27386 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Part 34 

[Docket ID OCC–2009–0005] 

RIN 1557–AD23 

FEDERAL RESERVE SYSTEM 

12 CFR Part 208 

[Docket No. R–1357] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Part 365 

RIN 3064–AD43 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Part 563 

[Docket No. 2009–0004] 

RIN 1550–AC33 

FARM CREDIT ADMINISTRATION 

12 CFR Part 610 

RIN 3052–AC52 

NATIONAL CREDIT UNION 

ADMINISTRATION 

12 CFR Part 761 

RIN 3133–AD59 

Registration of Mortgage Loan 

Originators 

AGENCIES: Office of the Comptroller of 

the Currency, Treasury (OCC); Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); Office of 

Thrift Supervision, Treasury (OTS); 

Farm Credit Administration (FCA); and 

National Credit Union Administration 

(NCUA). 

ACTION: Joint notice of proposed 

rulemaking. 

SUMMARY: The OCC, Board, FDIC, OTS, 

FCA, and NCUA (collectively, the 

Agencies) are proposing amendments to 

their rules to implement the Secure and 

Fair Enforcement for Mortgage 

Licensing Act (the S.A.F.E. Act). The 

S.A.F.E. Act requires an employee of a 

bank, savings association, credit union 

or other depository institution and their 

subsidiaries regulated by a Federal 

banking agency or an employee of an 

institution regulated by the FCA 

(collectively, Agency-regulated 

institutions) who acts as a residential 

mortgage loan originator to register with 

the Nationwide Mortgage Licensing 

System and Registry (Registry), obtain a 

unique identifier, and maintain this 

registration. This proposal implements 

these requirements. It also provides that 

Agency-regulated institutions must 

require their employees who act as 

residential mortgage loan originators to 

comply with the S.A.F.E. Act’s 

requirements to register and obtain a 

unique identifier and must adopt and 

follow written policies and procedures 

designed to assure compliance with 

these requirements. 

DATES: Comments must be received on 

or before July 9, 2009. Comments on the 

Paperwork Reduction Act analysis set 

forth in Part II of the Regulatory 

Analysis Section of this Federal 

Register notice must be received on or 

before August 10, 2009. 

ADDRESSES: Commenters that direct 

comments to more than one Agency 

may send comments to any of the 

Agencies and need not send copies of 

the same comment letter to all of the 

Agencies. Commenters are encouraged 

to use the title ‘‘Registration of Mortgage 

Loan Originators’’ to facilitate the 

organization and distribution of 

comments among the Agencies. 

Interested parties are invited to submit 

written comments to: 

Office of the Comptroller of the 

Currency: Because paper mail in the 

Washington, DC area and at the OCC is 

subject to delay, commenters are 

encouraged to submit comments by the 

Federal eRulemaking Portal or e-mail, if 

possible. Please use the title 

‘‘Registration of Mortgage Loan 

Originators’’ to facilitate the 

organization and distribution of the 

comments. You may submit comments 

by any of the following methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov, under the ‘‘More 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Comptroller of 

the Currency’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OCC– 

2009–0005’’ to submit or view public 

comments and to view supporting and 

related materials for this proposal. The 

‘‘How to Use This Site’’ link on the 

Regulations.gov home page provides 

information on using Regulations.gov, 

including instructions for submitting or 

viewing public comments, viewing 

other supporting and related materials, 

and viewing the docket after the close 

of the comment period. 

• E-mail: 

regs.comments@occ.treas.gov. 

• Mail: Office of the Comptroller of 

the Currency, 250 E Street, SW., Mail 

Stop 2–3, Washington, DC 20219. 

• Fax: (202) 874–5274. 

• Hand Delivery/Courier: 250 E 

Street, SW., Mail Stop 2–3, Washington, 

DC 20219. 

Instructions: You must include 

‘‘OCC’’ as the agency name and ‘‘Docket 

Number OCC–2009–0005’’ in your 

comment. In general, OCC will enter all 

comments received into the docket and 

publish them on the Regulations.gov 

Web site without change, including any 

business or personal information that 

you provide such as name and address 

information, e-mail addresses, or phone 

numbers. Comments received, including 

attachments and other supporting 

materials, are part of the public record 

and subject to public disclosure. Do not 

enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

You may review comments and other 

related materials that pertain to this 

proposal by any of the following 

methods: 

• Viewing Comments Electronically: 

Go to http://www.regulations.gov, under 

the ‘‘More Search Options’’ tab click 

next to the ‘‘Advanced Document 

Search’’ option where indicated, select 

‘‘Comptroller of the Currency’’ from the 

agency drop-down menu, then click 

‘‘Submit.’’ In the ‘‘Docket ID’’ column, 

select ‘‘OCC–2009–0005’’ to view public 

comments for this rulemaking action. 

• Viewing Comments Personally: You 

may personally inspect and photocopy 

comments at the OCC, 250 E Street, 

SW., Washington, DC. For security 

reasons, the OCC requires that visitors 

make an appointment to inspect 

comments. You may do so by calling 

(202) 874–4700. Upon arrival, visitors 

will be required to present valid 

government-issued photo identification 

and submit to security screening in 

order to inspect and photocopy 

comments. 

• Docket: You may also view or 

request available background 

documents and project summaries using 

the methods described above. 

Board of Governors of the Federal 

Reserve System: You may submit 

comments, identified by Docket No. R– 

1357, by any of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27387 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include the docket number in the 

subject line of the message. 

• Fax: (202) 452–3819 or (202) 452– 

3102. 

• Mail: Address to Jennifer J. Johnson, 

Secretary, Board of Governors of the 

Federal Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. 

All public comments will be made 

available on the Board’s Web site at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, unless modified for technical 

reasons. Accordingly, comments will 

not be edited to remove any identifying 

or contact information. Public 

comments may also be viewed 

electronically or in paper in Room MP– 

500 of the Board’s Martin Building (20th 

and C Streets, NW.) between 9 a.m. and 

5 p.m. on weekdays. 

