Compliance Blog

From time to time, the NAFCU Compliance Team receives questions regarding the requirement in Regulation G, issued pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), to disclose or make available to consumers the Nationwide Mortgage Licensing System & Registry (NMLS) IDs (unique identifiers) of their mortgage loan originators. An NMLS ID is a number assigned by the NMLS to “facilitate electronic tracking and uniform identification of loan originators and public access to the employment history of, and the publicly adjudicated disciplinary and enforcement actions against, loan originators.” See, 12 USC 5107(c).

Disclosure Requirements in Regulation G. Section 1007.105 of Regulation G requires credit unions to make available to consumers the unique identifiers of registered mortgage loan originators. For the purposes of the act, a mortgage loan originator is an individual who “takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain”. A residential mortgage loan is “any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 USC 1602(v)) or residential real estate upon which is constructed or intended to be constructed a dwelling, and includes refinancings, reverse mortgages, home equity lines of credit and other first and additional lien loans that meet the qualifications listed in this definition.” See, 12 CFR §1007.102 (2)(C)(ii)(1). 

Credit unions are required to provide the NMLS IDs to consumers “(1) upon request, (2) before acting as a mortgage loan originator; and (3) through the originator's initial written communication with a consumer, whether on paper or electronically”. See, 12 CFR § 1007.105 (b). These requirements apply whether the communication is provided in writing on paper or through electronic means. 

The regulation requires credit unions to "make available the unique identifiers of its registered mortgage loan originators in a manner and method practicable to the institution." See, 12 CFR § 1007.105 (a). There is some guidance in the preamble to this rule indicating how NCUA expects credit unions to comply with generally providing the credit union's NMLS IDs:

“As noted in the SUPPLEMENTARY INFORMATION section of the proposed rule, an Agency-regulated institution may comply with the § __.105(a) requirement in a number of ways. For example, the institution may choose to direct consumers to a listing of registered mortgage loan originators and their unique identifiers on its Web site; post this information prominently in a publicly accessible place, such as a branch office lobby or lending office reception area; and/or establish a process to ensure that institution personnel provide the unique identifier of a registered mortgage loan originator to consumers who request it from employees other than the mortgage loan originator…”(emphasis added.) See, 75 FR 51642.

Many credit unions have made the business decision to include NMLS IDs on emails and business cards to ensure the disclosure is given at the appropriate time, due to the “initial communication requirement” in Regulation G.   

It is important to point out that even though Regulation G does not require institutions to include the unique identifier on loan program descriptions, advertisements, business cards, stationary, notepads, and other similar materials, credit unions are not prohibited from doing so. Also, while the rule does not specifically require the NMLS IDs on a credit union’s website, credit unions can choose to implement such practice.

Other Regulatory Requirements. In addition to the requirements in Regulation G, section 1026.36(g) of Regulation Z requires a loan originator organization (a loan originator who is not an individual loan originator) to include its name and NMLS ID and the name and NMLS ID of the individual loan originator on certain loan documents.

Under Regulation Z, a loan originator “means a person who, in expectation of direct or indirect compensation or other monetary gain or for direct or indirect compensation or other monetary gain, performs any of the following activities: takes an application, offers, arranges, assists a consumer in obtaining or applying to obtain, negotiates, or otherwise obtains or makes an extension of consumer credit for another person; or through advertising or other means of communication represents to the public that such person can or will perform any of these activities…”

For real estate transactions secured by a dwelling, a loan originator organization is required to include on the credit application, the disclosures required by §1026.19 (e) and (f), the note or loan contract, and the security instrument the following:

1. Its name and NMLS ID; and
2. The name of the individual loan originator (as the name appears in the NMLS) with primary responsibility for the origination and, if the NMLS has provided such person an NMLS ID, that NMLS ID. See, 12 CFR §1026.36(g).

Keep in mind that the credit union’s state SAFE Act may also apply. Credit unions union may want to consult with local counsel familiar with their state law to see if that is the case. How long has it been since you have dusted off your credit union’s SAFE Act procedures? As things start settling down, it may be a good time to determine if your procedures are compliant or if an update may be appropriate. NAFCU has available a SAFE Act training that you may find useful.