National Registry To Prevent Mortgage Fraudby Tim Manni
Federal financial regulators have proposed amendments to a rule that would require mortgage loan originators to “obtain a unique identifier”, allowing consumers access to the originator’s employment history and other background information. The registry is designed to prevent fraudulent originators from moving their business to different parts of the country.
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (S.A.F.E. Act) “requires the [Federal financial institution regulatory] 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.”
After this proposal is published in the Federal Register, it will be open to comments from the public for a period of 30 days.
“This is part of the overall re-regulation of the mortgage industry,” said HSH Vice President Keith Gumbinger. “At the very least, this proposal allows regulators to be able to track so-called ‘bad actors’ in the mortgage industry. Along with predatory lending laws, it will be easier to find and punish those who are responsible for some of the poor outcomes for future homeowners.”