similar results for borrowers as loan modifications;
(2) whether employees engaged in such refinancing transactions also
engage in other mortgage loan origination activities; (3) the types of
contact that employees who engage in these types of refinancings have
with customers; (4) the extent to which such staff initiate contact
with customers; and (5) the extent of the information that is gathered
from customers in the context of these types of refinancing
transactions.
Furthermore, the Agencies seek comment on whether individuals who
engage in loan modification and limited refinancing activities should
be excluded from the definition of mortgage loan originator only if the
transactions meet additional criteria. For example, should an
individual who engages only in loan modification activities be excluded
from the definition of mortgage loan originator only if the
modification meets specific criteria such as a lower interest rate,
reduced payment, elimination of an impending adjustment to the rate, or
reduction in principal? Comment is requested on criteria that should be
considered by the Agencies, if any.
Nationwide Mortgage Licensing System and Registry or Registry. The
proposal's definition of these terms is based on the definition
included in the S.A.F.E. Act. Specifically, these terms mean the system
developed and maintained by the CSBS and the AARMR for the State
licensing and registration of State-licensed mortgage loan originators
and the registration of mortgage loan originators pursuant to section
1507 of the S.A.F.E. Act. The Registry currently supports the licensing
and registration of State mortgage loan originators. As explained
above, the Agencies are working with the CSBS to modify the Registry to
support the registration of mortgage loan originators employed by
Agency-regulated institutions.
Registered mortgage loan originator. Pursuant to section 1503(7) of
the S.A.F.E. Act, the proposal defines this term to mean any individual
who meets the definition of mortgage loan originator and is an employee
of an Agency-regulated institution and is registered pursuant to the
requirements of this rule with, and maintains a unique identifier
through, the Registry. This definition is the same as that included in
the S.A.F.E. Act, except that the Agencies have modified it to apply
only to individuals registered pursuant to regulations issued by the
Agencies.
Residential mortgage loan. As in the S.A.F.E. Act, the proposal
defines ``residential mortgage loan'' as any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act
(TILA) \19\ or residential real estate upon which is constructed or
intended to be constructed a dwelling. In addition, the proposal
specifically includes in this definition refinancings, reverse
mortgages, home equity lines of credit and other first and second lien
loans secured by a dwelling in order to clarify that originators of
these types of loans are covered by the rule's requirements.
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\19\ TILA defines ``dwelling'' as a residential structure or
mobile home which contains one-to-four family housing units, or
individual units of condominiums or cooperatives. 15 U.S.C. 1602(v).
Board regulations and commentary include in this definition any
residential structure that contains one to four units, whether or
not that structure is attached to real property, and includes an
individual condominium unit, cooperative unit, mobile home, trailer,
and boat if they are in fact used as a residence. See 12 CFR
226.2(a)(19) (Regulation Z).
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The FCA emphasizes that section 1503(8) of the S.A.F.E. Act and --
--.102(f) do not amend or supersede sections 1.11(b) and 2.4(b) of the
Farm Credit Act of 1971, as amended, 12 U.S.C. 2019(b) and 2075(b), and
their implementing regulation, 12 CFR 613.3030(c), which establish the
purposes for which FCS institutions may originate residential mortgage
loans for eligible rural home borrowers.
[[Page 27393]]
Unique Identifier. The proposal's definition of this term is
identical to that included in section 1503(12) of the S.A.F.E. Act.
Specifically, the proposal defines ``unique identifier'' to mean a
number or other identifier that: (1) Permanently identifies a
registered mortgage loan originator; (2) is assigned by protocols
established by the Registry and the Agencies to facilitate electronic
tracking of mortgage loan originators, and uniform identification of,
and public access to, the employment history of, and the publicly
adjudicated disciplinary and enforcement actions against, mortgage loan
originators; and (3) must not be used for purposes other than those set
forth in the S.A.F.E. Act.
In section ----.103(d), the proposal uses the terms ``control'' and
``financial services-related'' in the descriptions of the information
that is required of an employee who is a mortgage loan originator.
These terms are currently defined in the web-based form collecting
information on State-licensed mortgage loan originators. In order to
promote consistency of the information collected for Agency-regulated
and State-licensed mortgage loan originators, the Agencies intend that
the Registry's definitions of those terms will also be used in the web-
based form collecting information on Agency-regulated mortgage loan
originators and, therefore have not defined them in this
rulemaking.\20\
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\20\ The Registry currently defines ``control'' as the power,
directly or indirectly, to direct the management or policies of a
company or business, whether through ownership of securities, by
contract, or otherwise. Any person who is a general partner or
executive officer, including Chief Executive Officer, Chief
Financial Officer, Chief Operations Officer, Chief Legal Officer,
Chief Compliance Officer, Director and individuals with similar
status or functions; directly or indirectly has the right to vote 10
percent or more of a class of a voting security or has the power to
sell or direct the sale of 10 percent or more of a class of voting
securities; or, in the case of a partnership, has the right to
receive upon dissolution, or has contributed, 10 percent or more of
the capital, is presumed to control that company. The Agencies have
requested that this definition be revised to include ``Chief Credit
Officer.'' The Registry's current definition of ``Financial
services-related'' means pertaining to securities, commodities,
banking, insurance, consumer lending, or real estate (including, but
not limited to, acting or being associated with a bank or savings
association, credit union, mortgage lender, mortgage broker, real
estate salesperson or agent, closing agent, title company, or escrow
agent). The Agencies have requested that this definition be revised
to include ``Farm Credit System institution'' and ``appraiser.''
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Section ----.103--Registration of Mortgage Loan Originators
The S.A.F.E. Act specifically prohibits an individual who is an
employee of an Agency-regulated institution from engaging in the
business of a loan originator without registering as a loan originator
with the Registry, maintaining annually such registration, and
obtaining a unique identifier through the Registry.\21\ As described
more specifically below, under Sec. ----.103 of the proposal, both the
individual employee and the employing institution are responsible for
complying with these requirements. In addition, the proposal requires
that both the employee and the employing institution must submit
information to the Registry for each registration to be complete.
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\21\ See S.A.F.E. Act at section 1504(a).
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Employee registration requirement. In general, proposed Sec. --
--.103(a)(1) requires employees of Agency-regulated institutions who
act as a mortgage loan originator to register with the Registry,
maintain their registration, and obtain a unique identifier. The
Agencies note that this requirement would not apply if the employee is
subject to a de minimis exception. This section further provides that
any employee who is not in compliance with the registration and unique
identifier requirements set forth in this subpart, by the expiration of
the implementation periods specified in Sec. ----.103(a)(3) and
(a)(4)(ii), as applicable, is in violation of the S.A.F.E. Act and this
rule. The OCC, Board, FDIC, and OTS have the authority to take
enforcement actions against their respective Agency-regulated
institutions and individual employees of those institutions who violate
the S.A.F.E. Act and the final rule, pursuant to 12 U.S.C. 1818. The
FCA has authority to take enforcement actions against Farm Credit
System institutions and individual employees who violate the S.A.F.E.
Act and the final rule pursuant to title V, Part C of the Farm Credit
Act of 1971, as amended, 12 U.S.C. 2261 et seq. The NCUA has the
authority to take enforcement actions against federally-insured credit
unions and their employees who violate the S.A.F.E. Act and the final
rule under 12 U.S.C. 1786.
Institution requirement. Unless the de minimis exception applies,
paragraph (a)(2) of Sec. ----.103 provides that an Agency-regulated
institution must require its employees who are mortgage loan
originators to register with the Registry, maintain this registration,
and obtain a unique identifier in compliance with this subpart. This
provision also prohibits an Agency-regulated institution from
permitting its employees to act as mortgage loan originators unless
registered with the Registry pursuant to this subpart, after the
implementation periods specified in Sec. Sec. ----.103(a)(3) and
(a)(4)(ii), as applicable, expire.
Implementation period for initial registrations. The proposal
provides a grace period for initial registrations. Pursuant to
paragraph (a)(3) of this section, an employee is not required to
register, and therefore can continue to originate residential mortgage
loans without complying with the rule's registration requirement, for
180 days from the date the Agencies provide public notice that the
Registry is accepting initial registrations. After this 180-day period
expires, any existing employee or newly hired employee of an Agency-
regulated institution who is subject to the registration requirements
is prohibited from originating residential mortgage loans without first
meeting the registration requirements. The Registry, in consultation
with the Agencies, is considering a staggered registration process for
some of the larger Agency-regulated institutions in order to spread out
the registration of mortgage loan originators throughout this
implementation period. This could reduce the number of originators
registering at any one time, thereby enabling the Registry to
accommodate all registrations in a timely and efficient manner.
The Agencies seek comment on whether the 180-day implementation
period will provide Agency-regulated institutions and their employees
with adequate time to complete the initial registration process. The
Agencies also inquire as to whether an alternative schedule for
implementation and initial registrations would be appropriate, what
such an alternative schedule should be, and why it is more appropriate
than the implementation period proposed by the Agencies. In addition,
the Agencies request comment on whether, and how, a staggered
registration process should be developed.
The Agencies recognize that Agency-regulated institutions and
mortgage loan originators need certainty as to when the Registry is
available to start accepting registrations and the date that the 180-
day clock starts to run. Therefore, the Agencies will provide a
coordinated and simultaneous advance notice to Agency-regulated
institutions of when the Registry will begin accepting Federal
registrations through appropriate means, such as a Federal Register
publication, Web-site notice, or agency bulletin.
Special rule for previously registered employees. Under paragraph
(a)(4) of Sec. ----.103, properly registered or licensed mortgage loan
originators will not have to re-register when they change employment by
moving from one Agency-regulated institution to another or from a
State-regulated institution to
[[Page 27394]]
an Agency-regulated institution, regardless of whether the change in
employment is made voluntarily, through an acquisition or merger of the
employee's prior employer, or through a reorganization where previously
State-licensed mortgage loan originators become subject to the
registration requirements of Agency-regulated institutions.
Specifically, this provision provides that if a new employee of an
Agency-regulated institution had previously registered with, and
obtained a unique identifier from, the Registry prior to becoming an
employee of that institution and has maintained that registration (or
license, if previously employed by a State-regulated entity), the
registration requirements of this subpart are deemed to be met provided
that: (1) The employee's employment information in the Registry is
updated; (2) new fingerprints of the employee are provided to the
Registry for a new background check, except in the case of mergers,
acquisitions or reorganizations; (3) information concerning the new
employing institution is provided to the Registry pursuant to Sec. --
--.103(e)(1)(i), to the extent the institution has not previously met
these requirements, and (e)(2)(i) ; \22\ and (4) the registration is
maintained pursuant to the requirements of paragraph (b) of this
section as of the date that the employee is employed by the
institution.
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\22\ These provisions require: The institution's name, main
office address, IRS Employer Tax Identification Number, Research
Statistics Supervision Discount (RSSD) number; primary Federal
regulator, contact information for individuals at the institution
for Registry purposes; and confirmation that it employs the
registrant. Information regarding an institution's RSSD number is
available from the Board.
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In order to reduce regulatory burden and to prevent an interruption
in mortgage origination activity, this provision provides a 60-day
grace period to comply with these requirements when a registered
mortgage loan originator becomes an employee of an Agency-regulated
institution as a result of an acquisition, merger, or reorganization.
The Agencies seek comment on whether this grace period is appropriate.
Continuing a mortgage loan originator's registration from one
employer to another will reduce regulatory burden on Agency-regulated
institutions as well as the residential mortgage industry. In addition,
because an employee's unique identifier and background information in
the Registry will remain the same, consumers will be able to locate a
mortgage loan originator who has changed employers. The Agencies note
that the registration of a mortgage loan originator who leaves any
employer will be inactive until he or she is hired by a new
institution, his or her record is updated in accordance with the final
rule's requirements, and the new employer acknowledges employing the
mortgage loan originator through the Registry. The individual will be
prohibited from acting as a mortgage loan originator at an Agency-
regulated institution until such time as the registration is
reactivated, unless covered by the 60-day grace period.
Maintaining Registration. Under Sec. ----.103(b), a registered
mortgage loan originator must renew his or her registration with the
Registry during the annual renewal period (November 1-December 31). To
renew, the employee must confirm that the information previously
submitted to the Registry remains accurate and complete, updating any
information as needed. Any registration that is not renewed during this
period will become inactive and the individual will be prohibited from
acting as a mortgage loan originator at an Agency-regulated institution
until such time as the registration requirements are met. All employee
data that has been provided to the Registry about the employee will
remain in the Registry even when the employee is in inactive status.
Inactive mortgage loan originators will not be assigned a new unique
identifier if they reregister.
In addition to the annual renewal, a registration must be updated
within 30 days of the occurrence of any of the following events: (1) A
change in the employee's name, (2) the registrant ceases to be an
employee of the institution; or (3) any of the employee's responses to
the information required for registration pursuant to paragraphs
(d)(1)(iii) through (xi) become inaccurate. These annual renewal and
updating requirements are similar to what is required currently for
State-licensed mortgage loan originators.
This paragraph also provides that any employee who registers with
the Registry must maintain his or her registration unless the employee
is no longer a mortgage loan originator. As a result of this provision,
once an employee registers as a loan originator with the Registry, the
employee will be required to continue this registration until he or she
is no longer engaged in the activity of a mortgage loan originator,
even if, in any particular year, the employee originates fewer mortgage
loans than the number specified in the de minimis exception provision.
The purpose of this requirement is to avoid the creation of a timing
loophole that could allow mortgage loan originators to avoid
registration requirements.
The Agencies specifically request comment on whether the proposed
initial registration requirements as well as the requirements for
maintaining registration are adequate and feasible for Agency-regulated
institutions and their employees who are mortgage loan originators, yet
serve the consumer protection purposes enumerated in the S.A.F.E. Act.
Effective date of registrations and renewals. Paragraph (c) of this
section provides that an initial registration is effective on the date
that the registrant receives notification from the Registry that all
employee and institution information required by paragraphs (d) and (e)
of this section has been submitted and the registration is complete.
A renewal or update pursuant to paragraph (b) is effective on the
date the registrant receives notification from the Registry that all
applicable information required by paragraphs (b) and (e) of this
section has been submitted and the renewal or update is complete.
Except as provided by the 180-day implementation period in Sec. --
--.103(a)(3) or the 60-day grace period provided in Sec. --
--.103(a)(4), an employee must not engage in mortgage origination if
his or her registration is not yet effective or has not been renewed
pursuant to this rule.
Required employee information. Paragraph (d) of Sec. ----.103
lists the categories of information that mortgage loan originators, or
the employing Agency-regulated institution on behalf of the mortgage
loan originator, will be required to submit to the Registry. The
Registry's registration form will more specifically identify the
information required.
Specifically, the proposal requires the employee to submit
information regarding his or her identity (name and former names,
Social Security number, gender, date of birth, and place of birth) and
home and business contact information; date the employee became an
employee of the Agency-regulated institution; financial services-
related employment and financial history for the past 10 years;
criminal history involving felonies and certain misdemeanors; history
of financial services-related civil actions, arbitrations and
regulatory and disciplinary actions or orders; financial services-
related professional license revocations or suspensions; voluntary or
involuntary employment terminations based on violations of law or
industry standards of conduct; and certain actions listed above that
are pending
[[Page 27395]]
against the employee. As explained below, the Agency-regulated
institution must have policies and procedures in place for confirming
the adequacy and accuracy of employee registrations.
