Compliance Blog

Written by JiJi Bahhur, Regulatory Compliance Counsel

Just a friendly reminder that the SAFE Act renewal period is set to expire on December 31, 2011.  Under the SAFE Act, all credit unions and its MLOs must renew their registration between the annual renewal period each year (there is an exception for MLOs registering for the first time less than six months prior to the end of the annual renewal period).  Part 761.102(a) of NCUA’s Rules and Regulations define the annual renewal period as November 1 through December 31 of each year.  If a credit union and its MLOs do not renew their registration, they would be prohibited from originating residential loans.  Here is from 12 CFR 761.103(a)(2): 

Ҥ 761.103 Registration of mortgage loan originators.

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(2) Credit union requirement —(i) In general. A credit union that employs one or more individuals who act as a residential mortgage loan originator must require each employee who is a mortgage loan originator to register with the Registry, maintain this registration, and obtain a unique identifier in accordance with the requirements of this part.

(ii) Prohibition. A credit union must not permit an employee of the credit union who is subject to the registration requirements of this part to act as a mortgage loan originator for the credit union unless such employee is registered with the Registry pursuant to this part.”

There is some leniency in the SAFE Act.  First, although all institution accounts must be renewed during each annual renewal period, the same does not always apply to the institution’s MLO(s).  If the MLO completed his/her initial registration less than 6 months prior to the end of the annual renewal period for that year, Part 761.103(b)(3) of the rule allows for an exception to annual renewal for that particular year.  Thus, any MLOs who registered on or after July 1st of 2011 would not be required to renew in 2011.    

Second, if for some reason the institution’s MLO(s) misses the December 31 deadline for annual renewal, it doesn’t mean the MLO is forever banned from originating loans.  What it does mean is that the MLO’s status goes inactive.  During the period of inactivity, the MLO cannot originate loans, but as soon as the MLO renews his/her registration, he/she will go back to active status and may begin originating again.

Below is a Q&A from the November 2011 NAFCU Compliance Monitor explaining the exception for MLOs who registered after July 1, 2011:

Question: We registered all our mortgage loan originator (MLO) personnel at the beginning of the year. I understand that we need to renew the credit union account before December 31, 2011, but I don’t need to renew our MLO registrations until next year, correct?  

Answer: No. If your employees were registered before July 1st then you will need to renew the registrations before December 31st and again annually thereafter as long they are active mortgage loan originators. “The annual registration renewal requirement set forth in paragraph (b)(1) of this section does not apply to a registered mortgage loan originator who has completed his or her registration with the Registry pursuant to paragraph (a)(1) of this section less than 6 months prior to the end of the annual renewal period.” See, 12 C.F.R. §761.103(b). Thus, any registrations that were made active after July 1st are not required to be renewed in that same calendar year but must be renewed in subsequent years. Any registrations prior to July 1st would need to be renewed between November 1 and December 31.     

For additional information on the SAFE Act renewal process, check out our October 18th blog post.