Proposal to Require More Stringent Review of Loan Originators

June 2, 2009 No Comments »


The FDIC, Office of Thrift Supervision, and National Credit Union Administration, among others, have proposed developing a joint system to register residential mortgage loan originators who are employees of the related regulated institutions.

“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,” the FDIC said in a statement.

These loan originators would be required to be registered with the Nationwide Mortgage Licensing System, along with the American Association of Residential Mortgage Regulators.

As part of the registration, originators would be subject to a background check and required to provide fingerprints; they would generally be barred from originating loans until registered.

“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.”

The system is aimed at providing more transparency in what can be a misleading and complicated loan process, while reducing mortgage fraud and pushing bad players out of the business.

It will be published in the Federal Register and subject to public comment for 30 days, and likely won’t be implemented for 180 days after that thanks to the complexity involved.

(photo: exercisetradewinds2009)

Leave A Response