Appraisal Scoop

Consumer Financial Protection Bureau adopts rule to improve consumer access to appraisal reports

Rule gives consumers additional rights to information on how a home value is determined

WASHINGTON, D.C. — Today (1/18/2013) the Consumer Financial Protection Bureau (CFPB) adopted a new rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates. The rule will ensure that consumers can receive information prior to closing about how the property’s value was determined.

“This rule will guarantee consumers can receive important information on how a lender determines the value of the home,” said CFPB Director Richard Cordray. “Having this information available promptly makes it easier for loan applicants to make informed decisions.”

Appraisals and other estimates of a home’s value are generally used by mortgage lenders to inform their decisions. Consumers are typically charged for the costs related to conducting an appraisal; however, currently the law does not require that consumers receive a copy of the appraisal unless they request it and does not require that consumers receive a copy of any other estimates of the home’s value.

The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that lenders give consumers a copy of each appraisal or other estimate free of charge although a lender generally may still charge the consumer a reasonable fee for the cost  of  conducting the appraisal or other estimate. The Bureau’s new rule implements these requirements.

Today’s rule also requires that creditors inform consumers within three days of receiving an application for a loan of their right to receive copy of all appraisals.  Creditors will then be required to provide the copies of appraisal reports and other written home-value estimates to consumers promptly, or three days before closing, whichever is earlier.  The new rule will go into effect in January 2014 and will apply to first-lien mortgages.

The final rule is available at: http://www.consumerfinance.gov/regulations/disclosure-and-delivery-requirements-for-copies-of-appraisals-and-other-written-valuations-under-the-equal-credit-opportunity-act-regulation-b/

A summary of the CFPB’s rule is available at: http://files.consumerfinance.gov/f/201301_cfpb_ecoa-appraisals-rule_summary.pdf

Today, in partnership with several other federal regulatory agencies, the Bureau is also adopting a new rule that establishes special requirements concerning appraisals for higher-priced mortgage loans. The new rule creates an additional level of due diligence by requiring that creditors use a licensed or certified appraiser to prepare the written appraisal report based on a physical inspection of the property. The rule also requires creditors to disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report.

The interagency higher-priced appraisals rule for higher-priced mortgage loans is available at: http://www.consumerfinance.gov/pressreleases/agencies-issue-final-rule-on-appraisals-for-higher-priced-mortgage-loans/

A summary of the interagency rule is available at: http://files.consumerfinance.gov/f/201301_cfpb_tila-appraisals-rule_summary.pdf

Final Rule: Appraisal Standards for Higher-Risk Mortgages Approved by FDIC

U.S. mortgage lenders will get an additional year to implement new appraisal standards for higher-risk loans after regulators revised the Dodd-Frank Act measure to address concerns raised by financial firms.

Download 2013-01-15_notice_dis-a_res

Creditors issuing loans at above-average interest rates that don’t meet the “qualified mortgage” standard will need to get written reports by certified appraisers who physically inspect homes under rules approved today by the Federal Deposit Insurance Corp., one of six agencies that must sign off.

The chiefs of the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency -- as FDIC board members -- also approved the rule.  

SOURCE:  Bloomberg

SOURCE: http://www.fhfa.gov/webfiles/24893/HRMPressRelease011813FINAL.pdf

SOURCE: http://www.fhfa.gov/webfiles/24892/HRMFR11813.pdf

Resource: Mortgage News Daily

Consumer Financial Protection Bureau Issues Rule to Protect Consumers from Irresponsible Mortgage Lending

Rule Requires Lenders Ensure Borrowers Have the Ability to Repay Their Mortgage

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) adopted a new rule that will protect consumers from irresponsible mortgage lending by requiring lenders to ensure prospective buyers have the ability to repay their mortgage. The rule also protects borrowers from risky lending practices such as “no doc” and “interest only” features that contributed to many homeowners ending up in delinquency and foreclosure after the 2008 housing collapse.

“When consumers sit down at the closing table, they shouldn’t be set up to fail with mortgages they can’t afford,” said CFPB Director Richard Cordray. “Our Ability-to-Repay rule protects borrowers from the kinds of risky lending practices that resulted in so many families losing their homes. This common-sense rule ensures responsible borrowers get responsible loans.”