Federal Deposit Insurance 

Corporation: You may submit 

comments, identified by RIN number, 

by any of the following methods: 

• Agency Web site: http:// 

www.FDIC.gov/regulations/laws/ 

federal/notices.html. Follow 

instructions for submitting comments 

on the Agency Web site. 

• E-mail: Comments@FDIC.gov. 

Include the RIN number on the subject 

line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

• Hand Delivery: Comments may be 

hand delivered to the guard station at 

the rear of the 550 17th Street Building 

(located on F Street) on business days 

between 7 a.m. and 5 p.m. 

Instructions: All comments received 

must include the agency name and RIN 

for this rulemaking and will be posted 

without change to http://www.fdic.gov/ 

regulations/laws/federal/propose.html, 

including any personal information 

provided. 

Office of Thrift Supervision: You may 

submit comments, identified by OTS– 

2009–0004, by any of the following 

methods: 

• Federal eRulemaking Portal— 

‘‘Regulations.gov’’: Go to http:// 

www.regulations.gov, under the ‘‘more 

Search Options’’ tab click next to the 

‘‘Advanced Docket Search’’ option 

where indicated, select ‘‘Office of Thrift 

Supervision’’ from the agency dropdown menu, then click ‘‘Submit.’’ In the 

‘‘Docket ID’’ column, select ‘‘OTS– 

2009–0004’’ to submit or view public 

comments and to view supporting and 

related materials for this proposed 

rulemaking. The ‘‘How to Use This Site’’ 

link on the Regulations.gov home page 

provides information on using 

Regulations.gov, including instructions 

for submitting or viewing public 

comments, viewing other supporting 

and related materials, and viewing the 

docket after the close of the comment 

period. 

• E-mail address: 

regs.comments@ots.treas.gov. Please 

include OTS–2009–0004 in the subject 

line of the message and include your 

name and telephone number in the 

message. 

• Mail: Regulation Comments, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552, Attention: OTS– 

2009–0004. 

• Facsimile: (202) 906–6518. 

• Hand Delivery/Courier: Guard’s 

Desk, East Lobby Entrance, 1700 G 

Street, NW., from 9 a.m. to 4 p.m. on 

business days, Attention: Regulation 

Comments, Chief Counsel’s Office, 

Attention: OTS–2009–0004. 

• Instructions: All submissions 

received must include the agency name 

and docket number for this rulemaking. 

All comments received will be entered 

into the docket and posted on 

Regulations.gov without change, 

including any personal information 

provided. Comments, including 

attachments and other supporting 

materials received, are part of the public 

record and subject to public disclosure. 

Do not enclose any information in your 

comment or supporting materials that 

you consider confidential or 

inappropriate for public disclosure. 

• Viewing Comments On-Site: You 

may inspect comments at the Public 

Reading Room, 1700 G Street, NW., by 

appointment. To make an appointment 

for access, call (202) 906–5922, send an 

e-mail to public.info@ots.treas.gov, or 

send a facsimile transmission to (202) 

906–6518. (Prior notice identifying the 

materials you will be requesting will 

assist us in serving you.) We schedule 

appointments on business days between 

10 a.m. and 4 p.m. In most cases, 

appointments will be available the next 

business day following the date we 

receive a request. 

Farm Credit Administration: We offer 

a variety of methods to receive your 

comments. For accuracy and efficiency 

reasons, commenters are encouraged to 

submit comments by e-mail or through 

the FCA’s Web site or the Federal 

eRulemaking Portal. As faxes are 

difficult for us to process and achieve 

compliance with section 508 of the 

Rehabilitation Act, we are no longer 

accepting comments submitted by fax. 

Regardless of the method you use, 

please do not submit your comment 

multiple times via different methods. 

You may submit comments by any of 

the following methods: 

• E-mail: Send us an e-mail at regcomm@fca.gov. 

• FCA Web site: http://www.fca.gov. 

Select ‘‘Public Commenters,’’ then 

‘‘Public Comments,’’ and follow the 

directions for ‘‘Submitting a Comment.’’ 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: Gary K. Van Meter, Deputy 

Director, Office of Regulatory Policy, 

Farm Credit Administration, 1501 Farm 

Credit Drive, McLean, VA 22102–5090. 

You may review copies of comments 

we received at our office in McLean, 

Virginia, or from our Web site at http: 

//www.fca.gov. Once you are in the Web 

site, select ‘‘Public Commenters,’’ then 

‘‘Public Comments,’’ and follow the 

directions for ‘‘Reading Submitted 

Public Comments.’’ We will show your 

comments as submitted, but for 

technical reasons we may omit items 

such as logos and special characters. 

Identifying information that you 

provide, such as phone numbers and 

addresses, will be publicly available. 

However, we will attempt to remove 

e-mail addresses to help reduce Internet 

spam. 

National Credit Union 

Administration: You may submit 

comments by any of the following 

methods (please send comments by one 

method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposed_regs/proposed_regs.html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Notice of Proposed 

Rulemaking Part 761, Registration of 

Mortgage Loan Originators’’ in the 

e-mail subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Mary Rupp, 

Secretary of the Board, National Credit 

Union Administration, 1775 Duke 

Street, Alexandria, VA 22314–3428. 

• Hand Delivery/Courier: Address to 

Mary Rupp, Secretary of the Board, 

National Credit Union Administration. 

Deliver to guard station in the lobby of 

1775 Duke Street, Alexandria, VA 

22314–3428, on business days between 

8 a.m. and 5 p.m. 

27388 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

1The S.A.F.E. Act was enacted as part of the 

Housing and Economic Recovery Act of 2008, 

Public Law 110–289, Division A, Title V, sections 

1501–1517, 122 Stat. 2654, 2810–2824 (July 30, 

2008), codified at 12 U.S.C. 5101–5116. Citations in 

this preamble are to the ‘‘S.A.F.E. Act’’ by section 

number in the public law. 

