COMPLIANCE CORNER
Apr
01
Fingerprinting Requirements for Mortgage Loan Originators
In 2008, Congress passed the Secure and Fair Enforcement for Mortgage Licensing Act, or “SAFE” Act. The Act is designed to protect consumers and reduce fraud through a number of initiatives. One such initiative is the establishment of a nationwide registry of Mortgage Loan Originators (MLOs) which will be maintained by the National Mortgage Licensing System and Registry (NMLSR). All MLOs are included, whether they work at a Non-depository Organization (NDO) or a Depository Organization (DO).
The registration process for NDO MLOs became effective in February, 2010. The requirements include:
- Submitting certain background information, including credit check information,
- Passing a national license test, and
- Having fingerprints collected by a specific vendor designated by NMLSR.
New NDO MLOs must complete this process before applying for a license in those states where they conduct business. MLOs that are already licensed must complete these three requirements before their state licenses are renewed or by year end, whichever comes first.
The registration process for DO MLOs is still in development. The NMLSR is proposing, however, that the same registration requirements apply – a proposal which many industry experts oppose. This is because many DOs already have a preferred vendor for the collection of fingerprints and, in some situations, they have already collected fingerprints of MLOs, but have done so using their current vendor. In order to avoid changing vendors or the additional cost and inconvenience of having a second vendor collect the prints, DOs propose that the NMLSR accept fingerprints taken by any FBI authorized vendor.
DOs who wish to use a fingerprinting vendor of their choice are encouraged to contact their federal regulator. For more information, visit the NMLS Resource Center, the SAFE Office web site or the FDIC’s Draft Final Rule regarding the federal banking agency’s implementation under the SAFE Act.