Leading up to the mortgage crisis, certain lenders originated mortgages to consumers without considering their ability to repay the loans. The gradual deterioration in underwriting standards led to dramatic increases in mortgage delinquencies and rates of foreclosures. What followed was the collapse of the housing market in 2008 and the subsequent financial crisis. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act created broad-based changes to how creditors make loans and included new ability-to-repay requirements, which the CFPB is charged with implementing.

Ability to Repay

In the years leading up to the financial crisis, lenders too often offered mortgages to consumers who could not afford them. Under the Ability-to-Repay rule announced today, all new mortgages must comply with basic requirements that protect consumers from taking on loans they don’t have the financial means to pay back. Among the features of the new rule:

• Financial information has to be supplied and verified: Lenders must look at a consumer’s financial information. A lender generally must document: a borrower’s employment status; income and assets; current debt obligations; credit history; monthly payments on the mortgage; monthly payments on any other mortgages on the same property; and monthly payments for mortgage-related obligations. This means that lenders can no longer offer no-doc, low-doc loans, where lenders made quick sales by not requiring documentation, then offloaded these risky mortgages by selling them to investors.
• A borrower has to have sufficient assets or income to pay back the loan: Lenders must evaluate and conclude that the borrower can repay the loan. For example, lenders may look at the consumer’s debt-to-income ratio – their total monthly debt divided by their total monthly gross income. Knowing how much money a consumer earns and is expected to earn, and knowing how much they already owe, helps a lender determine how much more debt a consumer can take on.
• Teaser rates can no longer mask the true cost of a mortgage: Lenders can’t base their evaluation of a consumer’s ability to repay on teaser rates. Lenders will have to determine the consumer’s ability to repay both the principal and the interest over the long term − not just during an introductory period when the rate may be lower.

Qualified Mortgages

Lenders will be presumed to have complied with the Ability-to-Repay rule if they issue “Qualified Mortgages.” These loans must meet certain requirements which prohibit or limit the risky features that harmed consumers in the recent mortgage crisis. If a lender complies with the clear criteria of a Qualified Mortgage, consumers will have greater assurance that they can pay back the loan. Among the features of a Qualified Mortgage:

• No excess upfront points and fees: A Qualified Mortgage limits points and fees including those used to compensate loan originators, such as loan officers and brokers. When lenders tack on excessive points and fees to the origination costs, consumers end up paying a lot more than planned.
• No toxic loan features: A Qualified Mortgage cannot have risky loan features, such as terms that exceed 30 years, interest-only payments, or negative-amortization payments where the principal amount increases. In the lead up to the crisis, too many consumers took on risky loans that they didn’t understand. They didn’t realize their debt or payments could increase, or that they weren’t building any equity in the home.
• Cap on how much income can go toward debt: Qualified Mortgages generally will be provided to people who have debt-to-income ratios less than or equal to 43 percent. This requirement helps ensure consumers are only getting what they can likely afford. Before the crisis, many consumers took on mortgages that raised their debt levels so high that it was nearly impossible for them to repay the mortgage considering all their financial obligations. For a temporary, transitional period, loans that do not have a 43 percent debt-to-income ratio but meet government affordability or other standards − such as that they are eligible for purchase by the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) − will be considered Qualified Mortgages.

There are two kinds of Qualified Mortgages that have different protective features for a consumer and different legal consequences for the lender. The first, Qualified Mortgages with a rebuttable presumption, are higher-priced loans. These loans are generally given to consumers with insufficient or weak credit history. Legally, lenders that offer these loans are presumed to have determined that the borrower had an ability to repay the loan. Consumers can challenge that presumption, though, by proving that they did not, in fact, have sufficient income to pay the mortgage and their other living expenses. 

The second, Qualified Mortgages that have a safe harbor status, are generally lower-priced loans. They are generally prime loans that are given to consumers who are considered to be less risky. They will also offer lenders the greatest legal certainty that they are complying with the new Ability-to-Repay rule. Consumers can legally challenge their lender if they believe the loan does not meet the definition of a Qualified Mortgage.