2 If the Secretary of Housing and Urban 

Development (HUD) determines that any State fails, 

within the statutorily prescribed time frame, to 

establish a licensing regime that meets the 

requirements of the S.A.F.E. Act, the Secretary is 

required to establish a system for the licensing and 

registration of mortgage loan originators in that 

State. S.A.F.E. Act at section 1508. HUD has 

reviewed the model legislation developed by the 

Conference of State Bank Supervisors and the 

American Association of Residential Mortgage 

Regulators to assist States in meeting the minimum 

requirements of the S.A.F.E. Act and found it to 

meet these requirements. See 74 FR 312 (Jan. 5, 

2009) and http://www.hud.gov/offices/hsg/sfh/ 

mps/smlicact.cfm. 

3The OCC, Board, FDIC, OTS, and NCUA are 

referred to both in the S.A.F.E. Act and in this 

rulemaking as the ‘‘Federal banking agencies.’’ 

4See S.A.F.E. Act at section 1502. 

5 Id. at section 1507(a). 

6As of the date of this proposal, 26 States use this 

system to manage the processing of their mortgage 

licenses. This system is owned and operated by the 

State Regulatory Registry LLC (SRR), a limitedliability company established by CSBS as a whollyowned subsidiary to develop and operate 

nationwide systems for State regulators in the 

financial services industry, and has been built and 

is maintained by the Financial Industry Regulatory 

Authority (FINRA), which operates similar systems 

in the securities industry. To obtain more 

information on this system, see http:// 

www.stateregulatoryregistry.org. (For purposes of 

this rulemaking, reference to the Registry refers, as 

• Public inspection: All public 

comments are available on the agency’s 

Web site at http://www.ncua.gov/ 

RegulationsOpinionsLaws/comments as 

submitted, except as may not be 

possible for technical reasons. Public 

comments will not be edited to remove 

any identifying or contact information. 

Paper copies of comments may be 

inspected in NCUA’s law library, at 

1775 Duke Street, Alexandria, VA 

22314, by appointment weekdays 

between 9 a.m. and 3 p.m. To make an 

appointment, call (703) 518–6546 or 

send an e-mail to OGCMail@ncua.gov. 

FOR FURTHER INFORMATION CONTACT: 

OCC: Michele Meyer, Assistant 

Director, and Heidi Thomas, Special 

Counsel, Legislative and Regulatory 

Activities, (202) 874–5090, and Nan 

Goulet, Senior Advisor, Large Bank 

Supervision, (202) 874–5224, Office of 

the Comptroller of the Currency, 250 E 

Street, SW., Washington, DC 20219. 

BOARD: Anne Zorc, Counsel, Legal 

Division, (202) 452–3876, Virginia 

Gibbs, Senior Supervisory Analyst, 

(202) 452–2521, and Stanley Rediger, 

Supervisory Financial Analyst, (202) 

452–2629, Division of Banking 

Supervision and Regulation, Board of 

Governors of the Federal Reserve 

System, 20th and C Streets, NW., 

Washington, DC 20551. 

FDIC: Thomas F. Lyons, Examination 

Specialist, (202) 898–6850, Victoria 

Pawelski, Policy Analyst, (202) 898– 

3571, or John P. Kotsiras, Financial 

Analyst, (202) 898–6620, Division of 

Supervision and Consumer Protection; 

or Richard Foley, Counsel, (202) 898– 

3784, or Kimberly A. Stock, Counsel, 

(202) 898–3815, Legal Division, Federal 

Deposit Insurance Corporation, 550 17th 

Street, NW., Washington, DC 20429. 

OTS: Charlotte M. Bahin, Special 

Counsel (Special Projects), (202) 906– 

6452, Vicki Hawkins-Jones, Special 

Counsel, Regulations and Legislation 

Division, (202) 906–7034, Debbie 

Merkle, Project Manager, Credit Risk, 

(202) 906–5688, and Rhonda Daniels, 

Senior Compliance Program Analyst, 

Consumer Regulations, (202) 906–7158, 

Office of Thrift Supervision, 1700 G 

Street, NW., Washington, DC 20552. 

FCA: Gary K. Van Meter, Deputy 

Director, Office of Regulatory Policy, 

Farm Credit Administration, 1501 Farm 

Credit Drive, McLean, VA, (703) 883– 

4414, TTY (703) 883–4434; Richard A. 

Katz, Senior Counsel, Office of General 

Counsel, Farm Credit Administration, 

McLean, VA 22102–5090, (703) 883– 

4020, TTY (703) 883–4020; or Jennifer 

Cohn, Senior Counsel, Office of General 

Counsel, Farm Credit Administration, 

McLean, VA 22102–5090, (703) 883– 

4020, TTY (703) 883–4020. 

NCUA: Regina Metz, Staff Attorney, 

Office of General Counsel, at the above 

address or 703–518–6561; or Roger 

Blake, Program Officer, Division of 

Supervision, Examination & Insurance, 

at the above address or 703–518–6385. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Statutory Requirements 

The S.A.F.E. Act,1 enacted on July 30, 

2008, mandates a nationwide licensing 

and/or registration system for mortgage 

loan originators. Specifically, the Act 

requires all States to provide for a 

licensing regime for mortgage loan 

originators within one year of enactment 

(or two years for States whose 

legislatures meet biennially) and 

prohibits an individual employed by a 

State-regulated institution from 

engaging in the business of residential 

mortgage loan origination without first 

obtaining and maintaining a license and 

registration and obtaining a unique 

identifier (State licensing).2

With respect to mortgage loan 

originators employed by Agencyregulated institutions, the Act requires 

the OCC, Board, FDIC, OTS and NCUA,3

through the Federal Financial 

Institutions Examination Council 

(FFIEC), and the FCA to develop and 

maintain a Federal registration system, 

and to implement this system by July 

29, 2009 (Federal registration). The 

S.A.F.E. Act specifically prohibits an 

individual employed by an Agencyregulated institution from engaging in 

the business of residential mortgage 

loan origination without first obtaining 

and maintaining annually a registration 

as a registered mortgage loan originator 

and obtaining a unique identifier. This 

rulemaking implements these 

requirements for Agency-regulated 

institutions. 

