FAQs
Question: Are mortgage loan originators (MLO) required to provide their Nationwide Mortgage Licensing System (NMLS) number on HELOC applications, notes, and security instruments?
Answer: The NMLS disclosure requirements found in Reg. Z – 1026.36(g) apply only to closed-end consumer credit transactions secured by a dwelling. Therefore, the requirement does not apply to HELOCs, which are considered open-end credit.
The SAFE Act, which also has requirements related to providing NMLS ID numbers, covers residential real estate open-end credit, but does not include a requirement to include the NMLS ID number on certain loan documents. However, the other SAFE Act disclosure requirements must still be followed. The MLO shall provide his or her unique identifier to a consumer (1) upon request; (2) before acting as a mortgage loan originator; and (3) through the originator’s initial written communication with a consumer, if any, whether on paper or electronically
Question: What names should be submitted to the Nationwide Mortgage Licensing System & Registry on the Individual License Form (MU4) for a Mortgage Loan Originator?
Answer: Section 1007.103(d)(i)(A) of the S.A.F.E. Mortgage Licensing Act states all employees who are a MLO must submit to the Registry various identifying information which includes their legal name and any other names they use. The NMLS Policy Guidebook then describes how the fields within the Registry are to be completed. On page 86, it instructs when creating an individual record, the MLO should enter their “Full legal name (First, Middle, Last)”. On page 88 of the Guidebook, it further specifies, “Full Name should be the individual’s legal name as found on their birth certificate, including a middle name even if not used, unless modified by a legal proceeding.”
The Guidebook also addresses other names that should be detailed in the Registry on page 90. It specifies “Individuals are required to provide any names other than their legal name used since the age of 18. Examples include nicknames, aliases, initials, names used on business cards or advertisements, and names used before or after marriage. Make sure that all names used in business practices are included such as those listed on business cards.” It further details, “The information provided in this section is used to enhance the searchable data available on NMLS Consumer Access, as well as to verify information on credit reports, criminal background checks and for general compliance purposes.
Question: How and when should the Nationwide Mortgage Licensing System & Registry be updated when a bank employee, who is currently acting as a Mortgage Loan Originator with an active NMLS ID in the Registry, changes positions within the bank and the new position no longer requires the employee to maintain their NMLS ID?
Answer: The best way to handle this situation is for the institution to keep the employee’s NMLS ID status “Active” until the next annual renewal period (November 1st – December 31st). When completing the annual renewals, the Administrator can choose to NOT renew that individual employee’s NMLS ID. Once the annual renewal period has ended and the individual’s NMLS ID has not been renewed, the Registry will show his/her NMLS ID status as “Inactive” but still employed by the institution. According to the NMLS Federal Registry Resources Quick Guides — Institutions, terminating the employment records in the Registry should not be considered when the employee is still employed by the institution.
It is also important to remember that the de-minimis exception (which exempts an employee from the requirement to register for an NMLS ID if they originate five or fewer residential mortgage loans in a rolling 12-month period) is not available to individuals who were previously registered MLOs. So, if there is a slight chance that the employee could take even one residential mortgage loan application and negotiate loan terms, the institution should renew the NMLS registration and ensure the employee’s status remains “Active.”
Question: We are preparing to process our MLO NMLS registration renewals. A new MLO on our team believes we are required to ensure every MLO on our team receives at least 8 hours of continuing education each year in order to maintain their NMLS registration. Is that really a requirement?
Answer: There is no provision in Reg. G, which implements the SAFE Act requirements for registration and renewal of registration for bank-employed MLOs that requires a specific number of continuing education hours per year. Rather, the requirement in Reg. G simply states that MLOs must receive annual training based on their responsibilities under the law, the bank’s procedures for complying with the SAFE Act and other regulatory requirements. Reg. Z also has training requirements for MLOs in § 1026.36(f) Loan Originator Qualification Requirements but again, the training requirements found in § 1026.36(f)(3)(iii) do not require a specific number of continuing education hours, rather the requirement simply states the bank must “…provide periodic training covering Federal and State law requirements that apply to the individual loan originator’s loan origination activities.”
