The minimum standards required by the Department of Housing and Urban Development under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 have been published. The housing agency also addressed licensing requirements for loan modification employees.
All 50 states and the District of Columbia have passed and enacted legislation to support SAFE, Acting FHA Commissioner Robert Ryan said in a statement Wednesday. States have established regulatory frameworks that require originators to take initial and continuing education courses; pass a test; and undergo civil, criminal and financial background checks.
Originators in any state that doesn’t meet the minimum requirements could be required to be licensed under a federal program.
The publication of the final rule by HUD clarifies minimum standards about how each state’s laws and regulations will be evaluated. The rule additionally clarifies the definition of “engaging in the business of a loan originator” so that players know who needs to be licensed. The rule also explains which activities do not require licensing.
“The rule further clarifies that employees of government agencies and bona fide nonprofit organizations who act as loan originators only as part of their duties do not engage in the business of a loan originator and do not require licensure by states,” HUD said.
HUD was originally empowered with the responsibility for interpretation, implementation and compliance of SAFE when the laws was passed in July 2008 as part of the Housing and Economic Recovery Act of 2008. However, the Dodd-Frank Wall Street Reform and Consumer Protection Act calls for SAFE oversight to be transferred to the new Consumer Financial Protection Bureau on July 21.
HUD is deferring to the CFPB to determine whether employees who only handle loan modifications are subject to licensing.