The S.A.F.E. Act requires that Federal 

registration and State licensing and 

registration must be accomplished 

through the Registry. The S.A.F.E. Act 

provides that the objectives of the 

Registry, among other things, are to 

aggregate and improve the flow of 

information to and between regulators; 

provide increased accountability and 

tracking of mortgage loan originators; 

enhance consumer protections; reduce 

fraud in the residential mortgage loan 

origination process; and provide 

consumers with easily accessible 

information at no charge regarding the 

employment history of, and publicly 

adjudicated disciplinary and 

enforcement actions against, mortgage 

loan originators.4

The S.A.F.E. Act specifically requires 

the Agencies to jointly develop and 

maintain a system for registering 

mortgage loan originators employed by 

Agency-regulated institutions with the 

Registry. In connection with this 

registration, the Agencies at a minimum 

must furnish or cause to be furnished to 

the Registry information concerning the 

mortgage loan originator’s identity, 

including: (1) Fingerprints for 

submission to the Federal Bureau of 

Investigation (FBI) and any other 

relevant governmental agency for a State 

and national criminal background 

check; and (2) personal history and 

experience, including authorization for 

the Registry to obtain information 

related to any administrative, civil, or 

criminal findings by any governmental 

jurisdiction.5

B. Implementing the Requirements for 

Federal Registration 

The Registry is a Web-based system 

developed and maintained by the 

Conference of State Bank Supervisors 

(CSBS) and the American Association of 

Residential Mortgage Regulators 

(AARMR). The Registry was launched in 

January of 2008 for State licensing and 

registration purposes in participating 

States.6 Mortgage loan originators in 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27389 

applicable, to the system itself and to CSBS and 

SRR.) 

7The Agencies note that some employees of 

Agency-regulated institutions may also be subject to 

the State licensing and registration regime. For 

example, employees who act as mortgage loan 

originators for a bank and a nondepository 

subsidiary of a bank holding company would be 

subject to both regimes. 

8Because each Agency’s proposed rule will 

amend a different part of the Code of Federal 

Regulations but will have a similar numbering, 

relevant sections are cited, for example, as 

‘‘§ __.101’’ unless otherwise noted. 

9Section 3 of the FDI Act defines ‘‘depository 

institution’’ as any bank or savings association. The 

term ‘‘bank’’ in section 3 of the FDI Act means any 

national bank, State bank, Federal branch, and 

insured branch and includes any former savings 

association. The term ‘‘savings association’’ means 

any Federal savings association, state savings 

association, and any corporation other than a bank 

that the FDIC and the OTS jointly determine to be 

Continued 

those States complete a single uniform 

form (known as the MU4) electronically. 

The data provided on the form is stored 

electronically in a secure, centralized 

repository available to State mortgage 

regulators who use it to process license 

applications and for supervisory 

purposes. 

The Federal banking agencies, 

through the FFIEC, and the FCA are 

working with CSBS to modify the 

Registry so that it can accept 

registrations from mortgage loan 

originators employed by Agencyregulated institutions. As indicated 

above, the Registry currently supports 

the licensing of State mortgage lending 

institutions and their mortgage loan 

originators, a process that involves State 

authorization of individuals to engage in 

mortgage loan origination. It was not 

originally designed to support the 

Federal registration of Agency-regulated 

institution employees, who do not need 

additional authorization from the 

appropriate Federal agency to engage in 

mortgage loan origination activities. 

Furthermore, the S.A.F.E. Act requires 

new enhancements to the current 

system, such as public access to certain 

mortgage loan originator data and 

processing of fingerprints through the 

Registry. These differences between the 

current Registry and the Federal 

registration system required by the 

S.A.F.E. Act, as well as the resulting 

modifications necessary to support both 

State licensing and Federal registration 

functions, require careful analysis and 

raise complex legal and system 

development issues that the Agencies 

are addressing through both this 

rulemaking and modifications to the 

Registry. These issues include: 

Consistency of data requirements for 

mortgage loan originators subject to 

Agency jurisdiction and those subject to 

State jurisdiction; modification to Webpage navigation in the current system; 

registration functionality for the 

anticipated hundreds of thousands of 

Federal registrants; Federal procurement 

and contracting issues; data privacy and 

security requirements; and protocols for 

submitting mortgage loan originators’ 

fingerprints to the FBI. Furthermore, the 

modified system is expected to support 

mortgage loan originators who move 

between the Federal registration and the 

State licensing regimes due to 

employment changes or who are 

licensed under one or more State 

regimes and also registered under the 

Federal regime.7 The Agencies and 

CSBS have made substantial progress in 

resolving these issues, and the Agencies 

expect to enter into an agreement with 

the Registry that will provide for 

appropriate consultation between the 

Agencies and the Registry concerning 

registrant information requirements and 

fees, system functionality and security, 

and other operational matters. However, 

final determination of system costs, 

funding, design, development and 

deployment will not be completed until 

after the Agencies adopt a final rule 

establishing registration requirements. 

This proposal provides for a 180-day 

period within which to complete initial 

registrations after the Registry is capable 

of accepting registrations from 

employees of Agency-regulated 

institutions. During this period, 

employees of Agency-regulated 

institutions would not be subject to 

sanctions if they originate residential 

mortgage loans without having 

completed their registration. The 

Agencies expect that this time period 

would provide mortgage loan 

originators and the Agency-regulated 

institutions that employ them adequate 

opportunity to prepare for the 

registrations required under this 

proposal. The Agencies intend to make 

a formal public announcement, in 

advance, of the date when the Registry 

will begin accepting registrations from 

employees of Agency-regulated 

institutions. 

