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SAFE Act Examination Procedures for Depository Institutions

Examination Objectives

1. To determine whether the financial institution has adopted written policies and

procedures designed to assure compliance with the SAFE Act regulation.

2. To determine whether the annual independent testing of the institution’s policies and

procedures for assuring compliance with the SAFE Act regulation has been conducted.

3. To determine whether any violations or deficiencies identified during the independent

testing have been corrected and that steps have been taken to ensure they do not recur.

Examination Procedures

1) Determine whether the financial institution, or any of its subsidiaries, employs one or more

MLOs. For those institutions without any MLOs, these examination procedures do not need to be 

completed. 

2) Determine for those financial institutions with MLOs whether the institution has adopted

written policies and procedures and conducts annual independent compliance tests to assure 

compliance with the SAFE Act regulation. If the institution has failed to adopt policies and 

procedures and to perform annual independent compliance tests, the examiners should address 

the violation in the examination report and require corrective action. 

3) Review the financial institution’s written policies and procedures and the annual independent

compliance tests to determine whether the institution has taken appropriate steps to assure 

compliance with the SAFE Act that at a minimum:

(a) Establish a process for identifying which employees of the financial institution are 

required to be registered MLOs; 

(b) Require that all employees of the financial institution who are MLOs be informed of 

the registration requirements of the SAFE Act and the SAFE Act regulation and be 

instructed on how to comply with such requirements and procedures; 

(c) Establish procedures to comply with the unique identifier requirements in section 105

of the SAFE Act regulation; 

(d) Establish reasonable procedures for confirming the adequacy and accuracy of 

employee registrations, including updates and renewals, by comparisons with its own 

records; 

(e) Establish procedures and tracking systems for monitoring compliance with 

registration and renewal requirements and procedures; 
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(f) Provide for independent testing for compliance with the SAFE Act regulation 

conducted annually by institution personnel or by an outside party; 

(g) Provide for appropriate action in the case of an employee who fails to comply with 

the registration requirements of the SAFE Act, the SAFE Act regulation, or the financial 

institution’s policies and procedures, including prohibiting such employees from acting 

as an MLO or other appropriate disciplinary actions; 

(h) Establish a process for reviewing employee criminal history background reports 

received pursuant to the SAFE Act regulation, taking appropriate action consistent with 

applicable federal law, including section 19 of the Federal Deposit Insurance Act (12 

USC section 1829) and implementing records of these reports and actions taken with 

respect to applicable employees; and

(i) Establish procedures designed to ensure that any third party with which the institution 

has arrangements related to mortgage loan origination has policies and procedures to 

comply with the SAFE Act, including appropriate licensing and/or registration of 

individuals acting as MLOs.

4) Any significant deficiencies in the institution’s SAFE Act regulation policies and procedures 

or independent compliance tests should be documented in the workpapers and discussed in the 

examination report together with corrective actions taken.