The Ability-to-Repay rule does not affect the rights of a consumer to challenge a lender for violating any other federal consumer protection laws.

Today, the CFPB is also releasing proposed amendments to its Ability-to-Repay rule. These amendments would, among other things, exempt certain nonprofit creditors that work with low- and moderate-income consumers. The proposed amendments would also make exceptions for certain homeownership stabilization programs − such as those that offer loans made in connection with the Making Home Affordable program − which help consumers avoid foreclosure. The proposed amendments would also provide Qualified Mortgage status for certain loans made and held in portfolio by small creditors, such as community banks and credit unions. Finally, today’s proposed amendments invite comment on how to calculate loan origination compensation under the points and fees provision of Qualified Mortgages.

The proposed amendments, if adopted, would be finalized this spring and go into effect at the same time as the Ability-to-Repay rule in January 2014. The CFPB is dedicated to working with industry and consumers for a smooth transition to the new rule. To help creditors with compliance, the CFPB will, among other things, be publishing plain-language translations of the regulation for lenders in booklet and video form, issuing implementation guides, and, in coordination with other agencies, releasing materials that help lenders understand supervisory expectations. As the effective date approaches, the CFPB will give consumers information about their new rights under these rules.

The rule and proposed amendments will be available on Thursday at: http://www.consumerfinance.gov/regulations

A factsheet further explaining the new rule is at: http://files.consumerfinance.gov/f/201301_cfpb_ability-to-repay-factsheet.pdf

A summary of the final Ability-to-Repay rule is at: http://files.consumerfinance.gov/f/201301_cfpb_ability-to-repay-summary.pdf

SOURCE: CFPB Website

Senators Reintroduce Bill to Expand HARP to Homeowners with Equity - Eliminate appraisal costs for all borrowers

Two U.S. Senators have reintroduced a bill which aimed at giving Freddie Mac and Fannie Mae (the GSEs) financed homeowners with equity the some opportunity to refinance as currently enjoyed by homeowners who are underwater.  The Responsible Homeowner Refinancing Act would extend the guidelines and reduced fees available under the Home Affordable Refinance Program (HARP) to homeowners regardless of the loan-to-value (LTV) ratio of their current GSE owned or guaranteed loan.

According to the THOMAS Library of Congress website, the bill was originally introduced on May 10, 2012 and referred to the Senate Banking Committee where it apparently died.  The new version is sponsored by Robert Menendez (D-NJ) and Barbara Boxer (D-CA).

According to its sponsors, the bill would be available to borrowers who are current on their existing GSE owned or guaranteed loans.  It would:

• Remove barriers to competition.
  The lender currently servicing a loan has an advantage over a new lender which faces stricter underwriting criteria and greater risks from the GSEs' reps and warranties should the borrower default.  These different standards have hindered competition, resulting in higher prices and less favorable terms for borrowers.  The proposed legislation would direct the GSEs to require equalize the underwriting and associated reps and warranties between new lenders and current servicers. 
• Guarantee equal access to streamlined refinancing for all GSE borrowers. 
  The revised HARP guidelines continued to distinguish between borrowers with LTVs above 80 percent and those below, leaving higher equity borrowers with greater costs and administrative burdens and effectively locking them out of the program.  The bill will allow all lenders to offer a single, streamlined program to all GSE borrowers who have been paying their loans on time.
• Eliminate up-front fees completely on refinances. 
  Under enhancements to HARP earlier this year, some fees for HARP loans were lowered and others were eliminated completely, creating what the sponsors call an economically indefensible situation in which borrowers with significant equity face steeper costs for refinancing than borrowers with no equity and hence presenting considerably greater risk.  These additional fees can be as high as two percent of the loan amount.  The bill prohibits the GSEs from charging up-front fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSE's and taxpayers.
• Eliminate appraisal costs for all borrowers. 
  Borrowers who live in communities without a significant number of recent home sales are often precluded from the Automated Valuation Models widely used by the GSEs and must pay hundreds of dollars for a manual appraisal to refinance.  The proposed bill will require the GSEs to develop additional streamlined alternatives to manual appraisals, eliminating a significant barrier and reducing cost and time for borrowers and lenders alike, especially in rural areas
• Further streamline the refinancing application process.
  Since participation in HARP requires that borrowers be current on their loans and with a demonstrated commitment to timely payments, there is no reason to require proof of employment or income for these loans.  The GSEs already own the risk which will only decrease with lower interest rates and payments.  The bill eliminates employment and income verification requirements, further streamlining the refinancing process and removing unnecessary costs and hassle for lenders and borrowers alike.
• Save taxpayers money. 
  The sponsors cite the Congressional Budget Office which says the bill will pay for itself through reduced default rates of existing GSE loans.