When fully operational, mortgage loan 

originators and their Agency-regulated 

institution employers are expected to 

have access to the Registry, seven days 

a week, to establish and maintain their 

registrations. Furthermore, the CSBS 

plans to phase-in system enhancements 

to provide consumers with access to 

certain information from the Registry in 

order for them to obtain information on 

State-licensed and Federally-registered 

mortgage loan originators. 

As indicated above, and consistent 

with the S.A.F.E. Act, the Registry will 

not screen or approve registrations 

received from employees of Agencyregulated institutions. Instead, it will be 

the repository of, and conduit for, 

information on those employees who 

are mortgage loan originators at Agencyregulated institutions. As provided in 

§ __.104(d) and (h) of the proposed rule, 

it will be the responsibility of the 

Agency-regulated institution to review 

its employees’ submissions as well as 

any reports received from the Registry. 

II. Overview of the Proposal 

The proposed rule implements the 

S.A.F.E. Act’s requirements with respect 

to Agency-regulated institutions. It 

requires individuals employed by these 

institutions who act as mortgage loan 

originators to register with the Registry, 

obtain unique identifiers, and maintain 

their registrations. The proposal also 

directs Agency-regulated institutions to 

require compliance with these 

requirements. Furthermore, the proposal 

requires Agency-regulated institutions 

to adopt and follow written policies and 

procedures to assure such compliance. 

A detailed section-by-section 

description of this proposal with a 

request for comments is set forth below. 

III. Section-by-Section Description of 

the Proposed Rule 

Section __.101—Authority, Purpose, 

and Scope 

Section __.101 8 states that this rule 

implements the S.A.F.E. Act’s Federal 

registration requirements, which apply 

to individuals who originate residential 

mortgage loans, and describes the 

objectives of the S.A.F.E. Act’s 

registration mandate. This section also 

identifies the entities that employ 

individual mortgage loan originators— 

entities referred to in this preamble 

discussion as Agency-regulated 

institutions—and that also are covered 

by this proposal. Under the S.A.F.E. 

Act, a mortgage loan originator must be 

Federally-registered if that individual is 

an employee of a depository institution, 

an employee of any subsidiary owned 

and controlled by a depository 

institution and regulated by a Federal 

banking agency, or an employee of an 

institution regulated by the FCA. 

Collectively, the Agencies’ proposed 

rule applies to a depository institution, 

any subsidiary of a depository 

institution that is regulated by a Federal 

banking agency, and an institution 

regulated by the FCA. Section 1503(2) of 

the S.A.F.E. Act provides that 

‘‘depository institution’’ has the same 

meaning as in section 3 of the Federal 

Deposit Insurance Act (FDI Act),9 and 

27390 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

operating in substantially the same manner as a 

savings association. 12 U.S.C. 1813. 10The S.A.F.E. Act’s definition of depository 

institution includes Federal branches of foreign 

banks but not Federal agencies of foreign banks. 

However, the OCC has applied the Federal 

registration requirements to these entities because 

they are Federally regulated and have the authority 

to originate residential mortgage loans and, 

therefore, should not be treated differently from 

other Federally regulated or Federally insured 

institutions. 11The Board notes that it proposes to cover 

branches and agencies of foreign banks (other than 

Federal branches, Federal agencies and insured 

State branches of foreign banks); and commercial 

lending companies owned or controlled by foreign 

banks pursuant to its authority under the 

International Banking Act (IBA) (Chapter 32 of Title 

12) to issue such rules it deems necessary in order 

to perform its respective duties and functions under 

the chapter and to administer and carry out the 

provisions and purposes of the chapter and prevent 

evasions thereof. 12 U.S.C. 3108(a). The Board notes 

that the IBA provides, in relevant part, that the 

above entities shall conduct their operations in the 

United States in full compliance with provisions of 

any law of the United States which imposes 

requirements that protect the rights of consumers in 

financial transactions, to the extent that the branch, 

agency, or commercial lending company engages in 

activities that are subject to such laws, and apply 

to State-chartered banks, doing business in the State 

in which such branch or agency or commercial 

lending company, as the case may be, is doing 

business. 12 U.S.C. 3106a(b)(1). Under the Board’s 

proposal the above entities would be subject to the 

same Federal registration requirements as Federal 

branches, Federal agencies and insured State 

branches of foreign banks, which are covered in the 

OCC and FDIC rules, respectively. 

12Some FCS associations may not exercise their 

statutory authority to make residential mortgage 

loans, and FCS banks no longer engage in 

residential mortgage origination activities because 

they have transferred their direct lending authority 

to their affiliated associations. The FCA emphasizes 

that employees of FCS banks and associations that 

do not engage in residential mortgage loan 

origination activities are not subject to the 

registration requirements of the S.A.F.E. and these 

regulations. The Federal Agricultural Mortgage 

Corporation (Farmer Mac) is an FCS institution that 

among other activities operates a secondary market 

for rural residential mortgage loans. The FCA 

determines that Farmer Mac employees are not 

subject to the registration requirements of the 

S.A.F.E. Act and these implementing regulations 

because Farmer Mac does not engage in mortgage 

loan origination activities for rural residents. The 

Farmer Mac secondary market is modeled after 

Fannie Mae and Freddie Mac, and the provisions 

of the S.A.F.E. Act do not expressly apply to 

employees at Fannie Mae and Freddie Mac. 

13See S.A.F.E. Act at sections 1507(c) (de 

minimis exceptions), 1504(a)(1)(A) (requirement to 

register), 1504(a)(2) (requirement to obtain a unique 

identifier). 

14For example, assume an Agency-regulated 

institution has six employees, A, B, C, D, E, and F 

who are not registered loan originators for an 

Agency-regulated institution. Employees A, B, C, 

and D have acted as mortgage loan originators on 

five mortgage loans each during the same 12-month 

period, while employee E has acted as a mortgage 

loan originator with respect to four mortgage loans 

during this same time. Employee F has not acted 

as a mortgage loan originator during this 12-month 

period. The institution has not exceeded its 

aggregate exception limit of 25 mortgage loans. 