The employee also must provide fingerprints, in digital form if
practicable, and any appropriate identifying information to the
Registry for submission to the FBI and any other Federal or State
governmental agency or entity authorized to do a criminal history
background check.\23\ The Agencies expect that the Registry will submit
fingerprints to the FBI for a criminal history background check in
connection with the registration of each mortgage loan originator of an
Agency-regulated institution. The Agencies, however, are not requiring
employees to obtain new fingerprints for submission to the Registry if
the employing Agency-regulated institution has the employee's
fingerprints on file, provided that the fingerprints submitted to the
Registry were taken less than three years prior to the employee's
registration with the Registry. If the Agency-regulated institution has
such fingerprints on file, the Registry plans to use these fingerprints
to run the required criminal history background check on the mortgage
loan originator.
---------------------------------------------------------------------------
\23\ Further information on the Registry's fingerprint and
background check procedures may be found on the Registry's Web site
at http://www.stateregulatoryregistry.org/NMLS/.
---------------------------------------------------------------------------
It is the Agencies' understanding that the Registry plans to
support digital fingerprinting by October 2009 and likely before the
initiation of the proposed rule's implementation period. As digital
fingerprints are preferable to paper fingerprints, the proposed rule
provides that registrants should submit digital fingerprints to the
Registry, if practicable. If digital fingerprints are not available,
the Registry will accept fingerprint cards, and will convert these
cards to a digital format. The Agencies encourage the use of digital
fingerprints and note that the proposal's permission to submit
fingerprints in paper form is intended to enable smaller institutions
without the capability or feasibility to obtain digital fingerprints to
comply with this requirement.
The Agencies specifically seek comment on whether the three-year
age limit for existing fingerprints is appropriate and whether Agency-
regulated institutions currently have fingerprints of their employees
on file, and if so, whether they are in digital or paper form.
Employee authorization and attestation. Paragraph (d)(2) of Sec.
----.103 requires the employee, not the employing Agency-regulated
institution, to attest to the correctness of all such information
submitted to the Registry pursuant to paragraph (d)(1), and to provide
authorization for the Registry and the employing Agency-regulated
institution to obtain information related to any administrative, civil
or criminal findings to which the employee is a party.
In order to provide relevant information to consumers and to
implement the purposes of the S.A.F.E. Act, paragraph (d)(2) requires
the employee, not the employing Agency-regulated institution, to
authorize the Registry to make available to the public the following
information submitted to the Registry: His or her name; other names
used; name of current employer(s); current principal business
location(s) and business contact information; 10 years of relevant
employment history; and publicly adjudicated or pending disciplinary
and enforcement actions and arbitrations against the employee. The
Agencies envision that this information will be made public in two
phases. The first phase, implemented at the time the Registry begins
accepting Federal registrations, would provide for public accessibility
of the employee's name; other names used; name of current employer(s);
current principal business location(s) and business contact
information; and employment history. The remaining categories of
information (publicly adjudicated or pending disciplinary and
enforcement actions and arbitrations against the employee) would be
made public at a later date, once the Registry, in consultation with
the Agencies, has designed and implemented a system through which the
registrant may provide additional explanatory information to accompany
a positive response to any of the disclosure questions regarding
criminal history or the other information requested in paragraphs
(d)(1)(iii) through (xi). The Agencies note that once the Registry
makes this enhancement, registered mortgage loan originators can
provide this explanatory language at any time or during the annual
renewal process, and that this explanatory language may be made public.
Additionally, relevant nonpublic information submitted to the Registry
will be accessible to the Agencies and State mortgage regulators, as
appropriate.
The institution may provide the employee information required under
Sec. ----.103(d)(1) to the Registry or require the employee to provide
the information to the Registry. Regardless of the manner that the
information is provided, the requirements of the rule remain the same:
The employee must attest to the correctness of the information required
by Sec. ----.103(d) and the institution must implement policies and
procedures to confirm the adequacy and accuracy of employee
registrations, including updates and renewals.
The Agencies have limited the required information to what is
necessary to meet the objectives of the S.A.F.E. Act for the
registration of residential mortgage loan originators employed by
Agency-regulated institutions and to what is required by the Registry's
current data collection form for State mortgage loan originators, Form
MU4. The Agencies believe that both the State-licensing and Agency-
registration requirements should collect similar information from
mortgage loan originators in order to effectively track loan
originators, reduce regulatory burden on mortgage loan originators who
move between institutions with differing charters and regulators, and
permit consumers to review similar information on mortgage loan
originators regardless of the originator's regulator. The Agencies and
CSBS have worked together to identify what information should be
required for registration and will continue to do so going forward.
The Agencies seek comment on the employee data that is proposed to
be collected, the employee data that is proposed to be made public, and
whether any other additional data should be collected or made public.
Required Agency-regulated institution information. Paragraph (e)(1)
of Sec. ----.103 requires the employing Agency-regulated institution
to submit certain information to the Registry as a base record in
connection with the initial registration of one or more mortgage loan
originators. Specifically, the Agency-regulated institution must
provide its name, main office address, primary Federal regulator,
Employer Identification Number (EIN) issued by the Internal Revenue
Service, primary point of contact information, and contact information
for ``system administrators.'' If the Agency-regulated institution is a
subsidiary, it also must indicate that it is a subsidiary and provide
the name of its parent institution, as explained further below.
System administrators will have the authority to enter data
required in paragraph (e) of this section on the Registry and will be
responsible for keeping institution information and the list of
employees registered with the Registry current, provided these
individuals do not act as mortgage loan originators. The system
administrators
[[Page 27396]]
may delegate their authority and assign as many additional system users
as necessary to comply with the registration requirements of the
S.A.F.E. Act and the final rule, provided the delegated administrators
meet this paragraph's requirements. The primary point of contact also
can be one of the system administrators.
In addition, paragraph (e)(1) requires an Agency-regulated
institution to provide its Research Statistics Supervision Discount
(RSSD) number. The RSSD database is maintained by the Board. The
Agencies expect to provide the Registry with an extract of the Board's
database, indexed by RSSD number, to facilitate an Agency-regulated
institution's authorized access to the Registry and its establishment
of a new base record. Upon receiving the information for a new base
record from an Agency-regulated institution, the Registry will confirm
the information by comparing the application with data supplied by the
Agencies. The Agencies will establish a mechanism by which Agency-
regulated institutions that do not have an RSSD number will be added to
the RSSD database. However, an operating subsidiary of an Agency-
regulated institution will not be required to obtain an RSSD number.
Instead, if an operating subsidiary does not have an RSSD number, the
operating subsidiary will provide its parent institution's RSSD number
and indicate that it is an operating subsidiary of the parent. The
Agencies seek comment on the proposal to require Agency-regulated
institutions to submit their RSSD number, and operating subsidiaries,
if necessary, to submit their parent institution's RSSD number, to
facilitate an Agency-regulated institution's authorized access to the
Registry and its establishment of a base record, and as identifying
data for validating the base record.
Paragraph (e)(1)(ii) of this section requires the Agency-regulated
institution to update any information it has submitted within 30 days
of the date that the information becomes inaccurate.
Paragraph (e)(2) of this section requires an Agency-regulated
institution to provide information to the Registry for each employee
who acts as a mortgage loan originator. The Agency-regulated
institution must: (1) After all the information required by paragraph
(d) of this section has been submitted to the Registry, confirm that it
employs the registrant; and (2) within 30 days of the date the
registrant ceases to be an employee of the institution, provide
notification that it no longer employs the registrant and the date the
registrant ceased being an employee. This information will link the
registering mortgage loan originator to the Agency-regulated
institution in order to confirm that the registration of the employee
is valid and legitimate. The Agencies note that the Registry's system
protocols will not permit the Agency-regulated institution to confirm
that it employs the registrant unless all of the employee's information
required by paragraph (d) of this section has been submitted to the
Registry.
The Agencies anticipate that some Agency-regulated institutions may
select one or more individuals to submit the required employee
information on behalf of each of their mortgage loan originators to
facilitate this registration process. The Agencies also recognize the
initial volume of new registrants could be burdensome on both the
registrants and on the staff charged with completing the registrations.
To mitigate this burden, the Agencies are considering whether to modify
the Registry to permit a ``batch'' process for Agency-regulated
institutions to submit, in bulk, some or all of the required employee
and institution data. However, such a process would not eliminate
completely an individual employee's role in the registration process or
the employee's responsibility to attest to the accuracy of the data
submitted on the employee's behalf. Typical automated human resources
systems likely will not contain all of the employee information
required to be submitted to the Registry Under Sec. ----.103(d) of this
proposed rule. As a result, the institution would need to gather the
missing information from each potential registrant and then format it
for the batch processing, which may create some registration burden on
administrative staff and lead to possible delays, errors, or omissions.
Alternatively, if the Agencies specify a limited set of standard data
elements that are likely to be contained in an institution's automated
human resources system, such as name and employment date, for the batch
file, individual employees would still be required to access the
Registry to provide any missing information and complete the
registration process. In either case, employees would still be
responsible for accessing their record in the Registry to attest to the
accuracy of the information submitted on their behalf by the employing
institution and authorize background checks and public access to
certain employee information.
The Agencies seek comment on batch processing and welcome
suggestions for workable alternative approaches that could mitigate the
initial registration burden on Agency-regulated institutions and their
employees. Comment is also sought on the appropriateness of having one
employee input registration information into the Registry on another
employee's behalf.
Section ----.104 Policies and Procedures
Proposed Sec. ----.104 requires Agency-regulated institutions that
employ mortgage loan originators to adopt and follow written policies
and procedures designed to assure compliance with the requirements of
the final rule. This requirement applies to all Agency-regulated
institutions that employ individuals who act as mortgage loan
originators, regardless of the application of any de minimis exception
to their employees. This section requires that these policies and
procedures must be appropriate to the nature, size, complexity and
scope of the mortgage lending activities of the Agency-regulated
institution and must at a minimum include the following eight
provisions.
First, these policies and procedures must establish a process for
identifying which employees of the institution are required to be
registered mortgage loan originators.
Second, the policies and procedures must require that all employees
of the institution who are mortgage loan originators be informed of the
registration requirements of the S.A.F.E. Act and this rule and be
instructed on how to comply with these requirements and procedures,
including registering as a mortgage loan originator prior to engaging
in any mortgage loan origination activity.
Third, the policies and procedures must establish procedures to
comply with the unique identifier requirements in Sec. ----.105.
Fourth, these policies and procedures must establish reasonable
procedures for confirming the adequacy and accuracy of employee
registrations, including updates and renewals, by comparison with the
institution's records. The Agencies do not expect Agency-regulated
institutions, however, to obtain private database searches on their
pre-existing employees to confirm employee information. Instead,
institutions should compare the information supplied by the employee
for purposes of registering with the Registry with the information
contained in the institution's own records.
Fifth, these policies and procedures must establish reasonable
procedures and tracking systems for monitoring compliance with
registration requirements and procedures. Agency-
[[Page 27397]]
regulated institutions will be expected to be able to demonstrate
compliance with the requirements of the S.A.F.E. Act and the final
rule, such as by maintaining appropriate records.
Sixth, the policies and procedures must provide for periodic
independent testing of the Agency-regulated institution's policies and
procedures for compliance with the S.A.F.E. Act and the final rule,
including the registration and renewal requirements, and for such
testing to be conducted by institution personnel or by an outside
party.
Seventh, the policies and procedures must provide for appropriate
action in the case of any employee who fails to comply with the
registration requirements of the S.A.F.E. Act, this rule, or the
related policies and procedures of the institution, including
prohibiting such employees from acting as mortgage loan originators or
other appropriate disciplinary actions.
Eighth, the policies and procedures must establish a process for
reviewing the criminal background history reports on employees received
from the FBI through the Registry and taking appropriate action
consistent with applicable law and rules with respect to these reports.
Moreover, an Agency-regulated institution must maintain such records or
reports and document any action taken with respect to applicable
employees. Institutions should maintain these records consistent with
applicable recordkeeping requirements, if any.
The Agencies specifically request comment on the difficulty of
establishing suitable policies and procedures including the amount of
time and resources needed for their adoption and implementation. The
Agencies note that these policies and procedures should be in place at
an institution prior to the registration of its employees pursuant to
this rule.
Section ----.105 Use of Unique Identifier
Section ----.105(a) of the proposal requires an Agency-regulated
institution to make the unique identifier(s) of its registered mortgage
loan originator(s) available to consumers in a manner and method
practicable to the institution. The Agencies note that an Agency-
regulated institution may comply with this requirement in a number of
ways. For example, the institution may choose to direct consumers to a
listing of registered mortgage loan originators and their unique
identifiers on its Web site; post this information prominently in a
publicly accessible place, such as a branch office lobby or lending
office reception area; or establish a process to ensure that
institution personnel provide the unique identifier of a registered
mortgage loan originator to consumers who request it from employees
other than the mortgage loan originator.\24\
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\24\ The Agencies note that the Federal Housing Finance Agency
(FHFA) has directed Fannie Mae and Freddie Mac to require all
mortgage loan applications taken on and after January 1, 2010 to
include the mortgage loan originator's unique identifier. See FNMA
LL 02-2009: New Mortgage Loan Data Requirements (02/13/09).
---------------------------------------------------------------------------
Section ----.105(b) requires a registered mortgage loan originator
to provide the originator's unique identifier to a consumer upon
request, before acting as a mortgage loan originator, and through the
originator's initial written communication with a consumer, if any. The
Agencies intend Sec. ----.105(b)(3) of the rule to cover written
communication from the originator specifically for his or her customers
and not written materials distributed by the Agency-regulated
institution for general use by its customers.
Although a mortgage loan originator may change his or her name,
change employment, or move, the unique identifier assigned to the
originator by the Registry at the originator's initial registration
will remain the same. Once public access to the Registry is fully
functional, the unique identifier will enable consumer access to an
individual mortgage loan originator's profile stored in the Registry,
including the mortgage loan originator's registration information, any
State licenses held (active or inactive), employment history and other
information of interest to the consumer. If a mortgage loan originator
is simultaneously employed by more than one State or Agency-regulated
institution, that information also will be readily visible to the
consumer. Therefore, as this unique identifier will enable a consumer
to obtain important information concerning a mortgage loan originator
from the Registry, a mortgage loan originator and the employing
institution must ensure that the consumer has access to it.
The Agencies seek comment regarding the adequacy and
appropriateness of these unique identifier requirements with respect to
the consumer protection and anti-fraud purposes of the S.A.F.E. Act.
The Agencies also seek comment on whether the proposed rule adequately
ensures that consumers will be made aware that they have the
opportunity to access information about the employment history of, and
publicly adjudicated disciplinary and enforcement actions against, a
prospective, current, or former mortgage loan originator. Furthermore,
the Agencies seek comment on the specific difficulties that an
institution or its employees may have in complying with these
requirements and whether there may be circumstances when a registered
mortgage loan originator would not be able to provide the unique
identifier to a consumer before acting as a mortgage loan originator.