I believe your team member is referring to the continuing education requirements detailed by state law for MLOs who are NOT bank employees and must first become licensed under state law before they can register on the NMLS. State law requirements for licensed MLOs (who do not work for federally regulated banks) are more vigorous because these MLOs work independently and are not as closely regulated as bank-employed MLOs who must only be registered. Bank-employed MLOs do NOT have to become licensed first and then register; they just need to register. Bank-employed MLOs must receive training but are not required to receive a prerequisite number of hours of CE credits per year. (December 2019)
Question: Many of our Mortgage Loan Originators (MLOs) use a shortened version of their full legal name for everyday business purposes and therefore will use that shortened version on their business cards, loan documents, email signature lines, etc. When registering them with the Nationwide Multistate Licensing System & Registry (NMLS Registry), how do we ensure the shortened version of their name is also reported so if someone would attempt to search for the MLO within the registry, their information will generate within the search engine?
Answer: During the initial registration process within the NMLS Registry, the MLO’s full legal name must be recorded. However, there is a section to then further record “other names.” This is the area where you will want to ensure all shortened versions are detailed to guarantee accurate search results. (February 2019)
Question: Are both the bank and individual mortgage loan originators (MLOs) required to renew their registration on the Nationwide Mortgage Licensing System & Registry (NMLS) or just the individual MLOs?
Answer: According to federal regulations, both institutions and most individual mortgage loan originators (MLOs) must renew their registration with the NMLS annually. The Nationwide Mortgage Licensing System & Registry (NMLS) annual renewal period begins November 1 and ends December 31 each year. If the renewal process is not completed prior to December 31st, the MLO is placed in an “Inactive” registration status both in NMLS and on NMLS Consumer Access site.
Question: When our bank hires a MLO from another bank, do we have to wait 30 days to update his/her registration with the NMLS? Or can we update the registry immediately?
Answer: There is no grace period before you can register the MLO under the bank’s name when a MLO moves from one bank to another. However, you must transfer the MLO’s registration to your bank before the individual can act as an “MLO” on behalf of your bank.
Question: What does it mean to “act as a MLO?”
Answer: The SAFE Act defines a MLO as an individual who “takes a residential mortgage loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain.” The definition of “taking an application” and “offering terms” is quite broad and includes an individual who receives information provided in connection with a request for a loan to be used to determine whether the consumer qualifies for a loan and then presents a loan offer to a consumer for acceptance, either verbally or in writing, or responds to a consumer’s request for a lower rate or lower points on a pending loan application by presenting to the consumer a revised loan offer, either verbally or in writing. For more detailed information on what constitutes “taking an application” or “offering terms”, refer to Appendix A in Regulation G.
Question: One of our previously registered Mortgage Loan Originators (MLOs) fills in periodically when we are busy or lenders are on vacation. Since they no longer originate more than five residential mortgages loans each year, can we use the de minimis exception rather than renewing their registration?
Answer: No. The de minimis exception referenced in section 1007.101(c)(2) of the S.A.F.E. Mortgage Licensing Act applies only to employees of a covered financial institution who have never been registered or licensed through the NMLS Registry and have acted as an MLO for five or fewer residential mortgage loans in the past 12 months.
Question: If a person applies for a loan online and they choose a mortgage loan originator (MLO) from a list of MLOs, that MLO’s NMLS (Nationwide Mortgage Licensing System and Registry) ID number is provided at the time of application. However, this MLO may not be the person who actually underwrites the loan and makes the credit decision. Does the SAFE Act require the customer also be given the NMLS ID of the person that is actually underwriting their loan, sending out the preliminary disclosures and for all essential purposes, “offering credit”? Does the customer need to even be provided the NMLS ID number of the MLO they select on the system if that MLO does not actually work on their file?
