BUREAU O F CONSUMER FINANCIAL PROTECTION

PAPERWORK REDUCTION ACT SUBMISSION

I NFORMATION COLLECTION REQUEST

SUPPORTING STATEMENT PART A

REGISTRATION OF MORT GAGE LOAN ORIGINATOR S (REGULATION G ) 12 CFR 100 7 (OMB CONTROL NUMBER: 3170

- 0005 )

OMB TERMS OF CLEARANCE:

Not applicable. The Office of Management and Budget (OMB) did not provide Terms of Clearance when approved this information collection on June 11, 2012.

ABSTRACT:

Regulation G implements the S.A.F.E. Act's f ederal registration requirement with respect to any covered financial institutions, and their employees who act as residential mortgage loan originators (MLOs), to register with the Nationwide Mortgage Licensing System and Registry, obtain a unique identif ier, maintain this registration, and disclose to consumers the unique identifier. The rule also requires the covered financial institutions employing these MLOs to adopt and follow written policies and procedures to ensure their employees comply with thes e requirements and to disclose the unique identifiers of their MLOs.

A. JUSTIFICATION

1. Circumstances Necessitating the Data Collection

On June 9, 2009, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), the Farm Credit Administration (FCA) , and the National Credit Union Administration (NCUA) (collectively, the Federal Registry Agencies) issued a joint proposed rule titled Registration of Mortgage Loan Originators (74 FR 27386). The rule implemented the Secure and Fair Enforcement for Mortg age Licensing Act (the S.A.F.E. Act), enacted June 30, 2008. The FDIC maintains this approval for this information

collection under OMB Control number 3064

- 0171 and the Federal Reserve board’s control

number for this collection is 7100

- 0328 . The OCC and NCUA previously maintained approval

for this collection under OMB control numbers 1557

- 0243 and 3064

- 0171 respectively. The

Dodd

- Frank Wall Street Reform and Consumer Protection Act (Dodd

- Frank Act) amended a number of consumer financial protection laws, i ncluding the S.A.F.E. Act. In addition to minor amendments, the Dodd

- Frank Act transferred certain rulemaking authority for the S.A.F.E. Act

to the CFPB , effective July 21, 2011 , and a lso granted the Bureau rulemaking authority pursuant

to the S.A.F.E. Ac t with respect to employees of institutions regulated by the Farm CreditAdministration. The CFPB regulation implementing the S.A.F.E. Act, known as Regulation G,

has been added to 12 CFR Part 1007.

Regulation G implements the S.A.F.E. Act's f ederal regi stration requirement with respect to any covered financial institutions, and their employees who act as residential mortgage loan originators (MLOs), to register with the Nationwide Mortgage Licensing System and Registry, obtain a unique identifier, mainta in this registration, and disclose to consumers the unique identifier. The rule also requires the covered financial institutions employing these MLOs to adopt and follow written policies and procedures to ensure their employees comply with these requireme nts and to disclose the unique identifiers of their MLOs.

NMLS R was created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators. It is operated by the State Regulatory Registry LLC, a wholly owned subsidiary of Conference of State Bank Supervisors

.

The S.A.F.E. Act provides that the objectives of this registration include aggregating and improving the flow of information to and between regulators; providing increased accountability

and tracking of mortgage loan originators (MLOs); enhancing consumer protections; supporting

anti

- fraud measures; and providing consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, MLOs

. The information is used by employers to ascertain whether MLOs are prohibited from being hired due to violations of other financial statutory requirements, or in general whether an individual is fit for employment b y the institution. The information is also used by consumers, as described above. Finally, Federal regulatory agencies use this information to ascertain whether employers are meeting the requirements of using this system’s information to make judgments on MLO hires; the information also gives agencies an improved means of tracking MLOs and taking appropriate action in cases of consumer harm.

