Credit Unions and the SAFE Act - Important Deadline July 29

A special message from Mary Martha Fortney, President and CEO,
July 2011

In 2008, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) was passed by Congress directing the states and federal agencies to develop a system for licensing or registering mortgage loan originators. 

As you may be aware, the SAFE Act requires residential mortgage loan originators who are employees of financial institutions, including all credit unions, to be registered with the Nationwide Mortgage Licensing System and Registry (Registry). The registry is a database licensing system for mortgage loan originators by the states.

Nearly three years later, credit union mortgage loan originators (MLOs) are required to register with the system by July 29, 2011. MLOs are defined as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain. There is an exemption to registration if the individual has acted as a MLO for five or fewer residential mortgage loans.

Also, remember, regarding credit union service organizations (CUSOs), that the employees of CUSOs that meet the definition of a MLO must obtain state licensing rather than registration.

As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks. As you may know, MLO registration required by the SAFE Act will need to be renewed annually. However, if you registered in the system before July 1, 2011, you will need to renew your registrations before the end of the year. Credit unions are also required to have policies and procedures in place for SAFE Act compliance. Examiners will look to see that your credit union has Board-approved policies and procedures for the SAFE Act.  

NASCUS has monitored SAFE Act developments closely since the passage of the law. If you have questions, please don't hesitate to contact us in the NASCUS offices at (703) 528-8351.