S.A.F.E. Mortgage Licensing Act of 2008

What is the SAFE Act and its purpose?
How does it affect my current surety bond?
What are the changes for my state?
How can I track these changes?

What does this legislation mean for you?
According to HUD:

The Housing and Economic Recovery Act of 2008, signed into law on July 30, 2008 (Public Law 110-289) (HERA), constitutes a major new housing law that is designed to assist with the recovery and the revitalization of America's residential housing market - from modernization of the Federal Housing Administration, to foreclosure prevention, to enhancing consumer protections. The SAFE Act is a key component of HERA.

The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry for the purpose of achieving the following objectives:

(1) Providing uniform license applications and reporting requirements for state licensed-loan originators;

(2) Providing a comprehensive licensing and supervisory database;

(3) Aggregating and improving the flow of information to and between regulators;

(4) Providing increased accountability and tracking of loan originators;

(5) Streamlining the licensing process and reducing regulatory burden;

(6) Enhancing consumer protections and supporting anti-fraud measures;

(7) Providing consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators;

(8) Establishing a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the consumer;

(9) Facilitating responsible behavior in the sub-prime mortgage market place and providing comprehensive training and examination requirements related to sub-prime mortgage lending;

(10) Facilitating the collection and disbursement of consumer complaints on behalf of state mortgage regulators.
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Simply Put - the Surety Bond Requirements are changing:

Section 1508(d)(6) of the SAFE Act provides that states must set minimum net worth or surety bond requirements or establish a recovery fund paid into by loan originators. HUD has determined that a state may comply with the SAFE Act requirement by providing that, in the case of a company that employs more than one loan originator, the bonding requirement may be met at the company level. Individual loan originators would not have to be bonded separately. The MSL incorporates this interpretation in section XX.XXX.140(1).

Each State is revising and adapting their specific mortgage bond requirements to ensure they comply with these new guidelines. At this time many State Agencies have increased bond requirements, removed net worth exemptions or opted for the recovery funds in lieu of the surety bond. See the link below for the Summary Tracking Sheet to find out how your state has responded at this time.
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Each State can interpret and apply the SAFE Act Model State Law differently

Please find a copy of the State SAFE Act Legislative Tracking Here. Due to the large scale changes these updates are critical to understand for licensing and compliance purposes. We make every effort to ensure that changes are posted and kept up to date.
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Change is inevitable and the best way to be successful is through good change management

To manage change effectively it is critical to be aware of what is happening and what might happen to ensure that you can act rather than re-act. We will keep our clients and partners updated via emails, newsletters, and blog postings to ensure that you have the knowledge to make the decisions that will be best for your company. To find out more sign up for our Newsletter or Blog and stay ahead of the change.
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