2. Use of the Information

The data collected in the registry are described in more detail in 12 CFR Part 1007 , as well as in the supplementary documents attached to this supporting statement , and include

information and supporting documentation to the extent required by the registry. In particular, the information collected includes specific identifying informat ion including name, home address, business contact information, social security number, gender, and date and place of birth; financial services

- related employment history for the past ten years, including convictions

and civil actions of the individual rel ated to financial services

- related activities; action order s regarding breaches of trust, dishonesty, or unfair or unethical actions ; suspensions of authority to act as an attorney, accountant, or state or Federal contractor; and fingerprints of the indivi dual for use in criminal history background checks. The confidentiality of this information, except the information provided to the public, is secured by 12 USC 15111(a), which essentially extends any existing privacy protections provided by state or feder al laws to the information submitted to

NMLS R

.

Part of the information is made available to general public, following S.A.F.E. Act's goal of providing consumers with information regarding individual MLO’s. In accordance with 12USC 15111(d), information a vailable to the public includes: name, phone number, work address, employment history (including self

- reported employment history not related to mortgage origination), currently held state licenses, as well as state regulatory actions, if any.

This infor mation is submitted in electronic form from MLOs and their employers and reported to the Nationwide Mortgage Licensing System and Registry (NMLS R ) , a web

- based system developed and maintained by the Conference of State Bank Supervisors and the

American Ass ociation of Residential Mortgage regulators jointly through the State Regulatory Registry LLC.

The information is used primarily by employers to ascertain whether MLOs are prohibited from being hired due to violations of other financial statutory requir ements, or in general whether an individual is fit for employment by the institution. The information is also used by consumers, who are able to go onto the Consumer Access website for NMLS R and check the employment history and disciplinary records of MLO s, primarily in connection with one whom the consumer is considering using as an agent to obtain a mortgage. A secondary use is for Federal regulatory agencies to ascertain whether employers are meeting the requirements of using this system’s information to make judgments on MLO hires, and gives them an improved means of tracking MLOs and taking appropriate action in cases of consumer harm.

3. Use of Information Technology

Section 1502 of the S.A.F.E. Act (12 USC 5101) establishes the Nationwide Mortgage Licensing System and Registry, with a specific requirement that consumers have access to the Registry through the Internet. Although the Act does not specifically call for electronic means of registration, in practice all submissions of information collections are made using the web

interface of the Nationwide Mortgage Licensing System and Registry, a web

- based system developed and maintained by the State Regulatory Registry LLC. The electronic form is stored in a secured, centralized r epository.

4. Efforts to Identify Duplication

Substantially all of the information collected is not otherwise available.

5. Efforts to Minimize Burdens on Small Entities

This collection of information imposes on covered entities, regardless of size, only the minimum burden necessary to accomplish the program objectives disc ussed in Items 1 and 2. Though small entities will be required to take steps to ensure compliance with the rule, the rule does contain an exception from registration as a mor tgage loan originator for an employee of any covered entity if, during the p receding 12 month period , the employee acted as a mortgage loan originator for 5 or fewer residential mortgage loans

.

6. Consequences of Less Frequent Collection and Obstacles t o Burden ReductionCompliance with Regulation G requires timely registration, annual registration renewals and maintaining the accuracy of the information supplied. A less frequent collection will undermine the quality of information. Currently every effort is made to reduce the burden of information submission, such as batch processing for employers, as well as auto

- completion of individual forms whereby an individu al MLO needs to provide information only if material circumstances have changed.

7. Circumstances Requiring Special Information Collection

Regulation G’ s information collection components are consistent with the applicable guidelines contained in 5 CFR 1320. 5(d)(2).

8. Consultation Outside the Agency

I n accordance with 5 CFR §1320.8(d)(1), the Bureau has published a notice Federal Register allowing the public 60 days to comment on this proposed the extension (renewal) of this currently approved coll ection of information. Further and in accordance with 5 CFR §1320.5(a)(1)(iv), the Bureau will also publish a notice in the Federal Register allowing the public 30 days to comment on the submission of this information collection request to the Office

of Ma nagement and Budget.

In addition, w e have consulted with the Conference of State Bank Supervisors to confirm our understanding of the costs and counts relevant to the PRA burden of this regulation

.

9. Payments or Gifts to Respondents

No payments or gifts are provided to respondents.

10. Assurances of Confidentiality

Generally, t he confidentiality of information collected by the Registry is provided by 12

USC 51 1 1

.

