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The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), 12 U.S.C. § 5101, et seq. was enacted on July 30, 2008, and requires individuals who engage in the business of a residential mortgage loan originator (MLO) to be either state-licensed or federally-registered as MLOs. Federal registration is available only to individuals who are employees of: Federal registration is done through the Nationwide Mortgage Licensing System and Registry (NMLS) at http://fedregistry.nationwidelicensingsystem.org/Pages/default.aspx. When an MLO begins the federal registration process through the NMLS, he or she receives a unique identification number. The SAFE Act and its implementing regulation, Regulation G, (12 CFR Part 1007) require this unique identification number to be provided to consumers in specific instances. The SAFE Act and Regulation G also require the employer of federally-registered MLOs to adopt written policies and procedures to comply with the SAFE Act and Regulation G, and perform annual independent testing of the policies and procedures. Full text of the SAFE Act can be found here. Regulation G (SAFE Mortgage Licensing Act – Federal Registration of Residential Mortgage Loan Originators) can be found here. NCUA Regulation requires federally-insured credit unions to adhere to the requirement of 12 CFR Part 1007 (12 CFR §741.223) Associated RisksCompliance risk can occur when the credit union does not implement controls to comply with the SAFE Act and Regulation G. The credit union must establish procedures to ensure that third party companies which handle mortgage loan originations have policies and procedures to comply with the SAFE Act, including licensing and/or registration of individuals acting as MLOs. Transaction risk can occur when the credit union does not have adequate internal controls in place and as a result suffers a loss. Reputation risk can occur when the credit union incurs fines and penalties or experiences decreased member confidence because it or third party companies did not comply with the SAFE Act and Regulation G. Strategic risk can occur when the board of directors does not perform due diligence in reviewing policies, and existing and prospective products and services for compliance with Regulation G and the SAFE Act. Examination Objectives
Examination ProceduresScoping
Policies and Procedures
Use of Unique Identifier
Recordkeeping
SECURE AND FAIR ENFORCEMENT FOR MORTGAGE LICENSING ACT (SAFE ACT) (REGULATION G) EXAMINATION CHECKLIST
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