Menendez said, "Passing this bill will get rid of the red tape that leaves millions of borrowers trapped in higher interest loans, puts money back into the pockets of middle class families, and strengthens our economy. I'm asking Republicans to join us in putting families first."

Boxer said, "This bill is a win-win-win: homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will be strengthened. That's why the Menendez-Boxer bill has such broad support from industry and consumer groups."

The legislation has received support from the Mortgage Bankers Association, National Association of Realtors, National Association of Home Builders and the Center for Responsible Lending.

  View Article: http://www.mortgagenewsdaily.com/09112012_refinancing_harp.asp

Wells Fargo's $55.00 RVS Desktop Appraisal Releases 2/13/2010 - Restricted Use Report for Lending?

 The original document has been removed at the request of RVS for the reason below, but can be found on FNC Inc.'s site - Click Here

"The information contained in this electronic message is confidential, proprietary, and intended only for the use of the owner of the e-mail address listed as the recipient of this message. If you are not the intended recipient, or the employee or agent responsible for delivering this message to the intended recipient, you are hereby notified that any disclosure, dissemination, distribution, copying of this communication, or unauthorized use is strictly prohibited and subject to prosecution to the fullest extent of the law. If you are not the intended recipient, please delete this electronic message and DO NOT ACT UPON, FORWARD, COPY OR OTHERWISE DISSEMINATE IT OR ITS CONTENTS."

Here are a couple of appraiser comments from the LinkedIn USPAP Group:

Stephen G. De Castro: President, S.G. De Castro Appraisal & Consulting, Inc.

Wells Fargo is calling this a Restricted Use appraisal report. As per USPAP, a restricted use appraisal report can only be used when the client is the only intended user. This pretty much eliminates utilizing restricted use appraisal reports for mortgage lending purposes since there are more users then just the client.

There are also the regulators, the investors if the mortgage is sold, the borrowers have been told by FANNIE MAE that they are intended users. The work file must contain sufficient information to produce a Summary appraisal report.

The underlying concept of the restricted use appraisal report is that the client is intimately knowledgeable of the subject property and the problem to be solved. Hence does not require excess information that someone not familiar with the property and problem would require to understand the appraisal report and conclusions without the possibility of being misled. It does not shorten the amount of work required under Standard 1. It only saves on some paper, toner and typing and is meant for very specific situations. So there is your USPAP validation to tell them to stick it.

Donald J. Martin, SCRP, RAA, GAA, CDEI Owner, Martin Appraisals.com

Also, do not forget, when you do a "Restricted Use," USPAP requires you to have everything in your workfile to produce a "Summary Appraisal Report" without collecting anything else for the workfile.

Since you have to do everything in the workfile that you would do for a Summary, you have done the majority of the work for a Summary anyway, why would any that has done that many hours of work, do a job for $51.00, it makes no sense.

Forms are never USPAP compliant, it is the Appraiser that makes them USPAP compliant. I really hope are State regulators and Federal regulators take notice here and put a stop to the nonsense that Wells Fargo is doing, it really is a sad thing they have no respect for USPAP or the law and more importantly no respect for the public.

We welcome your comments here or on the LinkedIn USPAP Group!

Nationwide Mortgage Licensing System & Registry Launches a Consumer Access Database

From the Mortgage Fraud Blog - "The Nationwide Mortgage Licensing System & Registry (NMLS)- a mortgage licensing system operated by state financial regulators- launched NMLS Consumer Access. NMLS Consumer Access is a fully searchable website that allows the general public to view information concerning state-licensed mortgage companies, branches, and individuals currently licensed through NMLS."