The respondents submit information directly into NMLS R , while CFPB obtains data fr om NMLS R under an MOU agreement with the State Regulatory Registry LLC

, on organization that

maintains NMLS R . The current NMLS R user agreements and privacy policies can be found at http://mortgage.nationwidelicensingsystem.org/about/Pages/Policies.aspx

.

Whenever CFPB receives information obtained through NMLS R , CFPB shall treat the

information in accordance with applicable federal law, including but not limited to the Bureau’s confidentiality rules, 12 C.F.R. Part 1070, and the federal laws and regulations that apply to federal agencies for the protection of privacy, confidentiality, security and i ntegrity.

The information collected under this information collection includes direct identifying personally identifiable information (PII) in order to meet objectives set by Regulation G. The NMLSR and the federal registry are authorized by the S.A.F.E . Act as amended by the Dodd

Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111

- 203, Title X, Section 1100,codified at 12 U.S.C. § 5101 et seq

. The CFPB.019 Nationwide Mortgage Licensing System & Registry

, 77 FR 35359 System of Records Noti ce (SORN), and the Nationwide Mortgage Licensing System & Registry Privacy Impact Assessment (PIA) cover the use of administrative data. The SORNs and PIAs will be updated as appropriate, and details regarding information handling will be specified in indi vidual submissions under this generic clearance.

This information collection implicates privacy concerns because a breach of confidentiality could result in an individual suffering harm. To reduce the risk of breaches of confidentiality, CFPB uses appr opriate security controls to protect information in the database

and disclosed to consumers. There is risk related to misuse of information collected. Misuse might involve secondary types of use that are incompatible with the purposes of the initial

collec tion, or a use of the information that individuals do not understand or to which they have not provided consent. To reduce the risk of misuse, the CFPB minimizes access to PII based on

the need

- to

- know basis. The Bureau treats the information received thro ugh NMLS R in a manner consistent with our confidentiality regulations, and all data and analyses are subject to legal and privacy review prior to their release. The Bureau also evaluates the potential privacy risk and

harm to individuals relative to the au thorized purpose, and vets any research proposals using these data to ensure that they serve an authorized purpose. Disclosure conducted under any studies using these data will be consistent with the Privacy Act and the E

- Government Act.

11. Justificat ion for Sensitive Questions

Questions regarding prior misconduct are the most sensitive among the data that is being collected. However, answers to these questions are essential for meeting the objectives of Regulation G. This information is used by emplo yers to ascertain whether certain MLOs are prohibited from being hired due to violations of other financial statutory requirements, or in general whether an individual is fit for employment by the institution. The informa tion is also used by consumers to ascertain the trustworthiness of the MLO they are transacting with. Finally, Federal regulatory agencies use this information to ascertain whether employers are meeting the requirements of using this system’s information t o make judgments on MLO hires.12. Estimated Burden of Information Collection

The following table summarizes the burden related to information collections required by Regulation G from institutions and individual MLO’s. The counts of annual responses for each

information collection are based on the actual records obtained from NMLSR . The average response time is based on interviews with industry experts.

Information collection requirement No. of Respondents Annual Frequency Annual Responses Average Response

Time (hrs.) Annual

Burden

Hours Hourly

Rate 1 Labor

Costs CFPB

share 2

Federally registered

institutions

Initial registration 139 1 139 3.00 417 $14.74 $6,147 0.0% 3

New employee registration 3,180 20.47 4 65,099 0.02 1,085 $14.74 $15,993 61.0%

Annual renewal 10,566 1 10,566 0.50 5,283 $14.74 $77,871 1.4% 5

Federally registered MLO's

Initial registration 78,543 1 78,543 2.75 215,993 $28.76 $6,211,966 61.0%

Joining an institution 65,099 1 65,099 0.30 19,530 $28.76 $561,674 61.0%

Annual renewal 398,492 1 398,492 0.50 199,246 $28.76 $5,730,315 61.0%

Summary

Total hours: 441,554 CFPB allocated hours 265,944

Total labor cost: $12,603,966 CFPB allocated labor cost $7,638,251

No. of respondents

- institutions 10,566 CFPB respondents

- institutions 147

No. of respondents

- MLO's 398,492 CFPB respondents

- MLOs 243,080

No. of respondents

- total 409,058 CFPB respondents

- total 243,227

The CFPB estimates that the total ongoing recordkeeping and disclosure costs for the

market un der Regulation G are 441,554 hours, implying the associated labor cost of $ 12,603,966. For purposes of PRA, the CFPB allocates to itself 267,494 hours, implying the

associated labor cost of $ 7,635,487 dollars. The CFPB share in the total burden is calcula ted

as follows.