Answer: Interesting question! The SAFE Act does not directly address this sort of “what if” scenario, nor have we seen any regulatory guidance, but we will offer our opinion on the issue. First, the SAFE Act does not require that the consumer be provided NMLS ID number of the loan underwriter. In fact, persons who act only the capacity of an underwriter or credit analyst are not required to register with the NMLS. See the appendix to 12 CFR 1007 which indicates underwriting the loan does not fall within the parameters of “offering credit” to qualify someone as a “MLO”:
(2) Offering or negotiating terms of a loan does not include solely or in combination:…
(vi) Making an underwriting decision about whether the consumer qualifies for a loan;…
Rather, the SAFE Act focuses on disclosure of the MLO who “takes the application” and “offers or negotiates” the credit terms. This MLO’s NMLS ID number is required to be provided to the consumer applicant in the first “written correspondence” and upon the request of the consumer.
In your case where the application is submitted online rather than directly with a specific MLO, ensure the NMLS ID number of the MLO offering the credit terms (which may be by virtue of a written offer and accompanying early disclosures) be provided to the applicant. The intent of the SAFE Act is the consumer be able to access the NMLS record of the MLO who is their primary point of contact in regard to their loan application.
As a side note, Reg. Z does have requirements for disclosing the NMLS number of the primary contact. Reg. Z requires that NMLS ID number to be on the credit application, Loan Estimate, Closing Disclosure, note/loan contract and security instrument. Therefore if the Mortgage Loan Originator (MLO) changes, documents issued after the time the MLO changed should reflect the one assigned to the loan.
Question: The SAFE Act requires the bank to provide certain information as part of its “bank base record.” One of the items the bank is to provide is its “RSSD” number. What is that?
Answer: Section .103 of the final SAFE Act rule requires an Agency-regulated institution to provide its Research Statistics Supervision Discount (RSSD) number as identifying data for validating the bank’s base record. The RSSD database is maintained by the Federal Reserve Board. An institution can look up its RSSD number online at: https://www.ffiec.gov/nicpubweb/nicweb/SearchForm.aspx. The final rule indicates the regulatory agencies will establish a mechanism by which institutions that do not have an RSSD number will be added to the RSSD database.
The Agencies will provide the Registry with an extract of the Board’s database, indexed by RSSD number, to facilitate an Agency-regulated institution’s authorized access to the Registry and its establishment of a new base record. Upon receiving the information for a new base record from an Agency-regulated institution, the Registry will confirm the information by comparing the application with RSSD data supplied by the Agencies.
Question: I have a question regarding our SAFE Act procedures. When and how is the bank and its MLOs required to make the unique identifier of our MLOs available to consumers?
Answer: The final rule is pretty general and only says the bank must make its MLO unique identifiers available, and the MLO must make his/her number available upon request and through their initial written communication. Beyond that, the rules are pretty generic—providing lots of flexibility to the lender.
365.105 Use of unique identifier.
(a) The insured State nonmember bank shall make the unique identifier(s) of its registered mortgage loan originator(s) available to consumers in a manner and method practicable to the institution.
(b) A registered mortgage loan originator shall provide his or her unique identifier to a consumer:
(1) Upon request;
(2) Before acting as a mortgage loan originator; and
(3) Through the originator’s initial written communication with a consumer, if any, whether on paper or electronically.
The preamble discussion in the final rule provides ideas of how you might make the number available, but again, these are suggestions, not requirements.
Section .105—Use of Unique Identifier
…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. Furthermore, the Agencies intend § .105(b)(3) of the rule to cover written communication from the originator specifically for his or her customers, such as a commitment letter, good faith estimate or disclosure statement, and not written materials or promotional items distributed by the Agency-regulated institution for general use by its customers. While, this provision does not require institutions to include the unique identifier on loan program descriptions, advertisements, business cards, stationary, notepads, and other similar materials, institutions are not prohibited from doing so. We also clarify that the requirement to provide the unique identifier to the consumer through the originator’s initial written communication, if any, applies whether that communication is provided in writing on paper or through electronic means.
Question: Are Mortgage Loan Originators required to provide their unique identifier number issued by NMLS on all loan documents?
Answer: Not at this time. However, Reg. Z section 1026.36(g)(2) states that the credit application, disclosures required by 1026.19(e) and (f) – meaning the Loan Estimate and Closing Disclosure, the note or contract and the security instrument must all include the names and NMLSR ID.