Employees A, B, C, and D must register before 

acting as a mortgage loan originator with respect to 

any additional mortgage loan during this 12-month 

period because any one of them would exceed the 

individual exception limit of five mortgage loans 

each. Employee E, who has acted as a mortgage loan 

originator with respect to four loans may act as a 

mortgage loan originator with respect to one more 

loan because he or she would not exceed the 

individual exception limit of five mortgage loans 

and the institution would not exceed the aggregate 

exception limit of 25 mortgage loans. After 

employee E acts as a mortgage loan originator with 

respect to his or her fifth loan, and the 25th loan 

for the institution, the exception in ___.101(c) is no 

longer available to any employee (A, B, C, D, E, or 

F) who acts as a mortgage loan originator at the 

institution during this 12-month period. 

15The FCA joins the Federal banking agencies in 

proposing a de minimis exception pursuant to its 

authority under section 5.17(a)(11) of the Farm 

Credit Act of 1971, as amended, 12 U.S.C. 

2252(a)(11) to ‘‘exercise such incidental powers as 

may be necessary or appropriate to fulfill its duties 

* * *’’ In this case, the FCA is exercising its 

incidental powers to fulfill the requirement in the 

S.A.F.E. Act that it work together the Federal 

banking agencies to develop and maintain a system 

for registering residential mortgage loan originators 

at Agency-regulated institutions with the Registry. 

A coordinated and uniform approach to the de 

minimis exception among the Agencies is 

appropriate because it best fulfills the objectives of 

the S.A.F.E. Act. 

includes any credit union. The Agencies 

note that because the definition of 

‘‘depository institution’’ in the FDI Act 

and in the S.A.F.E. Act does not include 

bank or savings association holding 

companies or their non-depository 

subsidiaries, employees of these entities 

who act as mortgage loan originators are 

not covered by the Federal registration 

requirement and, therefore, must 

comply with State registration and 

licensing requirements. 

Each Agency’s proposed rule 

indicates the specific entities covered by 

the proposal. With respect to the OCC, 

this rule applies to national banks, 

Federal branches and agencies of foreign 

banks, their operating subsidiaries, and 

their employees who are mortgage loan 

originators.10 For the Board, this rule 

applies to member banks of the Federal 

Reserve System (other than national 

banks), their respective subsidiaries that 

are not functionally regulated within the 

meaning of section 5(c)(5) of the Bank 

Holding Company Act, as amended (12 

U.S.C. 1844(c)(5)); and branches and 

agencies of foreign banks (other than 

Federal branches, Federal agencies and 

insured State branches of foreign banks) 

and commercial lending companies 

owned or controlled by foreign banks 11

and their employees who act as 

mortgage loan originators. For the FDIC, 

this rule applies to insured State 

nonmember banks (including Statelicensed insured branches of foreign 

banks) and their subsidiaries (except 

brokers, dealers, persons providing 

insurance, investment companies, and 

investment advisers) and their 

employees who are mortgage loan 

originators. For the OTS, this rule 

applies to savings associations and their 

operating subsidiaries, and their 

employees who are mortgage loan 

originators. For the FCA, this rule 

applies to Farm Credit System (FCS or 

System) institutions that originate 

residential mortgage loans under 

sections 1.9(3), 1.11 and 2.4(a)(2) and (b) 

of the Farm Credit Act of 1971, as 

amended, 12 U.S.C. 2017(3), 2019, and 

2075(a)(2) and (b), and their employees 

who are mortgage loan originators.12 For 

the NCUA, this rule applies to 

Federally-insured credit unions and 

their employees who are mortgage loan 

originators. 

Section 1507 of the S.A.F.E. Act 

requires the Federal banking agencies to 

make such de minimis exceptions ‘‘as 

may be appropriate’’ to the Act’s 

requirements to register and obtain a 

unique identifier.13 Section 

___.101(c)(2) of the proposed rule states 

that these registration requirements do 

not apply to an employee of an Agencyregulated institution if during the last 12 

months: (1) The employee acted as a 

mortgage loan originator for 5 or fewer 

residential mortgage loans; and (2) the 

Agency-regulated institution employs 

mortgage loan originators who, while 

excepted from registration pursuant to 

this section, in the aggregate, acted as a 

mortgage loan originator in connection 

with 25 or fewer residential mortgage 

loans.14 An employee must register with 

the Registry prior to engaging in 

mortgage loan origination activity that 

exceeds either the individual or 

aggregate limit. The Agencies solicit 

comment on whether the proposed 

exception adequately and appropriately 

covers circumstances that are truly de 

minimis and whether any de minimis 

exception is appropriate. 15

In addition, the Agencies specifically 

invite comment on: whether the 

individual and institution-wide limits 

on the number of residential mortgage 

loans for which employees may act as 

a mortgage loan originator without 

registering and obtaining a unique 

identifier are appropriate; whether the 

proposed exception is adequately 

structured to prevent manipulation or 

‘‘gaming’’ of the registration 

requirements; whether an institution 

should aggregate its residential mortgage 

loans with its subsidiaries when 

calculating the number of mortgage 

loans originated for purposes of this 

exception; whether monitoring for 

compliance with the proposed 

exception would be unduly burdensome 

for Agency-regulated institutions, and if 

so, how such burden could be 

minimized; and whether the proposed 

exception is consistent with the 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27391 

16For 2009, that amount is $39 million. See 73 

FR 78616 (Dec. 23, 2008). Pursuant to the HMDA 

(12 U.S.C. 2808) and Board Regulation C (12 CFR 

203.2(e)(1)(i)), the asset-size threshold is adjusted 

annually based on year-to-year changes in the 

Consumer Price Index for Urban Wage Earners and 

Clerical Workers. 