NMLS Consumer Access^SM is a free service for consumers to confirm that the mortgage company or mortgage professional with whom they wish to conduct business is licensed in their state.

NMLS Consumer Access^SM

• Contains licensing/registration information on mortgage companies, branches and loan originator professionals licensed by state regulatory agencies participating in the Nationwide Mortgage Licensing System & Registry (NMLS).
• May not include all licensed/registered companies, branches or professionals. State agencies join NMLS in phases and not all agencies are fully participating on NMLS at this time. To see a list of currently participating states click here.
• Does not include information on applications not yet approved by a state.
• Does not include individuals working for federally insured depository institutions.
• Contains information that is self-reported to regulatory agencies by the licensed/registered company or professionals.
• Is updated nightly (business days only).

NAMB - HVCC Call To Action

To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers

From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, Director of FHFA (GSE Regulator) James Lockhart, and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing everyday, until advised to stop by NAMB. This will NOT be a one day action!

We have received hundreds of e-mails through the [email protected]  e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

• NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
• Federal Housing Finance Agency (FHFA): (866) 796-5595, [email protected]
• Fannie Mae: (202) 752-7000, [email protected]
• Freddie Mac: (703) 903-2000, Internet Complaint
• Senators, Representatives and Governors: Click here for contact information.

Also, please contact your local TV and Newspaper outlets. Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties.

For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Talking Points:

1) NAMB conservatively estimates (breakdown below) that the HVCC is costing consumers over 2.8 BILLION dollars a year in extra fees, created by long delays (extended lock-in fees) and higher appraisal costs.

2) Unregulated Appraisal Management Companies (AMCs), who have been the subject of several misconduct investigations, are the centerpiece of the HVCC. The original Cuomo investigation involved a federally chartered bank and an AMC.

3) AMCs are driving honest appraisers and mortgage brokers from business, eliminating competition, increasing costs to consumers and reducing state revenue. The HVCC is causing significant delays in real estate transactions, hurting real estate agents, title companies and other third parties reliant on turnaround time.

4) HVCC does nothing to reduce fraud, as it legitimizes the same failed model, which was the subject of Attorney General Cuomo’s investigation.

5) No Portability! Consumers are “trapped” with a specific lender. If a better deal becomes available with a different lender, the consumer is forced to pay for another appraisal.

Click here to continue reading . . . .

Fannie Mae Announcement 09-19 - Clarification of Announcement 08-30, Appraisal-Related Policy Changes and Clarifications

Fannie Mae's Announcement 09-19 updates and clarifies the following appraisal and property-related topic: Clarification of Announcement 08-30, Appraisal-Related Policy Changes and Clarifications Updates to Announcement 08-30, Appraisal-Related Policy Changes and Clarifications.

Market Conditions Addendum to the Appraisal Report

 In Announcement 08-30, Fannie Mae introduced the Market Conditions Addendum to the Appraisal Report (Form 1004MC) to further enhance the transparency of the conclusions made by the appraiser related to market trends and conditions.

To add clarity, Fannie Mae has added several shaded areas to the form to recognize that all the requested data may not be available from the data sources used by the appraiser and therefore the information may not be provided. The lack of completion of these areas is acceptable as long as the appraiser provides an explanation as to why these sections of the form are not complete. However, if the data is available, the appraiser must include the data in the analysis.

Fannie Mae is also modifying the requirement for the “Median List-to-Sale Price Ratio” to now label it as “Median Sale Price as a Percentage of List Price.” Additional research indicated that this figure is typically provided by data sources as a percentage. The revised form is dated March 2009 and is available on eFannieMae.com. It was also provided to the major form software vendors. Lenders are encouraged to use the updated version immediately; however, it will be required for all one- to four-unit appraisals dated on or after July 1, 2009.

Use of Supervisory Appraisers

 Announcement 08-30 provides additional policy and guidance on the use of supervisory appraisers when they sign an appraisal report on the left-hand side of the form as the “appraiser.” Fannie Mae is providing the following clarification.