Appendix--Examples of Mortgage Loan Originators
As an aid in the understanding, and to provide examples of the
definition of mortgage loan originator, the proposed rule includes an
Appendix that provides examples of the type of activities that would
cause an employee to fall within or outside the definition of mortgage
loan originator. The examples in this Appendix are not all inclusive;
they illustrate only the issue described and do not illustrate any
other issues that may arise in this proposal. The Agencies request
comment on whether the examples are helpful, and if other examples
should be added to this Appendix or provided to the public by other
means.
The Agencies also request comment on whether there are mortgage
loans for which there may be no mortgage loan originator. Are there
situations where a consumer applies for and is offered a loan through
an automated process (such as a prescreened offer extended to a
consumer as part of a mass mailing or an automated loan approval in
response to an online application) without contact with a mortgage loan
originator? To the extent there are such situations, please describe
the contact and communication that a consumer would have with the
institution and its employees. The Agencies also seek comment on: (1)
The activities conducted by employees with respect to mortgage loan
pre-approval; and (2) the typical duties of fulfillment staff that do
not involve mortgage loan origination activities.
IV. Request for Comments
The Agencies encourage comment on any aspect of this proposal and
especially on those issues specifically noted in this preamble.
Agency-regulated institutions are encouraged to identify how many
of their employees would qualify as residential mortgage loan
originators under this definition, and therefore, would be required to
register under this proposed rule. Please provide specific information
on the number of employees engaged in mortgage loan origination, with
both actual count and as a percentage of total employees, and
[[Page 27398]]
the number of full-time equivalents (FTEs) engaged in this activity as
reported on an institution's Consolidated Reports of Condition and
Income (Call reports) or Thrift Financial Reports, as applicable. It
would also be very helpful for Agency-regulated institutions to
identify the internal departments to which these employees are
assigned, and whether they are engaged in activities other than
residential mortgage loan origination. Specifically, please discuss the
estimated numbers of employees who act as mortgage loan originators who
work in the mortgage loan function and those that work in divisions
outside of the mortgage loan origination function. Please also describe
any activities related to mortgage loan origination in which the staff
outside the mortgage loan function engages. Please describe whether
fulfillment staff or other employees who are not loan officers act as
mortgage loan originators, and the estimated numbers of such employees
that the institution would need to register under the proposed rule.
This information will enable the Agencies to estimate the number of
employees who will seek registration for purposes of evaluating system
administration needs and determining if the proposed 180-day
implementation period is adequate to allow for initial registration.
This information will also assist the Agencies in preparing final
analyses of the impact of these registrations under the Regulatory
Flexibility Act, Paperwork Reduction Act, Executive Order 12866, and
the Unfunded Mandates Reform Act of 1995, as applicable.
Solicitation of Comments on Use of Plain Language
Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec.
722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking
agencies to use plain language in all proposed and final rules
published after January 1, 2000. The Agencies invite your comments on
how to make this proposal easier to understand. For example:
Have we organized the material to suit your needs? If not,
how could this material be better organized?
Are the requirements in the proposed regulation clearly
stated? If not, how could the regulation be more clearly stated?
Does the proposed regulation contain language or jargon
that is not clear? If so, which language requires clarification?
Would a different format (grouping and order of sections,
use of headings, paragraphing) make the regulation easier to
understand? If so, what changes to the format would make the regulation
easier to understand?
What else could we do to make the regulation easier to
understand?
Regulatory Analysis
A. Regulatory Flexibility Act
OCC: Pursuant to Sec. 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise
required under Sec. 604 of the RFA is not required if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
We have estimated that this proposal will not have a significant
economic impact on a substantial number of small entities.
Specifically, we estimate that 653 small national banks are likely to
be impacted by the NPRM, with an average total compliance cost per bank
estimated at $18,800. We base this analysis using the impact of the
proposed rule on compliance costs as a percent of labor costs, as well
as compliance costs as a percent of noninterest expenses. Therefore,
pursuant to Sec. 605(b) of the RFA, the OCC hereby certifies that this
proposal will not have a significant economic impact on a substantial
number of small entities. Accordingly, a regulatory flexibility
analysis is not needed.
Board: Pursuant to Sec. 605(b) of the Regulatory Flexibility Act,
5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise
required under Sec. 603 of the RFA is not required if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
The proposed rule applies to all banks that are members of the
Federal Reserve System (other than national banks) and certain of their
respective subsidiaries, branches and Agencies of foreign banks (other
than Federal branches, Federal agencies, and insured State branches of
foreign banks), and commercial lending companies owned or controlled by
foreign banks. Under regulations issued by the Small Business
Administration,\25\ a small entity includes banking organizations with
assets of $175 million or less (a small banking organization). As of
December 31, 2008, there were approximately 501 of the institutions
listed above that are small banking organizations. The Board believes
that there is no significant economic impact. Compliance costs are
estimated to be less than 4% of profits for state member banks. For the
other small banking organizations, the Board believes these entities
would fall below the de miminis exceptions in Section ----.101(c)(2) of
the proposed rule since originating residential mortgages is not part
of their primary business. The agencies proposed the de minimis
exception in an effort to reduce compliance costs on small businesses.
Therefore, pursuant to Sec. 605(b) of the RFA, the Board hereby
certifies that this proposal will not have a significant economic
impact on a substantial number of small entities. Accordingly, a
regulatory flexibility analysis is not needed.
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\25\ See 13 CFR 121.201.
---------------------------------------------------------------------------
FDIC: In accordance with the Regulatory Flexibility Act, 5 U.S.C.
601-612 (RFA), an agency must publish an initial regulatory flexibility
analysis with its proposed rule, unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities (defined for purposes of the RFA to include
banks with less than $175 million in assets). The FDIC hereby certifies
that the proposed rule would not have a significant economic impact on
a substantial number of small entities.
Approximately 3,274 FDIC-supervised banks are small entities.
However, the proposed rule would not apply to approximately 2,430 of
those small entities because they originate 25 or fewer residential
mortgage loans annually and therefore would qualify for the de minimis
exception. Only approximately 844 small entities supervised by the
FDIC--about 26% of FDIC-supervised small entities--would be subject to
the requirements of the proposed rule. For those 844 small entities,
the estimated initial costs for complying with the proposed rule would
represent, on average, approximately 0.7% of total non-interest
expenses, and the annual compliance costs would represent, on average,
approximately 0.3% of total non-interest expenses.
OTS: Pursuant to Sec. 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise
required under Sec. 604 of the RFA is not required if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
[[Page 27399]]
We have estimated that this proposal will not have a significant
economic impact on a substantial number of small entities.
Specifically, we estimate that 385 small savings associations are
likely to be impacted by the NPRM, with an average total compliance
cost per savings association estimated at $13,311. Therefore, pursuant
to Sec. 605(b) of the RFA, the OTS hereby certifies that this proposal
will not have a significant economic impact on a substantial number of
small entities. Accordingly, a regulatory flexibility analysis is not
needed.
FCA: Pursuant to section 605(b) of the Regulatory Flexibility Act,
5 U.S.C. 601 et seq., FCA hereby certifies that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. Each of the banks in the Farm Credit System, considered
together with its affiliated associations, has assets and annual income
in excess of the amounts that would qualify them as small entities.
Therefore, System institutions are not ``small entities'' as defined in
the Regulatory Flexibility Act.
NCUA: In accordance with the Regulatory Flexibility Act, 5 U.S.C.
601-612 (RFA), an agency must publish an initial regulatory flexibility
analysis with its proposed rule, unless the agency certifies that the
rule will not have a significant economic impact on a substantial
number of small entities (defined for purposes of the RFA to include
federally insured credit unions with less than $10 million in assets).
NCUA hereby certifies that the proposed rule would not have a
significant economic impact on a substantial number of small entities.
Approximately 3,231 federally insured credit unions are small
entities. However, the proposed rule would not apply to approximately
3,190 of those small entities because they originate 25 or fewer
residential mortgage loans annually and therefore would qualify for the
de minimis exception. Only approximately 41 small federally insured
credit unions, about 1.3% of small entities, would be subject to the
requirements of the proposed rule.
B. Paperwork Reduction Act
Request for Comment on Proposed Information Collection
In accordance with section 3512 of the Paperwork Reduction Act of
1995, 44 U.S.C. 3501-3521 (``PRA''), the Federal banking agencies may
not conduct or sponsor, and the respondent is not required to respond
to, an information collection unless it displays a currently valid
Office of Management and Budget (``OMB'') control number. The
information collection requirements contained in this joint notice of
proposed rulemaking have been submitted by the OCC, FDIC, OTS, and NCUA
to OMB for review and approval under section 3506 of the PRA and Sec.
1320.11 of OMB's implementing regulations (5 CFR part 1320). The FCA
collects information from Farm Credit System institutions, which are
Federal instrumentalities, in the FCA's capacity as their safety and
soundness regulator, and, therefore, OMB approval is not required for
this collection. The Board reviewed the proposed rule under the
authority delegated to the Board by the Office of Management and
Budget. The proposed rule contains requirements subject to the PRA. The
requirements are found in 12 CFR ----.103(a)-(b), (d)-(e), ----.104,
and ----.105.
Comments are invited on:
(a) Whether the collection of information is necessary for the
proper performance of the Federal banking agencies' functions,
including whether the information has practical utility;
(b) The accuracy of the estimates of the burden of the information
collection, including the validity of the methodology and assumptions
used;
(c) Ways to enhance the quality, utility, and clarity of the
information to be collected;
(d) Ways to minimize the burden of the information collection on
respondents, including through the use of automated collection
techniques or other forms of information technology; and
(e) Estimates of capital or startup costs and costs of operation,
maintenance, and purchase of services to provide information.
NCUA: Request for comments related to the number of respondents who
are mortgage loan originators--Some federally insured credit unions use
a credit committee comprised of unpaid volunteers to make lending
decisions, including decisions on mortgage loans to members. NCUA
requests comments on whether these credit committee members who work
for a credit union in an unpaid capacity and approve mortgage loans
must register. In addition, NCUA requests comments on whether only some
of these credit committee members must register, and if so, which ones
and why.
All comments will become a matter of public record. Comments should
be addressed to:
OCC: Communications Division, Office of the Comptroller of the
Currency, Public Information Room, Mailstop 1-5, Attention: 1557-AD23,
250 E Street, SW., Washington, DC 20219. In addition, comments may be
sent by fax to (202) 874-5274, or by electronic mail to
regs.comments@occ.treas.gov. You can inspect and photocopy comments at
the OCC, 250 E Street, SW., Washington, DC 20219. For security reasons,
the OCC requires that visitors make an appointment to inspect comments.
You may do so by calling (202) 874-4700. Upon arrival, visitors will be
required to present valid government-issued photo identification and
submit to security screening in order to inspect and photocopy
comments.
Board: You may submit comments, identified by Docket No. R-1357, by
any of the following methods:
Agency Web Site: http://www.federalreserve.gov. Follow the
instructions for submitting comments on the http://
www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: regs.comments@federalreserve.gov. Include docket
number in the subject line of the message.
FAX: 202-452-3819 or 202-452-3102.
Mail: Jennifer J. Johnson, Secretary, Board of Governors
of the Federal Reserve System, 20th Street and Constitution Avenue,
NW., Washington, DC 20551. All public comments are available from the
Board's Web site at http://www.federalreserve.gov/generalinfo/foia/
ProposedRegs.cfm as submitted, unless modified for technical reasons.
Accordingly, your comments will not be edited to remove any identifying
or contact information. Public comments may also be viewed
electronically or in paper in Room MP-500 of the Board's Martin
Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on
weekdays.
FDIC: You may submit written comments, identified by the RIN, by
any of the following methods:
Agency Web Site: http://www.fdic.gov/regulations/laws/
federal/propose.html. Follow the instructions for submitting comments
on the FDIC Web site.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: Comments@FDIC.gov. Include RIN 3064-AD43 on the
subject line of the message.
Mail: Robert E. Feldman, Executive Secretary, Attention:
Comments, FDIC, 550 17th Street, NW., Washington, DC 20429.
Hand Delivery/Courier: Guard station at the rear of the
550 17th Street
[[Page 27400]]
Building (located on F Street) on business days between 7 a.m. and 5
p.m.
Instructions: All comments received will be posted generally
without change to http://www.fdic.gov/regulations/laws/federal/propose/
html including any personal information provided.
OTS: Information Collection Comments, Chief Counsel's Office,
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552;
send a facsimile transmission to (202) 906-6518; or send an e-mail to
infocollection.comments@ots.treas.gov. OTS will post comments and the
related index on the OTS Internet site at http://www.ots.treas.gov. In
addition, interested persons may inspect the comments at the Public
Reading Room, 1700 G Street, NW., by appointment. To make an
appointment, call (202) 906-5922, send an e-mail to
public.info@ots.treas.gov, or send a facsimile transmission to (202)
906-7755.
NCUA: You may submit comments by any of the following methods
(Please send comments by one method only):
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
NCUA Web Site: http://www.ncua.gov/
RegulationsOpinionsLaws/proposedregs/proposedregs.html. Follow the
instructions for submitting comments.
E-mail: Address to regcomments@ncua.gov. Include ``[Your
name] Comments on Notice of Proposed Rulemaking Part 761 Registration
of Mortgage Loan Originators'' in the e-mail subject line.
Fax: (703) 518-6319. Use the subject line described above
for e-mail.
Mail: Address to Jeryl Fish, Deputy Chief Information
Officer, National Credit Union Administration, 1775 Duke Street,
Alexandria, VA 22314-3428.
Hand Delivery/Courier: Same as mail address. Additionally,
you should send a copy of your comments to the OMB Desk Officer for the
Federal banking agencies, by mail to U.S. Office of Management and
Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to
(202) 395-6974.
Proposed Information Collection
Title of Information Collection: Registration of Mortgage Loan
Originators.
Frequency of Response: On occasion; Annual.
Affected Public:
OCC: National banks, Federal branches and agencies of foreign
banks, their operating subsidiaries, and employees who are loan
originators.
Board: Member banks of the Federal Reserve System (other than
national banks), their respective subsidiaries that are not
functionally regulated within the meaning of section 5(c)(5) of the
Bank Holding Company Act; and branches and agencies of foreign banks
(other than Federal branches, Federal agencies and insured State
branches of foreign banks) and commercial lending companies owned or
controlled by foreign banks and their employees who act as mortgage
loan originators.
FDIC: State nonmember banks (including State-licensed insured
branches of foreign banks) and their subsidiaries (except brokers,
dealers, persons providing insurance, investment companies, and
investment advisers) and their employees who are mortgage loan
originators.
OTS: Savings associations and their operating subsidiaries, and
their employees who are mortgage loan originators.
NCUA: Federally chartered credit unions and their employees who are
mortgage loan originators.
