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Compliance A SAFE registration update
WASHINGTON (9/13/10)--The Conference of State Bank Supervisors (CSBS) briefed the Credit Union National Association (CUNA) and other trade associations last week about its progress on developing the registration process that banks, credit unions, and their employees will have to follow in order to comply with the Safe and Fair Enforcement for Mortgage Licensing Act (SAFE Act). All credit unions that make residential mortgage loans are subject to the National Credit Union Administration’s (NCUA’s) SAFE regulations and may have to register certain employees. NCUA, the federal banking agencies and the Farm Credit Administration are working with CSBS, which already runs the web-based registration system for state licensing of mortgage loan originators, to modify the current CSBS system to create the Nationwide Mortgage Licensing System and Registry. When the final SAFE regulations were issued in July, the agencies indicated they expect the Registry to be operational on January 28, 2011. The law provides that credit union employees who are “mortgage loan originators” (MLOs) as defined by the SAFE regulations and approve a certain number of mortgage loans a year will have 180 days after the agencies formally announce the date that the registry is operational to become registered in order to continue to be authorized to make residential mortgage loans, including home equity loans. Registration requires that MLOs provide certain information, including employment history, and provide finger prints for a criminal background check. Some of this information, including the unique identifying number assigned by the registry to the individual, will be publicly available. All of the information will be made available to the federal agencies. Although the registration procedures are not finalized, CSBS provided CUNA with an overview of how the electronic registration system will work. Each credit union will have to have a “research statistics supervision discount” (RSSD) number, which is assigned by the Federal Reserve Board, in order to initially access the Registry to register the credit union itself into the system. On its “SAFE Act” webpage, NCUA has a link to “Finding Your Credit Union’s RSSD Number.” CUNA isn’t sure how many credit unions lack a RSSD number and will explore what has to be done to have this number assigned. The registry will then provide each credit union with a number to be used for all future SAFE purposes. The credit union will complete a “MU1R” form for registering the credit union, which will include a name of an employee to contact for questions, who can be the same person designated as the account administrator. The account administrator will have full access to all the information provided by the credit union and its MLO employees. The credit union has to be registered before individual MLO employees can register. Individuals will do so by completing the “MU4R” form. Employees will have to attest to the accuracy of the information they provide, and the credit union will have to indicate that it has received the criminal background check information before finally completing the registration process. CSBS indicated that it hopes to post these forms to its website in the next week or so, which will allow everyone to understand what information will have to be provided even though actual registration is months away. CSBS described that it will have a “MLO batch upload process,” which will allow the credit union to manage the registration process of its employees. CUNA’s Senior Vice President for Compliance Kathy Thompson noted that although the batch upload process will not be required, CSBS said that it would recommend financial institutions use the batch upload process. “Undoubtedly credit unions will want to use this batch process in order to track that designated employees are actually registering, and employees will want the credit union to centralize the process so that the credit union, rather than the employee, pays the registration fees,” Thompson added. CSBS says it hopes to have the batch upload specifications released at the same time the forms are available in coming weeks. CSBS is required to seek public comment on the fees it’s proposing for SAFE registration, and CSBS said at the meeting that it expects to do so in the next two to three weeks. It would not provide even a range of what the cost might be, but said there will be fees for the actual registration process, fees for conducting the criminal background check, and a security fee required to protect the system. Starting in November, CSBS plans to provide training materials and webinars to help prepare credit unions and banks on how to register. It also noted that it has an experienced call center, which already provides technological support to the state licensing programs. It emphasized that the federal agencies, not its call center, have to address such questions on who has to register and other issues related to interpreting the regulations. CSBS has a page on its “NMLS Resource Center” website which provides public information about the federal registration process, which is where it will post the forms and answer frequently asked questions. CSBS says this page will serve as the gateway into the registration system. In addition to its regular meetings with the federal agencies, which determine what the registration system will require, CSBS has organized an informal working group of some credit union and bank loan officers to discuss implementation issues and training needs as it finalizes the SAFE registration program. It plans to meet with this group throughout the fall. As a reminder, the SAFE regulations are effective Oct. 1, 2010, even though the registration process won’t begin for another four months. “The regulations require credit unions to adopt a general SAFE policy in the next few weeks,” Thompson emphasizes, “although NCUA acknowledges the credit union’s policy will need to be reviewed, and possibly revised, once the registration procedures are announced.” Thompson said that credit unions should also begin the process of identifying which credit union employees will have to be registered. While credit unions and their employees will be given 180 days to register starting in late January, Thompson said that they should not wait until the beginning of next summer to focus on registration. "You don't want to find you have technological glitches, problems with fingerprints, or delays in receiving the background checks, and suddenly your credit union can't make a mortgage loan in mid-summer because staff isn't SAFE-ly registered." For more CSBS information, use the resource link.
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