17The S.A.F.E. Act defines ‘‘real estate brokerage 

activity’’ to mean any activity that involves offering 

or providing real estate brokerage services to the 

public, including: (i) Acting as a real estate agent 

or real estate broker for a buyer, seller, lessor, or 

lessee of real property; (ii) bringing together parties 

interested in the sale, purchase, lease, rental, or 

exchange of real property; (iii) negotiating, on 

behalf of any party, any portion of a contract 

relating to the sale, purchase, lease, rental, or 

exchange of real property (other than in connection 

with providing financing with respect to any such 

transaction); (iv) engaging in any activity for which 

a person engaged in the activity is required to be 

registered or licensed as a real estate agent or real 

estate broker under any applicable law; and (v) 

offering to engage in any activity, or act in any 

capacity, described in clause (i), (ii), (iii), or (iv). 

S.A.F.E. Act at § 1503(3)(D). Nothing in this 

proposal would constitute an authorization for 

Agency-regulated institutions to engage in real 

estate brokerage, or any other activity, for which the 

institution does not have independent authority 

pursuant to Federal or State law, as applicable. 

18 ‘‘Timeshare plan’’ is defined in 11 U.S.C. 101 

(53D) as an interest purchased in any arrangement, 

plan, scheme, or similar device, but not including 

exchange programs, whether by membership, 

agreement, tenancy in common, sale, lease, deed, 

rental agreement, license, right to use agreement, or 

by any other means, whereby a purchaser, in 

exchange for consideration, receives a right to use 

accommodations, facilities, or recreational sites, 

whether improved or unimproved, for a specific 

period of time less than a full year during any given 

year, but not necessarily for consecutive years, and 

which extends for a period of more than three years. 

A ‘‘timeshare interest’’ is that interest purchased in 

a timeshare plan which grants the purchaser the 

right to use and occupy accommodations, facilities, 

or recreational sites, whether improved or 

unimproved, pursuant to a timeshare plan. 

consumer protection and fraud 

prevention purposes of the S.A.F.E. Act. 

The Agencies also solicit comment on 

whether an asset-based threshold is 

appropriate or whether other types of 

limits or thresholds, or other ways of 

structuring a de minimis exception, 

would be more appropriate. For 

example, should the proposed de 

minimis exception be applicable only to 

Agency-regulated institutions with total 

assets that do not exceed the amount 

that the Board establishes annually for 

banks, savings associations, and credit 

unions as an exception from the Home 

Mortgage Disclosure Act (HMDA)? 16

Furthermore, please provide comment 

on whether alternatively, or in addition 

to the foregoing, a de minimis exception 

should be crafted to be event specific. 

For example, a de minimis exception 

might provide that the registration 

requirements would not apply to an 

employee who does not regularly 

function as a mortgage loan originator 

and who originates no more than a 

small number of loans within a 12- 

month period during the absence (such 

as vacation or illness) of the individual 

that regularly functions as the Agencyregulated institution’s mortgage loan 

originator. 

The Agencies note that the de 

minimis exception contained in the 

proposed rule would be voluntary; it 

would not prevent a mortgage loan 

originator who meets the criteria for the 

exception from registering with the 

Registry if the originator chooses to do 

so or if his or her employer requires 

registration. 

Section ___.102—Definitions 

Section __.102 defines the various 

terms used in the proposal. If a term is 

defined in the S.A.F.E. Act, the proposal 

generally incorporates that definition. 

The proposal has adopted other 

definitions used by the Registry in order 

to promote consistency and 

comparability, insofar as is feasible, 

between Federal registration 

requirements and the States’ licensing 

requirements. 

Annual renewal period. The proposal 

requires that a mortgage loan originator 

renew his or her registration annually 

during the annual renewal period. The 

annual renewal period is November 1 

through December 31 of each calendar 

year and a registered mortgage loan 

originator must renew during this 

period regardless of the date of the 

initial registration. For example, an 

employee who registered in October 

2010 would have to renew between 

November 1, 2010 and December 31, 

2010. This is the same annual renewal 

period provided to State mortgage loan 

originators by the Registry. However, 

the Agencies and the Registry are 

discussing whether an alternate annual 

renewal period for Agency-regulated 

institutions at a different time of year 

from the annual renewal period of the 

State mortgage loan originators may be 

more desirable from a technical and 

operational standpoint. For example the 

final rule may designate the annual 

renewal period during another twomonth time period during the year 

instead of the proposed renewal period. 

Furthermore, the Agencies are 

considering whether the rule should 

provide for a method in which the rule’s 

registration requirements may be 

temporarily waived, or the initial 

registration or renewal period extended, 

in case of emergency, systems 

malfunction, or other event beyond the 

control of the Agency-regulated 

institution or the mortgage loan 

originator. 

Mortgage loan originator. The 

proposed definition of ‘‘mortgage loan 

originator’’ is based on the definition of 

the term ‘‘loan originator’’ included in 

the S.A.F.E. Act at section 1503(3). 

Specifically, this term means an 

individual who takes a residential 

mortgage loan application and offers or 

negotiates terms of a residential 

mortgage loan for compensation or gain. 

The term does not include: (1) Any 

individual who performs purely 

administrative or clerical tasks on behalf 

of an individual who is a mortgage loan 

originator; (2) any individual 

performing only real estate brokerage 

activities (as defined in section 

1503(3)(D) of the S.A.F.E. Act) 17 and is 

licensed or registered as a real estate 

broker in accordance with applicable 

State law, unless the individual is 

compensated by a lender, a mortgage 

broker, or other loan originator or by 

any agent of such lender, mortgage 

broker, or other mortgage loan 

originator, and meets the definition of 

mortgage loan originator; or (3) any 

individual or entity solely involved in 

extensions of credit related to timeshare 

plans, as that term is defined in 11 

U.S.C. 101(53D).18 For purposes of this 

definition, the proposal defines 

‘‘administrative or clerical tasks’’ to 

mean: (1) The receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan; and (2) 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. The Agencies 

note that the appendix to the proposal 

includes examples of the types of 

activities the Agencies consider to be 

both within and outside the scope of 

residential mortgage loan origination 

activities. 