Abstract:
Unless the de minimis exception or a different implementation
period applies, Sec. ----.103(a) would require an employee of a
depository institution who engages in the business of a mortgage loan
originator (MLO) to register with the Registry, maintain such
registration, and obtain an unique identifier. Under Sec. ----.103(b),
a depository institution would require each such registration to be
renewed annually and updated within 30 days of the occurrence of
specified events. Section ----.103(d) describes the categories of
information that an employee, or the employing depository institution
on the employee's behalf, must submit to the Registry, with the
employee's attestation as to the correctness of the information
supplied, and his/her authorization to obtain further information.
Section ----.103(e) specifies institution and employee information that
a depository institution would submit to the Registry in connection
with the initial registration of one or more MLOs, and thereafter to
update. Section ----.104 would require that an agency-regulated
institution employing MLOs adopt and follow written policies and
procedures, at a minimum addressing certain specified areas, but
otherwise appropriate to the nature, size and complexity of their
mortgage lending activities. Section ----.105 would require a
depository institution to make the unique identifier(s) of its
registered MLO(s) available to consumers in a manner and method
practicable to the institution. It would also require a registered MLO
to provide his or her unique identifier to a consumer upon request,
before acting as a MLO, and through the originator's initial written
communication with a consumer, if any.
Estimated Burden:
OCC
Number of Bank Respondents: 1,771 (1,464 national banks; 307
operating subsidiaries).
Burden per Bank for Initial Set up: 351 hours (220 hours to
implement policies and procedures and establish tracking and compliance
systems; 131 hours to establish reporting, filing, and information
dissemination systems).
Total Bank Burden for Initial Set up: 621,621.
Number of MLO Employees for Initial Set up: 117,772.
Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours
to provide information to Registry, and 1 hour to provide Unique
Identifier to a consumer, upon request and at initial contact).
Total Burden for MLO Employees for Initial Set up: 412,202 hours.
Number of MLO Employees for Registration Update: 58,886.
Burden per MLO Employee for Registration Update: 0.25 hours.
Total Burden for MLO Employees for Registration Update: 14,721.5
hours.
Total OCC Annual Burden: 1,048,544.5 hours.
Board
Number of Bank Respondents: 2,382.
Burden per Bank for Initial Set up: 351 hours (220 hours to
implement policies and procedures and establish tracking and compliance
systems; 131 hours to establish reporting, filing, and information
dissemination systems).
Total Bank Burden for Initial Set up: 836,082 hours.
Number of MLO Employees for Initial Set up: 27,000.
Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours
to provide information to Registry, and 1 hour to provide Unique
Identifier to a consumer).
Total Burden for MLO Employees for Initial Set up: 94,500 hours.
Number of MLO Employees for Registration Update: 13,500.
Burden per MLO Employee for Registration Update: 0.25 hours.
Total Burden for MLO Employees for Registration Update: 3,375
hours.
Total Board Annual Burden: 933,957 hours.
[[Page 27401]]
FDIC
Number of Bank Respondents: 5,371.
Burden per Bank for Initial Set up: 351 hours (220 hours to
implement policies and procedures and establish tracking and compliance
systems; 131 hours to establish reporting, filing, and information
dissemination systems).
Total Bank Burden for Initial Set up: 1,885,221 hours.
Number of MLO Employees for Initial Set up: 49,719.
Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours
to provide information to Registry, and 1 hour to provide Unique
Identifier to a consumer, upon request and at initial contact).
Total Burden for MLO Employees for Initial Set up: 174,016.5 hours.
Number of MLO Employees for Registration Update: 24,860.
Burden per MLO Employee for Registration Update: 0.25 hours.
Total Burden for MLO Employees for Registration Update: 6,215
hours.
Total FDIC Annual Burden: 2,065,452.5 hours.
OTS
Number of Savings Association Respondents: 1,022 (802 savings
associations; 220 operating subsidiaries).
Burden per Savings Association for Initial Set up: 351 hours (220
hours to implement policies and procedures and establish tracking and
compliance systems; 131 hours to establish reporting, filing, and
information dissemination systems).
Total Savings Association Burden for Initial Set up: 358,722.
Number of MLO Employees for Initial Set up: 48,958.
Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours
to provide information to Registry, and 1 hour to provide Unique
Identifier to a consumer, upon request and at initial contact).
Total Burden for MLO Employees for Initial Set up: 171,353 hours.
Number of MLO Employees for Registration Update: 24,479.
Burden per MLO Employee for Registration Update: 0.25 hours.
Total Burden for MLO Employees for Registration Update: 6,120
hours.
Total OTS Annual Burden: 536,195 hours.
NCUA
Number of Credit Union Respondents: 2,834 credit unions.
Burden per Credit Union for Initial Set up: 351 hours (220 hours to
implement policies and procedures and establish tracking and compliance
systems; 131 hours to establish reporting, filing, and information
dissemination systems).
Total Credit Union Burden for Initial Set up: 994,734 hours.
Number of MLO Employees for Initial Set up: 23,539.
Burden per MLO Employee for Initial Set up: 3.50 hours (2.25 hours
to provide information to Registry, and 1 hour to provide Unique
Identifier to a consumer, upon request and at initial contact).
Total Burden for MLO Employees for Initial Set up: 82,386.5 hours.
Number of MLO Employees for Registration Update: 11,770.
Burden per MLO Employee for Registration Update: 0.25 hours.
Total Burden for MLO Employees for Registration Update: 2,942.50
hours.
Total NCUA Annual Burden: 1,080,063 hours.
C. OCC AND OTS Executive Order 12866 Determination
The OCC and the OTS have determined that this proposal is not a
significant regulatory action under Executive Order 12866. We have
concluded that the changes made by this rule will not have an annual
effect on the economy of $100 million or more. The OCC and the OTS
further conclude that this proposal does not meet any of the other
standards for a significant regulatory action set forth in Executive
Order 12866.
D. OCC and OTS Unfunded Mandates Reform Act of 1995 Determination
Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C.
1532), requires the OCC and OTS to prepare a budgetary impact statement
before promulgating a rule that includes a Federal mandate that may
result in the expenditure by State, local, and tribal governments, in
the aggregate, or by the private sector, of $100 million or more in any
one year. However, this requirement does not apply to regulations that
incorporate requirements specifically set forth in law. Because this
proposed rule implements the S.A.F.E. Act, the OTS and OCC have not
conducted an Unfunded Mandates Analysis for this rulemaking.
E. NCUA Executive Order 13132 Determination
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence to fundamental federalism principles, the NCUA, an
independent regulatory agency as defined in 44 U.S.C. 3502(5)
voluntarily complies with the Executive Order. The proposed rule
applies to federally insured credit unions and would not have
substantial direct effects on the states, on the connection between the
national government and the states, or on the distribution of power and
responsibilities among the various levels of government. The NCUA has
determined that the proposed rule does not constitute a policy that has
federalism implications for purposes of the Executive Order.
F. NCUA: The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this proposed rule would not affect
family well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
List of Subjects
12 CFR Part 34
Mortgages, National banks, Reporting and recordkeeping
requirements.
12 CFR Part 208
Accounting, Agriculture, Banks, Banking, Confidential business
information, Consumer protection, Crime, Currency, Insurance,
Investments, Mortgages, Reporting and recordkeeping requirements,
Securities.
12 CFR Part 365
Banks, Banking, Mortgages.
12 CFR Part 563
Accounting, Administrative practice and procedure, Advertising,
Conflict of interests, Crime, Currency, Holding companies, Investments,
Mortgages, Reporting and recordkeeping requirements, Savings
associations, Securities, Surety bonds.
12 CFR Part 610
Banks, Banking, Consumer protection, Loan programs--housing and
community development, Mortgages, Reporting and recordkeeping
requirements, Rural areas.
12 CFR Part 761
Credit unions, Mortgages, Reporting and recordkeeping requirements.
[[Page 27402]]
Office of the Comptroller of the Currency
12 CFR Chapter I
Authority and Issuance
For the reasons set forth in the preamble, chapter I of title 12 of
the Code of Federal Regulations is proposed to be amended as follows:
PART 34--REAL ESTATE LENDING AND APPRAISALS
1. The authority citation for part 34 is revised to read as
follows:
Authority: 12 U.S.C. 1 et seq., 29, 93a, 371, 1701j-3, 1828(o),
3331 et seq., and 5101 et seq.
2. Add Subpart F to part 34 to read as follows:
Subpart F--Registration of Residential Mortgage Loan Originators
Sec.
34.101 Authority, purpose, and scope.
34.102 Definitions.
34.103 Registration of mortgage loan originators.
34.104 Policies and procedures.
34.105 Use of unique identifier.
Appendix A to Subpart F of Part 34--Examples of Mortgage Loan
Originator Activities
Subpart F--Registration of Residential Mortgage Loan Originators
Sec. 34.101 Authority, purpose, and scope.
(a) Authority. This subpart is issued pursuant to the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
(b) Purpose. This subpart implements the S.A.F.E. Act's Federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of mortgage
loan originators; enhancing consumer protections; reducing fraud in the
residential mortgage loan origination process; and providing consumers
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.
(c) Scope--(1) In general. This subpart applies to national banks,
Federal branches and agencies of foreign banks, their operating
subsidiaries (collectively referred to in this subpart as national
banks), and their employees who act as mortgage loan originators.
(2) Exception. (i) This subpart and the requirements of sections
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of a national bank if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The national bank employs mortgage loan originators who, while
excepted from registration pursuant to paragraph (c)(2)(i)(A) of this
section, in the aggregate, acted as a mortgage loan originator in
connection with 25 or fewer residential mortgage loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, a
national bank employee must register with the Registry pursuant to this
subpart.
Sec. 34.102 Definitions.
For purposes of this subpart F, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \3\ means an individual who:
---------------------------------------------------------------------------
\3\ The Appendix to this subpart provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable State law, unless the individual is compensated by a lender,
a mortgage broker, or other mortgage loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator in paragraph (b)(1) of
this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the State licensing and registration of State-licensed
mortgage loan originators and the registration of mortgage loan
originators pursuant to section 1507 of the S.A.F.E. Act.
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is an
employee of a national bank; and
(2) Is registered pursuant to this subpart with, and maintains a
unique identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15
U.S.C. 1602(v)) or residential real estate upon which is constructed or
intended to be constructed a dwelling, and includes refinancings,
reverse mortgages, home equity lines of credit and other first and
second lien loans that meet the qualifications listed in this
definition.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those set forth under
the S.A.F.E. Act.
Sec. 34.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
employee of a national bank who acts as a mortgage loan originator must
register with the Registry, obtain a unique identifier, and maintain
this registration in accordance with the requirements of this subpart.
Any such employee who is not in compliance with the registration and
[[Page 27403]]
unique identifier requirements set forth in this subpart is in
violation of the S.A.F.E. Act and this subpart.
(2) National bank requirement--(i) In general. A national bank that
employs one or more individuals who act as a residential mortgage loan
originator must require each employee who is a mortgage loan originator
to register with the Registry, maintain this registration, and obtain a
unique identifier in accordance with the requirements of this subpart.
(ii) Prohibition. A national bank must not permit an employee of
the bank who is subject to the registration requirements of this
subpart to act as a mortgage loan originator unless such employee is
registered with the Registry pursuant to this subpart.
(3) Implementation period for initial registration. An employee of
a national bank who is a mortgage loan originator must complete an
initial registration with the Registry pursuant to this subpart within
180 days from the date that the OCC provides public notice that the
Registry is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If an employee of a national bank was
registered or licensed through, and obtained a unique identifier from,
the Registry prior to becoming an employee of the bank and has
maintained this registration or license, the registration requirements
of the S.A.F.E. Act and this subpart are deemed to be met, provided
that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii) of this
section;
(C) The national bank information required in paragraphs (e)(1)(i)
(to the extent the bank has not previously met these requirements) and
(e)(2)(i) of this section is submitted to the Registry; and
(D) The registration is maintained pursuant to paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the bank.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become national bank employees as a result of an acquisition, merger or
reorganization transaction, the bank and employees must comply with the
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section
within 60 days from the effective date of the acquisition, merger, or
reorganization.
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry pursuant to paragraph (a) of this section
must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be an employee of the national bank;
or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception set forth in Sec. 34.101(c)(2), unless the
individual is no longer engaged in the activity of a mortgage loan
originator.
(c) Effective dates--(1) Initial registration. An initial
registration pursuant to paragraph (a) of this section is effective on
the date the registrant receives notification from the Registry that
all information required by paragraphs (d) and (e) of this section has
been submitted and the registration is complete.
(2) Renewals or updates. A renewal or update pursuant to paragraph
(b) of this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) of this section has been submitted and the
renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, a national bank must require
each employee who is a mortgage loan originator to submit to the
Registry, or must submit on behalf of the employee, the following
categories of information to the extent this information is collected
by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became an employee of the bank;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or unsatisfied judgments or liens against the
employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust;
(v) Civil judicial actions against the employee in connection with
financial services-related activities, dismissals with settlements,
judicial findings that the employee violated financial services-related
statutes or regulations, except for actions dismissed without a
settlement agreement;
(vi) Actions or orders by a State or Federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a State or Federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or State or Federal contractor;
[[Page 27404]]
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action listed in paragraphs (d)(1)(iii) through (ix) of this
section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing institution less than three years prior to
registration and any appropriate identifying information for submission
to the Federal Bureau of Investigation and any governmental agency or
entity authorized to receive such information in connection with a
State and national criminal history background check.
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this subpart must:
(i) Authorize the Registry and the employing institution to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing bank; and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv)-(ix) and (xi) of this section.
(e) Required bank information. A national bank must submit the
following information to the Registry.
(1) Bank record. (i) In connection with the initial registration of
one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board of Governors of the Federal Reserve System;
(D) Identification of its primary Federal regulator;
(E) Name(s) and contact information of the individual(s) with
authority to act as the bank's primary point of contact for the
Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other bank
employees, provided this individual and any delegated employee does not
act as a mortgage loan originator; and
(G) If a subsidiary of a national bank, indication that it is a
subsidiary and the name of its parent bank.
(ii) A national bank must update the information required by this
paragraph (e) within 30 days of the date that this information becomes
inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be an
employee of the bank, notification that it no longer employs the
registrant and the date the registrant ceased being an employee.
Sec. 34.104 Policies and procedures.
A national bank that employs mortgage loan originators must adopt
and follow written policies and procedures designed to assure
compliance with this subpart. These policies and procedures must be
appropriate to the nature, size, complexity and scope of the mortgage
lending activities of the bank. At a minimum, these policies and
procedures must:
(a) Establish a process for identifying which employees of the bank
are required to be registered mortgage loan originators;
(b) Require that all employees of the national bank who are
mortgage loan originators be informed of the registration requirements
of the S.A.F.E. Act and this subpart and be instructed on how to comply
with such requirements and procedures;
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 34.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this
subpart to be conducted by bank personnel or by an outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this subpart, or the bank's related policies and procedures, including
prohibiting such employees from acting as mortgage loan originators or
other appropriate disciplinary actions; and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
34.103(d)(1)(xii), taking appropriate action consistent with applicable
law and rules with respect to these reports, and for maintaining
records of these reports and actions taken with respect to applicable
employees.
