Compliance Blog

Written by Steve Van Beek

Congress will be heading out of town for August and the Senate Banking Committee has postponed Richard Cordray's Nomination hearing until September 6, 2011.  Both chambers will continue to meet in pro forma sessions which will prevent President Obama from making any recess appointments - including for Cordray as Director of the Consumer Financial Protection Bureau.

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We have been getting quite a few SAFE Act NMLS # questions - specifically where and when the number must be disclosed.  The best starting resource is 12 C.F.R. 761.105(b) which is part of NCUA's regulations implementing the SAFE Act.  That section states:

 

"(b) A registered mortgage loan originator shall provide his or her unique identifier to a member:

(1) Upon request;

(2) Before acting as a mortgage loan originator; and

(3) Through the originator's initial written communication with a member, if any, whether on paper or electronically."

The two most common questions we received are: does the NMLS # need to be on emails and does the NMLS # need to be on business cards?

The Agencies discussed business cards when they issued the final rule.  Here is from the preamble:

"Furthermore, the Agencies intend § __.105(b)(3) of the rule to cover written communication from the originator specifically for his or her customers, such as a commitment letter, good faith estimate or disclosure statement, and not written materials or promotional items distributed by the Agency-regulated institution for general use by its customers. While, this provision does not require institutions to include the unique identifier on loan program descriptions, advertisements, business cards, stationery, notepads, and other similar materials, institutions are not prohibited from doing so. We also clarify that the requirement to provide the unique identifier to the consumer through the originator’s initial written communication, if any, applies whether that communication is provided in writing on paper or through electronic means. We have clarified this requirement in the final rule. The Agencies also clarify that the unique identifier may be provided orally, except pursuant to paragraph (b)(3) under which the unique identifier would be provided with the written or electronic communication."  (emphasis added).

That discussion is dealing with Section 761.105(b)(3) and the initial written communication.  

However, what about Section 761.105(b)(2)?  That section requires disclosure before acting as an mortgage loan originator (MLO).  Credit unions have options in meeting this requirement - but they do need to make sure the MLO discloses their NMLS # before acting as an MLO.  

Including the NMLS # on email signatures and business cards is one way of disclosing the unique identifier to members before acting as an MLO.  The credit union could adopt other procedures to meet the disclosure requirement as it is not a regulatory requirement to include the number on business cards or email signatures.

On a practical note, I'm not sure there is a concern about overdisclosure in this situation.  The credit union could include the NMLS # on business cards, email signatures and disclose the number via other means without worry about disclosing the number in too many places.

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The CFPB now has authority over the SAFE Act.  Perhaps the CFPB will provide straightforward guidance in the future?