According to the Dodd

- Frank Act assignment of supervisory authority

, CPPB is

allocated burden for 147 depository institutions (116 depository institutions with total assets of more than $10 billion and 31 affiliates) over which CFPB has pr imary enforcement authority with respect to Regulation G. Working with data provided by the Conference of

1 Hourly rate labor costs are the median hourly wages from the Bureau of Labor and Statistics (BLS) for affected

occupational groups. Occupational groups for the PRA burden of regulation G are defined as loan officers ( http://www.bls.gov/ooh/business

- and

- financial/loan

- officers.htm#tab

- 5 ) and information clerks ( http://www. bls.gov/ooh/office

- and

- administrative

- support/information

- clerks.htm ).

2 CFPB allocated labor hours and costs are calculated by multiplying the share by the totals

3 All CFPB institutions are already in the system

4 R epresents the average number of new hir es per institution each year.

5 Reflects 147 out of total 10,566 federally registered institutions that are supervised by CFPBState Bank Supervisors, we found that the share of individual federally registered MLO’s for

these institutions is 61% of the overall market. We apply this share to the total burden to

obtain the burden allocated to CFPB.

13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers

NMLS R collects processing fees from both institutions and individual MLO’s at various stages of the registration process and renewal. Using the available data and fee information, we calculate the approximate total cost to respondents, in the table below.

Desc ription of costs Unit Cost Units Total Cost

Federally registered institutions

Initial registration fee $100 139 $13

, 900

Annual processing fee $100 10

, 566 $1

, 056

, 600

Federally registered MLO's

Initial registration fee $60 78

, 543 $4

, 712

, 580

Annual processing fee $30 398

, 492 $11

, 954

, 760

Change of employment fee $30 65

, 099 $1

, 952

, 970

Summary

Total cost: $ 19,690,810

CFPB share 61%

CFPB costs $ 11,928,701

The total annual non

- labor cost burden to respondents is $19,690,810 dollars. Using the

same me thodology as in 12, the CFPB allocates 6 1% of the total non

- labor cost burden to itself, amounting to $11,928,701.

14. Estimated Cost to the Federal Government

There are no additional costs to the Federal Government.15. Program Changes or Adjustments

Total Respondents Annual Responses Burden Hours Cost Burden (O & M)

Total Annual Burden Requested 243,227 617,938 267,494 $11,928,701

Current OMB Inventory 180 33,656 15,183 $0

Difference (+/

- ) 243

, 047 584

, 282 252,311 $11,928,701

Program Change 0 $0

Discretionary 0 $0

New Statute 0 $0

Violation 0 $0

Adjustment 243

, 047 584

, 282 252,311 $11,928,701

The changes in burden and costs are the result of an improved methodology of calculating costs as o pposed to any regulation change. In particular the Bureau realized that the previous estimates in inherited counted only the number of institutions responding to this information collection, and not also the individuals who are required to respond. T heref ore the new requests should be seen as a more accurate representation of the true costs and burdens of Regulation G.

16. Plans for Tabulation, Statistical Analysis, and Publication

The public will have access to information in the Registry about a MLO’s employment history , work address, state regulatory actions.

17. Display of Expiration Date

The OMB control number and expiration date associated with this PRA submission will be displayed on the Federal government’s electronic PRA docket at www.re ginfo.gov, as well as in the Federal Register Notice of the submission.

18. Exceptions to the Certification Requirement

The Bureau certifies that this collection of information is consistent with the requirements of 5 CFR 1320.9, and the related provisi ons of 5 CFR 1320.8(b)(3) and is not seeking an exemption to these certification requirements.

Note: The following paragraph applies to all of the collections of information in this submission:An agency may not conduct or sponsor, and a person is not re quired to respond to, a collection of information unless the collection of information displays a valid OMB control number.