Sec. 34.105 Use of unique identifier.
(a) The national bank shall make the unique identifier(s) of its
registered mortgage loan originator(s) available to consumers in a
manner and method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
consumer, if any.
Appendix A to Subpart F of Part 34--Examples of Mortgage Loan
Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause an employee of a national bank to fall
within or outside the definition of mortgage loan originator. The
examples in this Appendix are not all inclusive. They illustrate
only the issue described and do not illustrate any other issues that
may arise under this subpart. For the purposes of the examples
below, the term ``loan'' refers to a residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes or does not take, a loan application.
(1) Taking an application includes: Receiving information that
is sufficient to determine whether the consumer qualifies for a
loan, even if the employee has had no contact with the consumer and
is not responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a consumer to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a consumer who is filling out an application by
clarifying what type of
[[Page 27405]]
information is necessary for the application or otherwise explaining
the loan application process in response to consumer inquiries.
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
(i) Presenting a loan offer to a consumer for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a consumer's request for a lower rate or
lower points on a pending loan application by presenting to the
consumer a revised loan offer, either verbally or in writing, that
includes a lower interest rate or lower points than the original
offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to consumer
queries regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the national
bank);
(ii) In response to a consumer's request, informing a consumer
of the loan rates that are publicly available such as on the
national bank's Web site for specific types of loan products without
communicating to the consumer whether qualifications are met for
that loan product;
(iii) Collecting information about a consumer in order to
provide the consumer with information on loan products for which the
consumer generally may qualify, without presenting a specific loan
offer to the consumer for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a consumer about those
arrangements, provided that communication with the consumer only
verifies loan terms already offered or negotiated; or
(v) Providing a consumer with information unrelated to loan
terms, such as the best days of the month for scheduling loan
closings at the bank.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain.''
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out employment duties,
even if the employee does not receive a referral fee or commission
or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the national
bank.
Federal Reserve System
12 CFR Chapter II
Authority and Issuance
For the reasons set forth in the preamble, chapter II of title 12
of the Code of Federal Regulations is proposed to be amended as
follows:
PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL
RESERVE SYSTEM (REGULATION H)
1. The authority citation for part 208 is revised to read as
follows:
Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a,
371d, 461, 481-486, 601, 611, 1814, 1816, 1820(d)(9), 1823(j),
1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882,
2901-2907, 3105, 3106a(b)(1), 3108(a), 3310, 3331-3351, and 3906-
3909, 5101 et seq., 15 U.S.C. 78b, 78l(b), 78l(g), 78l(i), 780-
4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801 and 6805; 31 U.S.C.
5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.
2. Subpart I, consisting of Sec. Sec. 208.100 and 208.101, is
redesignated as Subpart J, consisting of Sec. Sec. 208.110 and
208.111.
3. New subpart I is added to read as follows:
Subpart I--Registration of Residential Mortgage Loan Originators
Sec.
208.101 Authority, purpose, and scope.
208.102 Definitions.
208.103 Registration of mortgage loan originators.
208.104 Policies and procedures.
208.105 Use of unique identifier.
Appendix A to Subpart I of Part 208--Examples of Mortgage Loan
Originator Activities
Subpart I--Registration of Residential Mortgage Loan Originators
Sec. 208.101 Authority, purpose, and scope.
(a) Authority. This subpart is issued by the Board of Governors of
the Federal Reserve System (Board) pursuant to the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008, title V of the Housing
and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122
Stat. 2654, 12 U.S.C. 5101 et seq.), 12 U.S.C. 248(a), 3106a(b)(1), and
3108(a).
(b) Purpose. This subpart implements the S.A.F.E. Act's Federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of mortgage
loan originators; enhancing consumer protections; reducing fraud in the
residential mortgage loan origination process; and providing consumers
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.
(c) Scope--(1) In general. This subpart applies to member banks of
the Federal Reserve System (other than national banks); their
respective subsidiaries that are not functionally regulated within the
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended
(12 U.S.C. 1844(c)(5)); branches and agencies of foreign banks (other
than federal branches, Federal agencies and insured state branches of
foreign banks), and commercial lending companies owned or controlled by
foreign banks (collectively referred to in this subpart as banks), and
their employees who act as mortgage loan originators.
(2) Exception. (i) This subpart and the requirements of sections
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of a bank if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The bank employs mortgage loan originators who, while excepted
from registration pursuant to paragraph (c)(2)(i)(A) of this section,
in the aggregate, acted as a mortgage loan originator in connection
with 25 or fewer residential mortgage loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, a bank
employee must register with the Registry pursuant to this subpart.
Sec. 208.102 Definitions.
For purposes of this subpart, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \7\ means an individual who:
---------------------------------------------------------------------------
\7\ The Appendix to this subpart provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable State law, unless the individual is compensated by
[[Page 27406]]
a lender, a mortgage broker, or other mortgage loan originator or by
any agent of such lender, mortgage broker, or other mortgage loan
originator, and meets the definition of mortgage loan originator in
paragraph (b)(1) of this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the State licensing and registration of State-licensed
mortgage loan originators and the registration of mortgage loan
originators pursuant to section 1507 of the S.A.F.E. Act.
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is an
employee of a bank; and
(2) Is registered pursuant to this subpart with, and maintains a
unique identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15
U.S.C. 1602(v)) or residential real estate upon which is constructed or
intended to be constructed a dwelling, and includes refinancings,
reverse mortgages, home equity lines of credit and other first and
second lien loans that meet the qualifications listed in this
definition.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those set forth under
the S.A.F.E. Act.
Sec. 208.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
employee of a bank who acts as a mortgage loan originator must register
with the Registry, obtain a unique identifier, and maintain this
registration in accordance with the requirements of this subpart. Any
such employee who is not in compliance with the registration and unique
identifier requirements set forth in this subpart is in violation of
the S.A.F.E. Act and this subpart.
(2) Bank requirement--(i) In general. A bank that employs one or
more individuals who act as a residential mortgage loan originator must
require each employee who is a mortgage loan originator to register
with the Registry, maintain this registration, and obtain a unique
identifier in accordance with the requirements of this subpart.
(ii) Prohibition. A bank must not permit an employee of the bank
who is subject to the registration requirements of this subpart to act
as a mortgage loan originator unless such employee is registered with
the Registry pursuant to this subpart.
(3) Implementation period for initial registration. An employee of
a bank who is a mortgage loan originator must complete an initial
registration with the Registry pursuant to this subpart within 180 days
from the date that the Board provides public notice that the Registry
is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If an employee of a bank was registered or
licensed through, and obtained a unique identifier from, the Registry
prior to becoming an employee of the bank and has maintained this
registration or license, the registration requirements of the S.A.F.E.
Act and this subpart are deemed to be met, provided that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii) of this
section;
(C) The bank information required in paragraphs (e)(1)(i) (to the
extent the bank has not previously met these requirements) and
(e)(2)(i) of this section is submitted to the Registry; and
(D) The registration is maintained pursuant to paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the bank.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become bank employees as a result of an acquisition, merger or
reorganization transaction, the bank and employees must comply with the
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section
within 60 days from the effective date of the acquisition, merger, or
reorganization.
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry pursuant to paragraph (a) of this section
must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be an employee of the bank; or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception set forth in Sec. 208.101(c)(2), unless the
individual is no longer engaged in the activity of a mortgage loan
originator.
(c) Effective dates--(1) Initial registration. An initial
registration pursuant to paragraph (a) of this section is effective on
the date the registrant receives notification from the Registry that
all information required by paragraphs (d) and (e) of this section has
been submitted and the registration is complete.
(2) Renewals or updates. A renewal or update pursuant to paragraph
(b) of this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) of this section has been submitted and the
renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, a bank must require each
employee who is a mortgage loan originator to submit to the Registry,
or must submit on behalf of the employee, the following categories of
information to the extent
[[Page 27407]]
this information is collected by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became an employee of the bank;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or unsatisfied judgments or liens against the
employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust;
(v) Civil judicial actions against the employee in connection with
financial services-related activities, dismissals with settlements,
judicial findings that the employee violated financial services-related
statutes or regulations, except for actions dismissed without a
settlement agreement;
(vi) Actions or orders by a State or Federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a State or Federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or State or Federal contractor;
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action listed in paragraphs (d)(1)(iii) through (ix) of this
section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing institution less than three years prior to
registration and any appropriate identifying information for submission
to the Federal Bureau of Investigation and any governmental agency or
entity authorized to receive such information in connection with a
State and national criminal history background check.
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this subpart must:
(i) Authorize the Registry and the employing institution to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing bank; and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv)-(ix) and (xi) of this section.
(e) Required bank information. A bank must submit the following
information to the Registry.
(1) Bank record. (i) In connection with the initial registration of
one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board;
(D) Identification of its primary Federal regulator;
(E) Name(s) and contact information of the individual(s) with
authority to act as the bank's primary point of contact for the
Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other bank
employees, provided this individual and any delegated employee does not
act as a mortgage loan originator; and
(G) If a subsidiary of a bank, indication that it is a subsidiary
and the name of its parent bank.
(ii) A bank must update the information required by this paragraph
(e) within 30 days of the date that this information becomes
inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be an
employee of the bank, notification that it no longer employs the
registrant and the date the registrant ceased being an employee.
Sec. 208.104 Policies and procedures.
A bank that employs mortgage loan originators must adopt and follow
written policies and procedures designed to assure compliance with this
subpart. These policies and procedures must be appropriate to the
nature, size, complexity and scope of the mortgage lending activities
of the bank. At a minimum, these policies and procedures must:
(a) Establish a process for identifying which employees of the bank
are required to be registered mortgage loan originators;
(b) Require that all employees of the bank who are mortgage loan
originators be informed of the registration requirements of the
S.A.F.E. Act and this subpart and be instructed on how to comply with
such requirements and procedures;
[[Page 27408]]
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 208.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this
subpart to be conducted by bank personnel or by an outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this subpart, or the bank's related policies and procedures, including
prohibiting such employees from acting as mortgage loan originators or
other appropriate disciplinary actions; and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
208.103(d)(1)(xii), taking appropriate action consistent with
applicable law and rules with respect to these reports, and for
maintaining records of these reports and actions taken with respect to
applicable employees.
Sec. 208.105 Use of unique identifier.
(a) The bank shall make the unique identifier(s) of its registered
mortgage loan originator(s) available to consumers in a manner and
method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
consumer, if any.
Appendix A to Subpart I of Part 208--Examples of Mortgage Loan
Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause an employee of a bank to fall within or
outside the definition of mortgage loan originator. The examples in
this Appendix are not all inclusive. They illustrate only the issue
described and do not illustrate any other issues that may arise
under this subpart. For the purposes of the examples below, the term
``loan'' refers to a residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes, or does not take, a loan application.
(1) Taking an application includes: receiving information that
is sufficient to determine whether the consumer qualifies for a
loan, even if the employee has had no contact with the consumer and
is not responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a consumer to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a consumer who is filling out an application by
clarifying what type of information is necessary for the application
or otherwise explaining the loan application process in response to
consumer inquiries.
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
(i) Presenting a loan offer to a consumer for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a consumer's request for a lower rate or
lower points on a pending loan application by presenting to the
consumer a revised loan offer, either verbally or in writing, that
includes a lower interest rate or lower points than the original
offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to consumer
queries regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the bank);
(ii) In response to a consumer's request, informing a consumer
of the loan rates that are publicly available such as on the bank's
Web site for specific types of loan products without communicating
to the consumer whether qualifications are met for that loan
product;
(iii) Collecting information about a consumer in order to
provide the consumer with information on loan products for which the
consumer generally may qualify, without presenting a specific loan
offer to the consumer for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a consumer about those
arrangements, provided that communication with the consumer only
verifies loan terms already offered or negotiated; or
(v) Providing a consumer with information unrelated to loan
terms, such as the best days of the month for scheduling loan
closings at the bank.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain.''
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out employment duties,
even if the employee does not receive a referral fee or commission
or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the bank.
4. Section 208.111 is amended by redesignating footnotes 7 and 8 as
footnotes 8 and 9, respectively, and by revising newly designated
footnote 9 to read as follows:
Sec. 208.111 Obligations concerning institutional customers.
* * * * *
\9\ See footnote 8 in paragraph (d) of this section.
Federal Deposit Insurance Corporation
12 CFR Chapter III
Authority and Issuance
For the reasons set forth in the preamble, the Federal Deposit
Insurance Corporation proposes to amend subchapter B of chapter III of
title 12 of the Code of Federal Regulations by amending part 365 as
follows:
PART 365--REAL ESTATE LENDING STANDARDS
1. The authority citation for part 365 is revised to read as
follows:
Authority: 12 U.S.C. 1828(o) and 5101 et seq.
2. Sections 365.1 and 365.2 and Appendix A are placed under a new
subpart A, and the heading for new subpart A is added to read as
follows:
Subpart A--Real Estate Lending Standards
Sec. 365.1 [Amended]
3. Section 365.1 is amended by removing ``part'' and adding
``subpart'' in its place.
4. Appendix A to Part 365 is redesignated as Appendix A to Subpart
A of Part 365, and the heading is revised to read as follows:
Appendix A to Subpart A of Part 365--Interagency Guidelines for Real
Estate Lending Policies
5. New subpart B is added to read as follows:
Subpart B--Registration of Mortgage Loan Originators
Sec.
365.101 Authority, purpose, and scope.
365.102 Definitions.
365.103 Registration of mortgage loan originators.
[[Page 27409]]
365.104 Policies and procedures.
365.105 Use of unique identifier.
Appendix A to Subpart B of Part 365--Examples of Mortgage Loan
Originator Activities.
Subpart B--Registration of Residential Mortgage Loan Originators
Sec. 365.101 Authority, purpose, and scope.
(a) Authority. This subpart is issued pursuant to the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
(b) Purpose. This subpart implements the S.A.F.E. Act's Federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of mortgage
loan originators; enhancing consumer protections; reducing fraud in the
residential mortgage loan origination process; and providing consumers
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.
(c) Scope--(1) In general. This subpart applies to insured state
nonmember banks (including state-licensed insured branches of foreign
banks) and their subsidiaries (except brokers, dealers, persons
providing insurance, investment companies, and investment advisers)
(collectively referred to in this subpart as insured state nonmember
banks), and their employees who act as mortgage loan originators.
(2) Exception. (i) This subpart and the requirements of sections
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of an insured state nonmember bank if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The insured state nonmember bank employs mortgage loan
originators who, while excepted from registration pursuant to paragraph
(c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage
loan originator in connection with 25 or fewer residential mortgage
loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, an
insured state nonmember bank employee must register with the Registry
pursuant to this subpart.
Sec. 365.102 Definitions.
For purposes of this subpart, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------
\1\ The Appendix to this subpart provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable State law, unless the individual is compensated by a lender,
a mortgage broker, or other mortgage loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator in paragraph (b)(1) of
this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the State licensing and registration of State-licensed
mortgage loan originators and the registration of mortgage loan
originators pursuant to section 1507 of the S.A.F.E. Act.
