The Federal Reserve Board has issued a reminder regarding the requirements contained within the Consumer Financial Protection Bureau’s rule implementing the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act), which requires residential mortgage loan originators (MLOs) employed by financial institutions to register with the Nationwide Mortgage Licensing System and Registry (Registry), obtain a unique identifier from the Registry, and maintain their registrations.
Under the rule, institutions are required to adopt written policies and procedures to ensure that their MLOs are registered and that their registration information, as reflected in the institution’s records, is accurate. These policies and procedures should be appropriate to the nature, size, complexity, and scope of residential mortgage lending activities of each institution (See, NBA Compliance Handbook, Volume III, Lending section, for additional information regarding SAFE Act Policies and Procedures). The Federal Reserve Board has indicated that Federal Reserve-supervised institutions should be aware that Safety and Soundness examiners will begin reviewing institutions’ policies and procedures in this area, effective immediately.
The SAFE Act further requires financial institutions to conduct an annual test to review their compliance with the rule. These independent compliance activities may be conducted by an institution’s internal audit function, compliance (or similar) function, or by an outside party. The deadline date for completion of the 2012 test by Federal Reserve-supervised institutions is July 29, 2012, which is one year from the close of the initial registration period for federal MLOs. Thereafter, institutions are required to independently test for compliance with the rule at least annually.