SAFE Act Find a Lender
The Housing and Economic Recovery Act of 2008 (Pub.L. 110-289, 122 Stat. 2654) (commonly referred to as HERA) was signed into law on July 30, 2008. The Act was designed primarily to address the subprime mortgage crisis and restore confidence in Fannie Mae and Freddie Mac by strengthening regulations and injecting capital into the two large U.S. suppliers of mortgage funding.
One of the most important provisions of this legislation is the Secure & Fair Enforcement for Mortgage Licensing Act of 2008, or SAFE Act for short. The SAFE Act was designed to enhance consumer protection and reduce fraud by requiring states establish minimum standards for the licensing of mortgage loan originators (MLOs). In addition, the law tasks the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) with establishing and maintaining a Nationwide Mortgage Licensing System and Registry (NMLSR) for the residential mortgage industry.
The SAFE Act requires state-licensed MLOs pass a written test, complete pre-licensure education courses and take continuing education classes. MLOs must provide fingerprints to the NMLSR for submission to the FBI for a criminal background check. MLOs are also required to provide authorization for NMLSR to obtain an independent credit report.
Who Qualifies As an Mortgage Loan Originator (MLO)?
MLOs include those who take residential mortgage loan applications, assist borrowers to obtain or apply for mortgage loans, and those who negotiate residential mortgage loan terms. Persons performing real estate brokerage activities who are registered/licensed under existing state law are not considered MLOs unless they are compensated by a lender, a mortgage broker, or a loan originator.
In addition, the SAFE Act specifically excludes those performing purely clerical tasks from being defined as a loan originator because Congress did not intend to classify individuals performing administrative or clerical tasks as loan originators.
For more information on the SAFE Act of 2008, click here!