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is an
employee of an insured state nonmember bank; and
(2) Is registered pursuant to this subpart with, and maintains a
unique identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15
U.S.C. 1602(v)) or residential real estate upon which is constructed or
intended to be constructed a dwelling, and includes refinancings,
reverse mortgages, home equity lines of credit and other first and
second lien loans that meet the qualifications listed in this
definition.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those set forth under
the S.A.F.E. Act.
Sec. 365.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
employee of an insured state nonmember bank who acts as a mortgage loan
originator must register with the Registry, obtain a unique identifier,
and maintain this registration in accordance with the requirements of
this subpart. Any such employee who is not in compliance with the
registration and unique identifier requirements set forth in this
subpart is in violation of the S.A.F.E. Act and this subpart.
(2) Insured state nonmember bank requirement--(i) In general. An
insured state nonmember bank that employs one or more individuals who
act as a residential mortgage loan originator must require each
employee who is a mortgage loan originator to register with the
Registry, maintain this registration, and obtain a unique identifier in
accordance with the requirements of this subpart.
(ii) Prohibition. An insured state nonmember bank must not permit
an employee of the bank who is subject to the registration requirements
of this subpart to act as a mortgage loan
[[Page 27410]]
originator unless such employee is registered with the Registry
pursuant to this subpart.
(3) Implementation period for initial registration. An employee of
an insured state nonmember bank who is a mortgage loan originator must
complete an initial registration with the Registry pursuant to this
subpart within 180 days from the date that the FDIC provides public
notice that the Registry is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If an employee of an insured state nonmember
bank was registered or licensed through, and obtained a unique
identifier from, the Registry prior to becoming an employee of the bank
and has maintained this registration or license, the registration
requirements of the S.A.F.E. Act and this subpart are deemed to be met,
provided that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii) of this
section;
(C) The insured state nonmember bank information required in
paragraphs (e)(1)(i) (to the extent the bank has not previously met
these requirements) and (e)(2)(i) of this section is submitted to the
Registry; and
(D) The registration is maintained pursuant to paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the bank.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become insured state nonmember bank employees as a result of an
acquisition, merger or reorganization transaction, the bank and
employees must comply with the requirements of paragraphs (a)(4)(i)(A),
(C), and (D) of this section within 60 days from the effective date of
the acquisition, merger, or reorganization.
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry pursuant to paragraph (a) of this section
must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be an employee of the insured state
nonmember bank; or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception set forth in Sec. 365.101(c)(2), unless the
individual is no longer engaged in the activity of a mortgage loan
originator.
(c) Effective dates--(1) Initial registration. An initial
registration pursuant to paragraph (a) of this section is effective on
the date the registrant receives notification from the Registry that
all information required by paragraphs (d) and (e) of this section has
been submitted and the registration is complete.
(2) Renewals or updates. A renewal or update pursuant to paragraph
(b) of this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) of this section has been submitted and the
renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, an insured state nonmember
bank must require each employee who is a mortgage loan originator to
submit to the Registry, or must submit on behalf of the employee, the
following categories of information to the extent this information is
collected by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became an employee of the bank;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or unsatisfied judgments or liens against the
employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust;
(v) Civil judicial actions against the employee in connection with
financial services-related activities, dismissals with settlements,
judicial findings that the employee violated financial services-related
statutes or regulations, except for actions dismissed without a
settlement agreement;
(vi) Actions or orders by a State or Federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a State or Federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or State or Federal contractor;
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action
[[Page 27411]]
listed in paragraphs (d)(1)(iii) through (ix) of this section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing institution less than three years prior to
registration and any appropriate identifying information for submission
to the Federal Bureau of Investigation and any governmental agency or
entity authorized to receive such information in connection with a
State and national criminal history background check.
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this subpart must:
(i) Authorize the Registry and the employing institution to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing bank; and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv)-(ix) and (xi) of this section.
(e) Required bank information. An insured state nonmember bank must
submit the following information to the Registry.
(1) Bank record. (i) In connection with the initial registration of
one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board of Governors of the Federal Reserve System;
(D) Identification of its primary Federal regulator;
(E) Name(s) and contact information of the individual(s) with
authority to act as the bank's primary point of contact for the
Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other bank
employees, provided this individual and any delegated employee does not
act as a mortgage loan originator; and
(G) If a subsidiary of an insured state nonmember bank, indication
that it is a subsidiary and the name of its parent bank.
(ii) An insured state nonmember bank must update the information
required by this paragraph (e) within 30 days of the date that this
information becomes inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be an
employee of the bank, notification that it no longer employs the
registrant and the date the registrant ceased being an employee.
Sec. 365.104 Policies and procedures.
An insured state nonmember bank that employs mortgage loan
originators must adopt and follow written policies and procedures
designed to assure compliance with this subpart. These policies and
procedures must be appropriate to the nature, size, complexity and
scope of the mortgage lending activities of the bank. At a minimum,
these policies and procedures must:
(a) Establish a process for identifying which employees of the bank
are required to be registered mortgage loan originators;
(b) Require that all employees of the insured state nonmember bank
who are mortgage loan originators be informed of the registration
requirements of the S.A.F.E. Act and this subpart and be instructed on
how to comply with such requirements and procedures;
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 365.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this
subpart to be conducted by bank personnel or by an outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this subpart, or the bank's related policies and procedures, including
prohibiting such employees from acting as mortgage loan originators or
other appropriate disciplinary actions; and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
365.103(d)(1)(xii), taking appropriate action consistent with
applicable law and rules with respect to these reports, and for
maintaining records of these reports and actions taken with respect to
applicable employees.
Sec. 365.105 Use of unique identifier.
(a) An insured state nonmember bank shall make the unique
identifier(s) of its registered mortgage loan originator(s) available
to consumers in a manner and method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
consumer, if any.
Appendix A to Subpart B of Part 365--Examples of Mortgage Loan
Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause an employee of an insured state
nonmember bank to fall within or outside the definition of mortgage
loan originator. The examples in this Appendix are not all
inclusive. They illustrate only the issue described and do not
illustrate any other issues that may arise under this subpart. For
the purposes of the examples below, the term ``loan'' refers to a
residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes or does not take, a loan application.
(1) Taking an application includes: Receiving information that
is sufficient to determine whether the consumer qualifies for a
loan, even if the employee has had no contact with the consumer and
is not responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a consumer to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a consumer who is filling out an application by
clarifying what type of information is necessary for the application
or otherwise explaining the loan application process in response to
consumer inquiries.
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
[[Page 27412]]
(i) Presenting a loan offer to a consumer for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a consumer's request for a lower rate or
lower points on a pending loan application by presenting to the
consumer a revised loan offer, either verbally or in writing, that
includes a lower interest rate or lower points than the original
offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to consumer
queries regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the insured state
nonmember bank);
(ii) In response to a consumer's request, informing a consumer
of the loan rates that are publicly available such as on the insured
state nonmember bank's Web site for specific types of loan products
without communicating to the consumer whether qualifications are met
for that loan product;
(iii) Collecting information about a consumer in order to
provide the consumer with information on loan products for which the
consumer generally may qualify, without presenting a specific loan
offer to the consumer for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a consumer about those
arrangements, provided that communication with the consumer only
verifies loan terms already offered or negotiated; or
(v) Providing a consumer with information unrelated to loan
terms, such as the best days of the month for scheduling loan
closings at the bank.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain.''
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out employment duties,
even if the employee does not receive a referral fee or commission
or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the insured
state nonmember bank.
Office of Thrift Supervision
12 CFR Chapter V
Authority and Issuance
For the reasons set forth in the preamble, chapter V of title 12 of
the Code of Federal Regulations is proposed to be amended as follows:
PART 563--SAVINGS ASSOCIATIONS--OPERATIONS
1. The authority citation for part 563 is revised to read as
follows:
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1820, 1828, 1831o, 3806, 5101 et seq.; 31 U.S.C. 5318; 42
U.S.C. 4106.
2. Add Subpart D to part 563 to read as follows:
Subpart D--Registration of Residential Mortgage Loan Originators
Sec.
563.101 Authority, purpose, and scope.
563.102 Definitions.
563.103 Registration of mortgage loan originators.
563.104 Policies and procedures.
563.105 Use of unique identifier.
Appendix A to Subpart D of Part 563--Examples of Mortgage Loan
Originator Activities.
Subpart D--Registration of Residential Mortgage Loan Originators
Sec. 563.101 Authority, purpose, and scope.
(a) Authority. This subpart is issued pursuant to the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
(b) Purpose. This subpart implements the S.A.F.E. Act's Federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of mortgage
loan originators; enhancing consumer protections; reducing fraud in the
residential mortgage loan origination process; and providing consumers
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.
(c) Scope--(1) In general. This subpart applies to savings
associations and their operating subsidiaries (collectively referred to
in this subpart as savings associations), and their employees who act
as mortgage loan originators.
(2) Exception. (i) This subpart and the requirements of section
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of a savings association if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The savings association does not employ mortgage loan
originators who, while excepted from registration pursuant to paragraph
(c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage
loan originator in connection with more than 25 residential mortgage
loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, a
savings association employee must register with the Registry pursuant
to this subpart.
Sec. 563.102 Definitions.
For purposes of this subpart D, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------
\1\ The Appendix to this subpart provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable State law, unless the individual is compensated by a lender,
a mortgage broker, or other mortgage loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator in paragraph (b)(1) of
this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the State licensing and registration of State-licensed
mortgage loan originators and the registration of mortgage loan
originators pursuant to section 1507 of the S.A.F.E. Act.
[[Page 27413]]
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is an
employee of a savings association; and
(2) Is registered pursuant to this subpart with, and maintains a
unique identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act) or
residential real estate upon which is constructed or intended to be
constructed a dwelling, and includes refinancings, reverse mortgages,
home equity lines of credit and other first and second lien loans that
meet the qualifications listed in this definition.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those set forth under
the S.A.F.E. Act.
Sec. 563.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
employee of a savings association who acts as a mortgage loan
originator must register with the Registry, obtain a unique identifier,
and maintain this registration in accordance with the requirements of
this subpart. Any such employee who is not in compliance with the
registration and unique identifier requirements set forth in this
subpart is in violation of the S.A.F.E. Act and this subpart.
(2) Savings association requirement--(i) In general. A savings
association that employs one or more individuals who act as a
residential mortgage loan originator must require each employee who is
a mortgage loan originator to register with the Registry, maintain this
registration, and obtain a unique identifier in accordance with the
requirements of this subpart.
(ii) Prohibition. A savings association must not permit an employee
of the association who is subject to the registration requirements of
this subpart to act as a mortgage loan originator unless such employee
is registered with the Registry pursuant to this subpart.
(3) Implementation period for initial registration. An employee of
a savings association who is a mortgage loan originator must complete
an initial registration with the Registry pursuant to this subpart
within 180 days from the date that the OTS provides public notice that
the Registry is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If an employee of a savings association was
registered or licensed through, and obtained a unique identifier from,
the Registry prior to becoming an employee of the association and has
maintained this registration or license, the registration requirements
of the S.A.F.E. Act and this subpart are deemed to be met, provided
that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii);
(C) The savings association information required in paragraphs
(e)(1)(i) (to the extent the association has not previously met these
requirements) and (e)(2)(i) of this section is submitted to the
Registry; and
(D) The registration is maintained pursuant to paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the association.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become savings association employees as a result of an acquisition,
merger or reorganization transaction, the association and employees
must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and
(D) of this section within 60 days from the effective date of the
acquisition, merger, or reorganization.
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry pursuant to paragraph (a) of this section
must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be an employee of the savings
association; or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception set forth in Sec. 563.101(c)(2), unless the
individual is no longer engaged in the activity of a mortgage loan
originator.
(c) Effective dates--(1) Initial registration. An initial
registration pursuant to paragraph (a) of this section is effective on
the date the registrant receives notification from the Registry that
all information required by paragraphs (d) and (e) of this section has
been submitted and the registration is complete.
(2) Renewals or updates. A renewal or update pursuant to paragraph
(b) of this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) and of this section has been submitted and
the renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, a savings association must
require each employee who is a mortgage loan originator to submit to
the Registry, or must submit on behalf of the employee, the following
categories of information to the extent this information is collected
by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became an employee of the association;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or
[[Page 27414]]
unsatisfied judgments or liens against the employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust;
(v) Civil judicial actions against the employee in connection with
financial services-related activities, dismissals with settlements,
judicial findings that the employee violated financial services-related
statutes or regulations, except for actions dismissed without a
settlement agreement;
(vi) Actions or orders by a State or Federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a State or Federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or State or Federal contractor;
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action listed in paragraphs (d)(1)(iii) through (ix) of this
section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing savings association less than three years
prior to registration and any appropriate identifying information for
submission to the Federal Bureau of Investigation and any governmental
agency or entity authorized to receive such information in connection
with a State and national criminal history background check;
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this subpart must:
(i) Authorize the Registry and the employing institution to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing savings association; and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv), (v), (vi), (vii), (viii), (ix), and (xi) of this section.
(e) Required savings association information. A savings association
must submit the following information to the Registry.
(1) Savings association record. (i) In connection with the initial
registration of one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board of Governors of the Federal Reserve System;
(D) Identification of its primary Federal regulator;
(E) Name(s) and contact information of the individual(s) with
authority to act as the savings association's primary point of contact
for the Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other savings
association employees, provided this individual and any delegated
employee does not act as a mortgage loan originator;
(G) If an operating subsidiary of a savings association, indication
that it is a subsidiary and the name of its parent savings association.
(ii) A savings association must update the information required by
this paragraph (e) within 30 days of the date that this information
becomes inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be an
employee of the savings association, notification that it no longer
employs the registrant and the date the registrant ceased being an
employee.
Sec. 563.104 Policies and procedures.
A savings association that employs mortgage loan originators must
adopt and follow written policies and procedures designed to assure
compliance with this subpart. These policies and procedures must be
appropriate to the nature, size, complexity and scope of the mortgage
lending activities of the savings association. At a minimum, these
policies and procedures must:
(a) Establish a process for identifying which employees of the
savings association are required to be registered mortgage loan
originators;
(b) Require that all employees of the savings association who are
mortgage loan originators be informed of the registration requirements
of the S.A.F.E. Act and this subpart and be instructed on how to comply
with such requirements and procedures;
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 563.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this
subpart to be conducted by savings association personnel or by an
outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this subpart, or the savings association's related policies and
procedures,
[[Page 27415]]
including prohibiting such employees from acting as mortgage loan
originators or other appropriate disciplinary actions; and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
563.103(d)(1)(xii) of this section, taking appropriate action
consistent with applicable law and rules with respect to these reports,
and for maintaining records of these reports and actions taken with
respect to applicable employees.
Sec. 563.105 Use of unique identifier.
(a) The savings association shall make the unique identifier(s) of
its registered mortgage loan originator(s) available to consumers in a
manner and method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
consumer, if any.
Appendix A to Subpart D of Part 563--Examples of Mortgage Loan
Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause an employee of a savings association to
fall within or outside the definition of mortgage loan originator.
