The Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act) is a federal law that was enacted in 2008 to enhance consumer protection and reduce fraud in the residential mortgage industry. The S.A.F.E. Act requires residential mortgage loan originators (MLOs) to be registered with the National Mortgage Licensing System (NMLS) and to meet certain qualifications and standards.
The S.A.F.E. Act applies to MLOs who work for depository institutions and non-depository institutions that are regulated by a federal agency, such as the Office of the Comptroller of the Currency (OCC) or the Federal Deposit Insurance Corporation (FDIC).
Under the S.A.F.E. Act, MLOs who work for depository institutions and non-depository institutions that are regulated by a federal agency, such as the Office of the Comptroller of the Currency (OCC) or the Federal Deposit Insurance Corporation (FDIC), are required to register with the NMLS. This registration process includes a criminal background check, and MLOs must meet certain education and testing requirements as well as ongoing continuing education requirements.
The NMLS is a national system for licensing and registration of residential mortgage loan originators. It is a database that stores information about MLOs, including their qualifications, education, and testing results. The NMLS is accessible to state and federal regulatory agencies, as well as to consumers.
The S.A.F.E. Act aims to improve the quality of residential mortgage loan origination by requiring that MLOs meet certain standards and by providing a way for regulatory agencies to monitor their activities.
The S.A.F.E. Act requires MLOs to:
- Register with the NMLS and maintain an active registration
- Pass a criminal background check
- Meet certain education and testing requirements
- Comply with ongoing continuing education requirements
- Disclose any disciplinary action taken against them by state or federal agencies
The S.A.F.E. Act also requires employers of MLOs to:
- Verify the registration status of their MLOs through the NMLS
- Implement a written policy for detecting and preventing fraud
- Provide training to their MLOs on federal and state laws and regulations
The S.A.F.E. Act is enforced by the Consumer Financial Protection Bureau (CFPB) in coordination with state regulatory agencies. Violations of the S.A.F.E. Act can result in penalties, including fines and legal action, and may also result in the suspension or revocation of an MLO’s registration.
State Compliance and Bureau Registration System
The State Compliance and Bureau Registration System (SCBRS) is a system that enables state regulatory agencies and the Consumer Financial Protection Bureau (CFPB) to share information and coordinate their efforts in the supervision of non-depository institutions, such as non-bank mortgage companies and other types of financial services providers.
SCBRS is a central database that allows state and federal regulators to access information about the companies they supervise, such as their financial condition, management structure, and compliance with laws and regulations. This information can be used to identify potential risks and to help regulators prioritize their supervisory activities.
SCBRS also allows for the sharing of examination reports and other supervisory information between state and federal regulators, which can help improve the efficiency and effectiveness of supervisory activities.
SCBRS is intended to increase the overall level of protection for consumers by providing a more comprehensive and coordinated approach to the regulation of non-depository institutions. The CFPB uses the SCBRS to gather information about the companies it supervises, which allows it to focus its supervisory activities on those companies that pose the greatest risk to consumers.
The system also allows for the sharing of information between state and federal regulators, which can help them identify and address potential risks more quickly and effectively.