The Fannie Mae Selling Guide defines the appraiser as “the individual, who personally inspected the property being appraised, inspected the exterior of the comparables, performed the analysis, and prepared and signed the appraisal report as the appraiser.” The Announcement was intended to address instances where a trainee or unlicensed appraiser (who does not sign the report and where it is allowable by state law) completes the inspection, but the supervisory appraiser signs on the left-hand side of the appraisal as the “appraiser,” when they have never inspected the subject property.

In Announcement 8-30, Fannie Mae was conveying that this practice is unacceptable. Any appraiser signing on the left-hand side as the “Appraiser” must perform the level of inspection required by the assignment.

This guidance does not require the supervisory appraiser to inspect the subject property in all instances.

Time Adjustments on the Appraisal Report

Announcement 08-30 clarified that time adjustments may be either positive or negative. It also stated the adjustments must reflect the difference in market conditions between the date of sale of the comparable and the effective date of the appraisal for the subject property. The term “date of sale” was used in lieu of “contract date.” The correct terminology as stated in the Selling Guide is “contract date.”

Download FNMA_Announcement_0919

Key Highlights of Announcement 08-30:

•  New Market Condition Addendum form 1004MC

• Supervisory appraisers must now inspect the subject property

• Reporting prior sales and listing history

• Appraising a property on sites over 5 acres

• Effective age adjustments

• Cost approach for insurance purposes

Assuring Accurate Appraisals, Part II: What's A Consumer To Do?

According to Broderick Perkin's first article article Assuring Accurate Appraisals Part I:

"During the height of the housing boom, appraisers were pressured to up the value of homes. Now, during the housing downturn, appraisers are being pressured to lower the value of homes."

In the follow-up article, Assuring Accurate Appraisals, Part II: What's A Consumer To Do? , Perkins says:

"Appraisers are typically hired by the lender to protect its stake in a home buying transaction. That means the appraiser is beholden to his or her employee -- the lender -- not necessarily the buyer nor the seller.

However, both the seller and the buyer can play a role in the appraisal process through a process of due diligence known as looking over the lender's shoulder."

 

Click Here for the full Realty Times article by Broderick Perkins

Next Week: What's a consumer to do? How consumers can play a leading role in the appraisal process.

Feds Propose Nationwide Mortgage Licensing System and Registry Database (S.A.F.E. Act)

Federal Agencies Propose Rule to Implement S.A.F.E. Act Mortgage Loan Originator Registration Requirement

WASHINGTON — The Federal financial institution regulatory agencies (the Agencies) are together issuing for public comment proposed rules requiring mortgage loan originators who are employees of Agency-regulated institutions to meet the registration requirements of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act).

The S.A.F.E. Act requires the Agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of Agency-regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries.

These mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry (Registry), a database established by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators to support the licensing of mortgage loan originators by the States.

As part of this registration process, mortgage loan originators must furnish to the Registry background information and fingerprints for a background check. The S.A.F.E. Act generally prohibits employees of an Agency-regulated institution from originating residential mortgage loans without first registering with the Registry.

The proposal, which is being issued jointly by the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Farm Credit Administration, and National Credit Union Administration, establishes the registration requirements for mortgage loan originators employed by Agency-regulated institutions as well as requirements for these institutions, including the adoption of policies and procedures to ensure compliance with the S.A.F.E Act and final rule.

As required by the law, the proposal also requires these mortgage loan originators to obtain a unique identifier through the Registry that will remain with that originator, regardless of changes in employment. When the system is fully operational, consumers will be able to use the unique identifiers to access employment and other background information of registered mortgage loan originators.

Pursuant to the S.A.F.E. Act, the proposal further requires these mortgage loan originators to provide their unique identifiers to consumers in certain circumstances and Agency-regulated institutions to make them available to consumers.

Because modification of the Registry to accept Federal registrations involves complex technical issues, the proposed rule provides for a delay in implementation of the registration requirements until 180 days after the Registry becomes operational and available for initial Federal registrations.

The Federal Register notice and proposed rule are attached. The proposal will soon be published in the Federal Register and the comment period will end 30 days thereafter.

Source Document:  http://www.occ.treas.gov/ftp/release/2009-58a.pdf  

OCC News Release: http://www.occ.treas.gov/ftp/release/2009-58.htm