The examples in this Appendix are not all inclusive. They illustrate
only the issue described and do not illustrate any other issues that
may arise under this subpart. For the purposes of the examples
below, the term ``loan'' refers to a residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes or does not take, a loan application.
(1) Taking an application includes: receiving information that
is sufficient to determine whether the consumer qualifies for a
loan, even if the employee has had no contact with the consumer and
is not responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a consumer to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a consumer who is filling out an application by
clarifying what type of information is necessary for the application
or otherwise explaining the loan application process in response to
consumer inquiries.
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
(i) Presenting a loan offer to a consumer for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a consumer's request for a lower rate or
lower points on a pending loan application by presenting to the
consumer a revised loan offer, either verbally or in writing, that
includes a lower interest rate or lower points than the original
offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to consumer
queries regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the savings
association);
(ii) In response to a consumer's request, informing a consumer
of the loan rates that are publicly available such as on the savings
association's Web site for specific types of loan products without
communicating to the consumer whether qualifications are met for
that loan product;
(iii) Collecting information about a consumer in order to
provide the consumer with information on loan products for which the
consumer generally may qualify, without presenting a specific loan
offer to the consumer for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a consumer about those
arrangements, provided that communication with the consumer only
verifies loan terms already offered or negotiated; or
(v) Providing a consumer with information unrelated to loan
terms, such as the best days of the month for scheduling loan
closings at the savings association.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain.''
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out employment duties,
even if the employee does not receive a referral fee or commission
or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the savings
association.
Farm Credit Administration
12 CFR Chapter VI
Authority and Issuance
For the reasons set forth in the preamble, chapter VI of title 12
of the Code of Federal Regulations is proposed to be amended by adding
new part 610 to chapter VI to read as follows:
PART 610--REGISTRATION OF MORTGAGE LOAN ORIGINATORS
Sec.
610.101 Authority, purpose, and scope.
610.102 Definitions.
610.103 Registration of mortgage loan originators.
610.104 Policies and procedures.
610.105 Use of unique identifier.
Appendix A to Part 610--Examples of Mortgage Loan Originator
Activities
Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 1.13, 2.2, 2.4,
2.12, 5.9, 5.17, 7.2, 7.6, 7.8 of the Farm Credit Act (12 U.S.C.
2013, 2015, 2017, 2018, 2019, 2021, 2073, 2075, 2093, 2243, 2252,
2279a-2, 2279b, 2279c-10); and Secs. 1501 et seq. of the S.A.F.E.
Act (12 U.S.C. 5101 et seq.)
Sec. 610.101 Authority, purpose, and scope.
(a) Authority. This part is issued pursuant to the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008, title V of the Housing
and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122
Stat. 2654 (2008), 12 U.S.C. 5101 et seq.).
(b) Purpose. This part implements the S.A.F.E. Act's Federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of mortgage
loan originators; enhancing consumer protections; reducing fraud in the
residential mortgage loan origination process; and providing consumers
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, mortgage loan originators.
(c) Scope--(1) In general. This part applies to any Farm Credit
System lending institution that actually originates residential
mortgage loans pursuant to its authority under sections 1.9(3), 1.11,
or 2.4(a) and (b) of the Farm Credit Act of 1971, as amended, and their
employees who act as mortgage loan originators.
(2) Exception. (i) This part and the requirements of sections
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of a Farm Credit System institution if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The Farm Credit System institution employs mortgage loan
originators who, while excepted from registration pursuant to paragraph
(c)(2)(i)(A) of this section, in the
[[Page 27416]]
aggregate, acted as a mortgage loan originator in connection with 25 or
fewer residential mortgage loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, a Farm
Credit System institution employee must register with the Registry
pursuant to this part.
Sec. 610.102 Definitions.
For purposes of this part, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------
\1\ The Appendix to this part provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable State law, unless the individual is compensated by a lender,
a mortgage broker, or other mortgage loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator in paragraph (b)(1) of
this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the State licensing and registration of State-licensed
mortgage loan originators and the registration of mortgage loan
originators pursuant to section 1507 of the S.A.F.E. Act.
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is an
employee of a Farm Credit System institution; and
(2) Is registered pursuant to this part with, and maintains a
unique identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15
U.S.C. 1602(v)) or residential real estate upon which is constructed or
intended to be constructed a dwelling, and includes refinancings,
reverse mortgages, home equity lines of credit and other first and
second lien loans that meet the qualifications listed in this
definition. This definition does not amend or supersede Sec.
613.3030(c) of this chapter.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those set forth under
the S.A.F.E. Act.
Sec. 610.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
employee of a Farm Credit System institution who acts as a mortgage
loan originator must register with the Registry, obtain a unique
identifier, and maintain this registration in accordance with the
requirements of this part. Any such employee who is not in compliance
with the registration and unique identifier requirements set forth in
this part is in violation of the S.A.F.E. Act and this part.
(2) Farm Credit System institution requirement--(i) In general. A
Farm Credit System institution that employs one or more individuals who
act as a residential mortgage loan originator must require each
employee who is a mortgage loan originator to register with the
Registry, maintain this registration, and obtain a unique identifier in
accordance with the requirements of this part.
(ii) Prohibition. A Farm Credit System institution must not permit
an employee who is subject to the registration requirements of this
part to act as a mortgage loan originator unless such employee is
registered with the Registry pursuant to this part.
(3) Implementation period for initial registration. An employee of
a Farm Credit System institution who is a mortgage loan originator must
complete an initial registration with the Registry pursuant to this
part within 180 days from the date that the Farm Credit Administration
provides public notice that the Registry is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If an employee of a Farm Credit System
institution was registered or licensed through, and obtained a unique
identifier from, the Registry prior to becoming an employee of the Farm
Credit System institution and has maintained this registration or
license, the registration requirements of the S.A.F.E. Act and this
part are deemed to be met, provided that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii) of this
section;
(C) The Farm Credit System institution information required in
paragraphs (e)(1)(i) (to the extent the Farm Credit System institution
has not previously met these requirements) and (e)(2)(i) of this
section is submitted to the Registry; and
(D) The registration is maintained pursuant to paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the Farm Credit System institution.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become employees of another Farm Credit System institution as a result
of a consolidation, merger or reorganization transaction, the Farm
Credit System institution and employee must comply with the
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section
within 60 days from the effective date of the consolidation, merger, or
reorganization.
[[Page 27417]]
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry pursuant to paragraph (a) of this section
must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be an employee of the Farm Credit
System institution; or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception set forth in Sec. 610.101(c)(2), unless the
individual is no longer engaged in the activity of a mortgage loan
originator.
(c) Effective dates--(1) Initial registration. An initial
registration pursuant to paragraph (a) of this section is effective on
the date the registrant receives notification from the Registry that
all information required by paragraphs (d) and (e) of this section has
been submitted and the registration is complete.
(2) Renewals or updates. A renewal or update pursuant to paragraph
(b) of this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) of this section has been submitted and the
renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, a Farm Credit System
institution must require each employee who is a mortgage loan
originator to submit to the Registry, or must submit on behalf of the
employee, the following categories of information to the extent this
information is collected by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became an employee of the Farm Credit System institution;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or unsatisfied judgments or liens against the
employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust; (v) Civil judicial actions against the
employee in connection with financial services-related activities,
dismissals with settlements, judicial findings that the employee
violated financial services-related statutes or regulations, except for
actions dismissed without a settlement agreement;
(vi) Actions or orders by a State or Federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a State or Federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or State or Federal contractor;
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action listed in paragraphs (d)(1)(iii) through (ix) of this
section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing institution less than three years prior to
registration and any appropriate identifying information for submission
to the Federal Bureau of Investigation and any governmental agency or
entity authorized to receive such information in connection with a
State and national criminal history background check.
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this part must:
(i) Authorize the Registry and the employing institution to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing Farm Credit System institution;
and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv)-(ix) and (xi) of this section.
(e) Required information. A Farm Credit System institution must
submit the following information to the Registry.
(1) Farm Credit System institution record. (i) In connection with
the initial registration of one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board of Governors of the Federal Reserve System;
(D) Identification of its primary Federal regulator;
[[Page 27418]]
(E) Name(s) and contact information of the individual(s) with
authority to act as the Farm Credit System institution's primary point
of contact for the Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other employees of
the Farm Credit System institution, provided this individual and any
delegated employee does not act as a mortgage loan originator; and
(G) If an operating subsidiary of an agricultural credit
association, indication that it is a subsidiary and the name of its
parent agricultural credit association.
(ii) A Farm Credit System institution must update the information
required by this paragraph (e) within 30 days of the date that this
information becomes inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be an
employee of the Farm Credit System institution, notification that it no
longer employs the registrant and the date the registrant ceased being
an employee.
Sec. 610.104 Policies and procedures.
A Farm Credit System institution that employs mortgage loan
originators must adopt and follow written policies and procedures
designed to assure compliance with this part. These policies and
procedures must be appropriate to the nature, size, complexity and
scope of the mortgage lending activities of the Farm Credit System
institution. At a minimum, these policies and procedures must:
(a) Establish a process for identifying which employees of the Farm
Credit System institution are required to be registered mortgage loan
originators;
(b) Require that all employees of the Farm Credit System
institution who are mortgage loan originators be informed of the
registration requirements of the S.A.F.E. Act and this part and be
instructed on how to comply with such requirements and procedures;
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 610.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this part
to be conducted by Farm Credit System institution personnel or by an
outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this part, or the Farm Credit System institution's related policies and
procedures, including prohibiting such employees from acting as
mortgage loan originators or other appropriate disciplinary actions;
and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
610.103(d)(1)(xii), taking appropriate action consistent with
applicable law and rules with respect to these reports, and for
maintaining records of these reports and actions taken with respect to
applicable employees.
Sec. 610.105 Use of unique identifier.
(a) The Farm Credit System institution shall make the unique
identifier(s) of its registered mortgage loan originator(s) available
to consumers in a manner and method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
consumer, if any.
Appendix A to Part 610--Examples of Mortgage Loan Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause an employee of a Farm Credit System
institution to fall within or outside the definition of mortgage
loan originator. The examples in this Appendix are not all
inclusive. They illustrate only the issue described and do not
illustrate any other issues that may arise under this part. For the
purposes of the examples below, the term ``loan'' refers to a
residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes or does not take, a loan application.
(1) Taking an application includes: receiving information that
is sufficient to determine whether the consumer qualifies for a
loan, even if the employee has had no contact with the consumer and
is not responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a consumer to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a consumer who is filling out an application by
clarifying what type of information is necessary for the application
or otherwise explaining the loan application process in response to
consumer inquiries.
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
(i) Presenting a loan offer to a consumer for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a consumer's request for a lower rate or
lower points on a pending loan application by presenting to the
consumer a revised loan offer, either verbally or in writing, that
includes a lower interest rate or lower points than the original
offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to consumer
queries regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the Farm Credit
System institution);
(ii) In response to a consumer's request, informing a consumer
of the loan rates that are publicly available such as on the Farm
Credit System institution's Web site for specific types of loan
products without communicating to the consumer whether
qualifications are met for that loan product;
(iii) Collecting information about a consumer in order to
provide the consumer with information on loan products for which the
consumer generally may qualify, without presenting a specific loan
offer to the consumer for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a consumer about those
arrangements, provided that communication with the consumer only
verifies loan terms already offered or negotiated; or
(v) Providing a consumer with information unrelated to loan
terms, such as the best days of the month for scheduling loan
closings at the Farm Credit System institution.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain.''
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out
[[Page 27419]]
employment duties, even if the employee does not receive a referral
fee or commission or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the Farm
Credit System institution.
National Credit Union Administration
12 CFR Chapter VII
Authority and Issuance
For the reasons stated in the preamble, the National Credit Union
Administration proposes to amend chapter VII of title 12 of the Code of
Federal Regulations to add a new part 761 as follows:
PART 761--REGISTRATION OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS
Sec.
761.101 Authority, purpose, and scope.
761.102 Definitions.
761.103 Registration of mortgage loan originators.
761.104 Policies and procedures.
761.105 Use of unique identifier.
Appendix A to Part 761--Examples of Mortgage Loan Originator
Activities.
Authority: 12 U.S.C. 1751 et seq. and 5101 et seq.
Sec. 761.101 Authority, purpose, and scope.
(a) Authority. The National Credit Union Administration is issuing
part 761 under the Secure and Fair Enforcement for Mortgage Licensing
Act of 2008, title V of the Housing and Economic Recovery Act of 2008
(S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et
seq.).
(b) Purpose. This part implements the S.A.F.E. Act's federal
registration requirement for mortgage loan originators. The S.A.F.E.
Act provides that the objectives of this registration include
aggregating and improving the flow of information to and between
regulators; providing increased accountability and tracking of loan
originators; enhancing member protections; reducing fraud in the
residential mortgage loan origination process; and providing members
with easily accessible information at no charge regarding the
employment history of, and publicly adjudicated disciplinary and
enforcement actions against, loan originators.
(c) Scope--(1) In general. This part applies to federally insured
credit unions and their employees who act as mortgage loan originators.
(2) Exception. (i) This part and the requirements of section
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee
of a federally insured credit union if during the past 12 months:
(A) The employee acted as a mortgage loan originator for 5 or fewer
residential mortgage loans; and
(B) The credit union employs mortgage loan originators who, while
excepted from registration under paragraph (c)(2)(i)(A) of this
section, in the aggregate, acted as a mortgage loan originator in
connection with 25 or fewer residential mortgage loans.
(ii) Prior to engaging in mortgage loan origination activity that
exceeds either the individual or the aggregate exception limit, a
credit union employee must register with the Registry under this part.
Sec. 761.102 Definitions.
For purposes of this part, the following definitions apply:
(a) Annual renewal period means November 1 through December 31 of
each year.
(b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------
\1\ The Appendix to this part provides examples of activities
that would, and would not, cause an employee to fall within this
section's definition of mortgage loan originator.
---------------------------------------------------------------------------
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage loan for
compensation or gain.
(2) The term mortgage loan originator does not include:
(i) An individual who performs purely administrative or clerical
tasks on behalf of an individual who is described in paragraph (b)(1)
of this section;
(ii) An individual who only performs real estate brokerage
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and
is licensed or registered as a real estate broker in accordance with
applicable state law, unless the individual is compensated by a lender,
a mortgage broker, or other mortgage loan originator or by any agent of
such lender, mortgage broker, or other mortgage loan originator, and
meets the definition of mortgage loan originator in paragraph (b)(1) of
this section; or
(iii) An individual or entity solely involved in extensions of
credit related to timeshare plans, as that term is defined in 11 U.S.C.
101(53D).
(3) Administrative or clerical tasks means the receipt, collection,
and distribution of information common for the processing or
underwriting of a residential mortgage loan and communication with a
member to obtain information necessary for the processing or
underwriting of a residential mortgage loan.
(c) Nationwide Mortgage Licensing System and Registry or Registry
means the system developed and maintained by the Conference of State
Bank Supervisors and the American Association of Residential Mortgage
Regulators for the state licensing and registration of state-licensed
mortgage loan originators and the registration of mortgage loan
originators under section 1507 of the S.A.F.E. Act.
(d) Registered mortgage loan originator or registrant means any
individual who:
(1) Meets the definition of mortgage loan originator and is a
credit union employee; and
(2) Is registered under this part with, and maintains a unique
identifier through, the Registry.
(e) Residential mortgage loan means any loan primarily for
personal, family, or household use that is secured by a mortgage, deed
of trust, or other equivalent consensual security interest on a
dwelling (as defined in section 103(v) of the Truth in Lending Act (15
U.S.C. 1602(v))) or residential real estate upon which is constructed
or intended to be constructed a dwelling, and includes refinancings,
reverse mortgages, home equity lines of credit and other first and
second lien loans that meet the qualifications listed in this
definition.
(f) Unique identifier means a number or other identifier that:
(1) Permanently identifies a registered mortgage loan originator;
(2) Is assigned by protocols established by the Nationwide Mortgage
Licensing System and Registry, the Federal banking agencies, and the
Farm Credit Administration to facilitate:
(i) Electronic tracking of mortgage loan originators; and
(ii) Uniform identification of, and public access to, the
employment history of and the publicly adjudicated disciplinary and
enforcement actions against mortgage loan originators; and
(3) Must not be used for purposes other than those under the
S.A.F.E. Act.
Sec. 761.103 Registration of mortgage loan originators.
(a) Registration requirement--(1) Employee registration. Each
credit union employee who acts as a mortgage loan originator must
register with the Registry, obtain a unique identifier, and maintain
this registration in accordance with the requirements of this part. Any
such employee who is not in compliance with the registration and unique
identifier requirements in this part is in violation of the S.A.F.E.
Act and this part.
[[Page 27420]]
(2) Credit union requirement--(i) In general. A credit union that
employs one or more individuals who act as a residential mortgage loan
originator must require each employee who is a mortgage loan originator
to register with the Registry, maintain this registration, and obtain a
unique identifier in accordance with the requirements of this part.
(ii) Prohibition. A credit union must not permit its employee who
is subject to this part's registration requirements to act as a
mortgage loan originator unless such employee is registered with the
Registry under this part.
(3) Implementation period for initial registration. A credit union
employee who is a mortgage loan originator must complete an initial
registration with the Registry under this part within 180 days from the
date that the National Credit Union Administration provides public
notice that the Registry is accepting registrations.
(4) Employees previously registered or licensed through the
Registry--(i) In general. If a credit union employee was registered or
licensed through, and obtained a unique identifier from, the Registry
prior to becoming a credit union employee and has maintained this
registration or license, the registration requirements of the S.A.F.E.
Act and this part are deemed to be met, provided that:
(A) The employment information in paragraphs (d)(1)(i)(C) and
(d)(1)(ii) of this section is updated and the requirements of paragraph
(d)(2) of this section are met;
(B) New fingerprints of the employee are submitted to the Registry
for a background check, as required by paragraph (d)(1)(xii) of this
section;
(C) The credit union information required in paragraphs (e)(1)(i)
(to the extent the credit union has not previously met these
requirements) and (e)(2)(i) of this section is submitted to the
Registry; and
(D) The registration is maintained under paragraphs (b) and
(e)(1)(ii) of this section, as of the date that the employee is
employed by the credit union.
(ii) Implementation period for certain acquisitions, mergers or
reorganizations. When registered or licensed mortgage loan originators
become credit union employees as a result of an acquisition, merger or
reorganization transaction, the credit union and employee must comply
with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this
section within 60 days from the effective date of the acquisition,
merger, or reorganization.
(b) Maintaining registration. (1) A mortgage loan originator who is
registered with the Registry under paragraph (a) of this section must:
(i) Renew the registration during the annual renewal period,
confirming the responses set forth in paragraphs (d)(1)(i) through (xi)
of this section remain accurate and complete, and updating this
information, as appropriate; and
(ii) Update the registration within 30 days of any of the following
events:
(A) A change in the name of the registrant;
(B) The registrant ceases to be a credit union employee; or
(C) The information required under paragraphs (d)(1)(iii) through
(xi) of this section becomes inaccurate, incomplete, or out of date.
(2) A registered mortgage loan originator must maintain his or her
registration, notwithstanding the originator's subsequent qualification
for the exception in Sec. 761.101(c)(2), unless the individual is no
longer engaged in the activity of a mortgage loan originator.
(c) Effective dates--(1) Initial registration. An initial
registration under paragraph (a) of this section is effective on the
date the registrant receives notification from the Registry that all
information required by paragraphs (d) and (e) of this section has been
submitted and the registration is complete.
(2) Renewals or updates. A renewal or update under paragraph (b) of
this section is effective on the date the registrant receives
notification from the Registry that all applicable information required
by paragraphs (b) and (e) of this section has been submitted and the
renewal or update is complete.
(d) Required employee information--(1) In general. For purposes of
the registration required by this section, a credit union must require
each employee who is a mortgage loan originator to submit to the
Registry, or must submit on behalf of the employee, the following
categories of information to the extent this information is collected
by the Registry:
(i) Identifying information, including the employee's:
(A) Name and any other names used;
(B) Home address;
(C) Address of the employee's principal business location and
business contact information;
(D) Social security number;
(E) Gender; and
(F) Date and place of birth;
(ii) Financial services-related employment history for the 10 years
prior to the date of registration or renewal, including the date the
employee became a credit union employee;
(iii) Financial information for the 10 years prior to the date of
registration or renewal constituting a history of any personal
bankruptcy; business bankruptcy based upon events that occurred while
the employee exercised control over an organization; denied, paid out,
or revoked bonds; or unsatisfied judgments or liens against the
employee;
(iv) Felony convictions or other final criminal actions involving a
felony against the employee or organizations controlled by the
employee; or misdemeanor convictions or other final misdemeanor actions
against the employee or organizations controlled by the employee
involving financial services, a financial services-related business,
dishonesty, or breach of trust;
(v) Civil judicial actions against the employee in connection with
financial services-related activities, dismissals with settlements,
judicial findings that the employee violated financial services-related
statutes or regulations, except for actions dismissed without a
settlement agreement;
(vi) Actions or orders by a state or federal regulatory agency or
foreign financial regulatory authority that:
(A) Found the employee to have made a false statement or omission
or been dishonest, unfair or unethical; to have been involved in a
violation of a financial services-related regulation or statute; or to
have been a cause of a financial services-related business having its
authorization to do business denied, suspended, revoked or restricted;
(B) Are entered against the employee in connection with a financial
services-related activity;
(C) Denied, suspended, or revoked the employee's registration or
license to engage in a financial services-related activity; disciplined
the employee or otherwise by order prevented the employee from
associating with a financial services-related business or restricted
the employee's activities; or
(D) Barred the employee from association with an entity regulated
by the agency or authority or from engaging in a financial services-
related business;
(vii) Final orders issued by a state or federal regulatory agency
or foreign financial regulatory authority based on violations of any
law or regulation that prohibits fraudulent, manipulative or deceptive
conduct;
(viii) Revocation or suspension of the employee's authorization to
act as an attorney, accountant, or state or federal contractor;
[[Page 27421]]
(ix) Customer-initiated financial services-related arbitration or
civil action against the employee that required action, including
settlements;
(x) Disclosure of any voluntary or involuntary employment
terminations resulting from allegations accusing the employee of
violating a statute, regulation, or industry standard of conduct;
fraud; dishonesty; theft; or the wrongful taking of property;
(xi) Any pending actions against the employee that could result in
an action listed in paragraphs (d)(1)(iii) through (ix) of this
section; and
(xii) Fingerprints of the employee, in digital form if practicable,
collected by the employing credit union less than three years prior to
registration and any appropriate identifying information for submission
to the Federal Bureau of Investigation and any governmental agency or
entity authorized to receive such information in connection with a
state and national criminal history background check;
(2) Employee authorization and attestation. An employee registering
as a mortgage loan originator or renewing his or her registration under
this part must:
(i) Authorize the Registry and the employing credit union to obtain
information related to any administrative, civil or criminal findings,
to which the employee is a party, made by any governmental
jurisdiction;
(ii) Attest to the correctness of all information required by
paragraph (d) of this section, whether submitted by the employee or on
behalf of the employee by the employing credit union; and
(iii) Authorize the Registry to make available to the public
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii),
(iv)-(ix) and (xi) of this section.
(e) Required credit union information. A credit union must submit
the following information to the Registry:
(1) Credit union record. (i) In connection with the initial
registration of one or more mortgage loan originators:
(A) Name and main office address;
(B) Internal Revenue Service Employer Tax Identification Number
(EIN);
(C) Research Statistics Supervision and Discount (RSSD) number, as
issued by the Board of Governors of the Federal Reserve System;
(D) Identification of the National Credit Union Administration as
its primary Federal regulator;
(E) Name(s) and contact information of the individual(s) with
authority to act as the credit union's primary point of contact for the
Registry;
(F) Name(s) and contact information of the individual(s) with
authority to enter data required in paragraph (e) of this section on
the Registry and who may delegate this authority to other credit union
employees, provided this individual and any delegated employee does not
act as a mortgage loan originator.
(ii) A credit union must update the information required by this
paragraph (e) within 30 days of the date that this information becomes
inaccurate.
(2) Employee information. In connection with the registration of
each employee who acts as a mortgage loan originator:
(i) After the information required by paragraph (d) of this section
has been submitted to the Registry, confirmation that it employs the
registrant; and
(ii) Within 30 days of the date the registrant ceases to be a
credit union employee, notification that it no longer employs the
registrant and the date the registrant ceased being an employee.
Sec. 761.104 Policies and procedures.
A credit union that employs mortgage loan originators must adopt
and follow written policies and procedures designed to assure
compliance with this part. These policies and procedures must be
appropriate to the nature, size, complexity and scope of the mortgage
lending activities of the credit union. At a minimum, these policies
and procedures must:
(a) Establish a process for identifying which credit union
employees are required to be registered mortgage loan originators;
(b) Require that all credit union employees who are mortgage loan
originators be informed of the registration requirements of the
S.A.F.E. Act and this part and be instructed on how to comply with such
requirements and procedures;
(c) Establish procedures to comply with the unique identifier
requirements in Sec. 761.105;
(d) Establish reasonable procedures for confirming the adequacy and
accuracy of employee registrations, including updates and renewals, by
comparisons with its own records;
(e) Establish reasonable procedures and tracking systems for
monitoring compliance with registration and renewal requirements and
procedures;
(f) Provide for independent testing for compliance with this part
to be conducted by credit union personnel or by an outside party;
(g) Provide for appropriate action in the case of any employee who
fails to comply with the registration requirements of the S.A.F.E. Act,
this part, or the credit union's related policies and procedures,
including prohibiting such employees from acting as mortgage loan
originators or other appropriate disciplinary actions; and
(h) Establish a process for reviewing employee criminal history
background reports received from the Registry in connection with Sec.
761.103(d)(1)(xii), taking appropriate action consistent with
applicable law and rules with respect to these reports, and for
maintaining records of these reports and actions taken with respect to
applicable employees.
Sec. 761.105 Use of unique identifier.
(a) The credit union shall make the unique identifier(s) of its
registered mortgage loan originator(s) available to members in a manner
and method practicable to the credit union.
(b) A registered mortgage loan originator shall provide his or her
unique identifier to a member:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator's initial written communication with a
member, if any.
Appendix A to Part 761--Examples of Mortgage Loan Originator Activities
This Appendix provides examples to aid in the understanding of
activities that would cause a credit union employee to fall within
or outside the definition of mortgage loan originator. The examples
in this Appendix are not all inclusive. They illustrate only the
issue described and do not illustrate any other issues that may
arise under this part. For the purposes of the examples below, the
term ``loan'' refers to a residential mortgage loan.
(a) Taking a loan application: The following examples illustrate
when an employee takes or does not take, a loan application.
(1) Taking an application includes: receiving information that
is sufficient to determine whether the member qualifies for a loan,
even if the employee has had no contact with the member and is not
responsible for further verification of information.
(2) Taking an application does not include any of the following
activities performed solely or in combination:
(i) Contacting a member to verify the information in the loan
application by obtaining documentation, such as tax returns or
payroll receipts;
(ii) Receiving a loan application through the mail and
forwarding it, without review, to loan approval personnel; or
(iii) Assisting a member who is filling out an application by
clarifying what type of information is necessary for the application
or otherwise explaining the loan application process in response to
member inquiries.
[[Page 27422]]
(b) Offering or negotiating terms of a loan: The following
examples are designed to illustrate when an employee offers or
negotiates terms of a loan, and conversely, what does not constitute
offering or negotiating terms of a loan.
(1) Offering or negotiating the terms of a loan includes:
(i) Presenting a loan offer to a member for acceptance, either
verbally or in writing, even if further verification of information
is necessary and the offer is conditional; or
(ii) Responding to a member's request for a lower rate or lower
points on a pending loan application by presenting to the member a
revised loan offer, either verbally or in writing, that includes a
lower interest rate or lower points than the original offer.
(2) Offering or negotiating terms of a loan does not include
solely or in combination:
(i) Providing general explanations in response to member queries
regarding qualification for a specific loan product, such as
explaining loan terminology (i.e., debt-to-income ratio) or lending
policies (i.e., the loan-to-value ratio policy of the credit union);
(ii) In response to a member's request, informing a member of
the loan rates that are publicly available such as on the credit
union's Web site for specific types of loan products without
communicating to the member whether qualifications are met for that
loan product;
(iii) Collecting information about a member in order to provide
the member with information on loan products for which the member
generally may qualify, without presenting a specific loan offer to
the member for acceptance, either verbally or in writing;
(iv) Arranging the loan closing or other aspects of the loan
process, including communicating with a member about those
arrangements, provided that communication with the member only
verifies loan terms already offered or negotiated; or
(v) Providing a member with information unrelated to loan terms,
such as the best days of the month for scheduling loan closings at
the credit union.
(c) The following examples illustrate when an employee does or
does not offer or negotiate terms of a loan ``for compensation or
gain'':
(1) Offering or negotiating terms of a loan for compensation or
gain includes engaging in any of the activities in paragraph (b)(1)
of this Appendix in the course of carrying out employment duties,
even if the employee does not receive a referral fee or commission
or other special compensation for the loan.
(2) Offering or negotiating terms of a loan for compensation or
gain does not include engaging in a seller-financed transaction for
the employee's personal property that does not involve the credit
union.
Dated: May 27, 2009.
John C. Dugan,
Comptroller of the Currency.
By the order of the Board of Governors of the Federal Reserve
System, May 28, 2009.
Robert deV. Frierson,
Deputy Secretary of the Board.
By order of the Board of Directors.
Dated at Washington, DC, the 29th day of May 2009.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
Dated: May 28, 2009.
By the Office of Thrift Supervision,
John E. Bowman,
Acting Director.
Dated: May 28, 2009.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
By the National Credit Union Administration Board on May 26,
2009.
Mary Rupp,
Secretary of the Board.
[FR Doc. E9-13058 Filed 6-8-09; 8:45 am]
BILLING CODE 4810-33-P