To the extent it is within the scope of 

the S.A.F.E. Act, the Agencies are 

requesting comment on whether the 

definition of ‘‘mortgage loan originator’’ 

should cover individuals who modify 

existing residential mortgage loans. If 

so, the Agencies seek comment on 

whether these individuals should be 

excluded from the definition. For 

example, the Agencies are considering 

whether the final rule should exclude 

from this definition persons who modify 

an existing residential mortgage loan, 

pursuant to applicable law, provided 

this modification does not constitute a 

refinancing (that is, the satisfaction or 

extinguishment of the original 

obligation and replacement by a new 

obligation) and is completed in 

accordance with a contract between the 

parties, including any workout 

agreement. 

27392 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

19TILA defines ‘‘dwelling’’ as a residential 

structure or mobile home which contains one-tofour family housing units, or individual units of 

condominiums or cooperatives. 15 U.S.C. 1602(v). 

Board regulations and commentary include in this 

definition any residential structure that contains 

one to four units, whether or not that structure is 

attached to real property, and includes an 

individual condominium unit, cooperative unit, 

mobile home, trailer, and boat if they are in fact 

used as a residence. See 12 CFR 226.2(a)(19) 

(Regulation Z). 

The Agencies seek comment on 

whether an exclusion for individuals 

who modify existing residential 

mortgage loans would be appropriate in 

light of the S.A.F.E. Act’s objectives of 

providing increased accountability and 

tracking of the mortgage loan 

originators, enhancing consumer 

protection, reducing fraud in the 

residential mortgage loan origination 

process, and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

Comment is also requested on whether 

the final rule should delay the 

registration requirement for individuals 

engaged in loan modifications for only 

a specified period in light of current 

economic conditions and the national 

importance of encouraging mortgage 

lenders to engage in foreclosure 

mitigation activities. 

Moreover, the Agencies solicit 

comment on whether individuals who 

engage in approving mortgage loan 

assumptions should be excluded from 

the proposed definition of ‘‘mortgage 

loan originator’’ and whether such 

approach is consistent with the S.A.F.E. 

Act’s objectives. 

In particular, commenters are 

encouraged to: (1) Describe the extent to 

which loan modification and 

assumption activities are staffed and 

managed separately from loan 

origination activities within the 

institution; (2) provide the number of 

employees who engage in loan 

modifications or assumptions and do 

not otherwise act as mortgage loan 

originators; (3) describe the types of 

contact that staff engaged only in 

modifications or assumptions has with 

customers and the extent to which such 

staff initiate contact with customers; (4) 

discuss whether loan modification staff 

ever process loan refinancings; and (5) 

discuss the extent of the information 

that is gathered from customers in the 

context of the loan modifications and 

assumptions. With respect to loan 

modifications, describe what staff 

would handle the transaction if the 

modification process becomes a 

refinancing of a loan or if a new 

borrower is added in addition to the 

original borrower (i.e., adding a 

cosigner). 

With respect to assumptions, 

describe: (1) Whether the loan 

transactions offered by your institution 

are typically assumable; (2) the types of 

assumptions that are permitted, if any; 

(3) the type of contact between the 

employee and the new borrower; and (4) 

differences, if any, between 

underwriting practices for a loan 

assumption transaction and a new loan 

origination. Comment is also 

specifically requested on whether the 

exclusion of personnel solely engaged in 

loan modifications and loan 

assumptions affects a consumer’s ability 

to assess the competency and 

credentials of these personnel, keeping 

in mind the consumer protection and 

fraud prevention purposes of the 

S.A.F.E. Act. 

To the extent it is within the scope of 

the S.A.F.E. Act, the Agencies also seek 

comment on whether individuals who 

engage in certain refinancing 

transactions should be excluded from 

the definition of mortgage loan 

originator (and, correspondingly 

whether certain types of refinancing 

transactions should be excluded from 

the definition of residential mortgage 

loan). Specifically, should an individual 

who engages in refinancings that do not 

involve a cash-out and are with the 

same lender be excluded from the 

definition of mortgage loan originator? 

With respect to these specific types of 

refinancing transactions, the Agencies 

request comment on: (1) Whether such 

transactions have similar results for 

borrowers as loan modifications; (2) 

whether employees engaged in such 

refinancing transactions also engage in 

other mortgage loan origination 

activities; (3) the types of contact that 

employees who engage in these types of 

refinancings have with customers; (4) 

the extent to which such staff initiate 

contact with customers; and (5) the 

extent of the information that is 

gathered from customers in the context 

of these types of refinancing 

transactions. 

Furthermore, the Agencies seek 

comment on whether individuals who 

engage in loan modification and limited 

refinancing activities should be 

excluded from the definition of 

mortgage loan originator only if the 

transactions meet additional criteria. 

For example, should an individual who 

engages only in loan modification 

activities be excluded from the 

definition of mortgage loan originator 

only if the modification meets specific 

criteria such as a lower interest rate, 

reduced payment, elimination of an 

impending adjustment to the rate, or 

reduction in principal? Comment is 

requested on criteria that should be 

considered by the Agencies, if any. 

Nationwide Mortgage Licensing 

System and Registry or Registry. The 

proposal’s definition of these terms is 

based on the definition included in the 

S.A.F.E. Act. Specifically, these terms 

mean the system developed and 

maintained by the CSBS and the 

AARMR for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. The 

Registry currently supports the licensing 

and registration of State mortgage loan 

originators. As explained above, the 

Agencies are working with the CSBS to 

modify the Registry to support the 

registration of mortgage loan originators 

employed by Agency-regulated 

institutions. 

Registered mortgage loan originator. 

Pursuant to section 1503(7) of the 

S.A.F.E. Act, the proposal defines this 

term to mean any individual who meets 

the definition of mortgage loan 

originator and is an employee of an 

Agency-regulated institution and is 

registered pursuant to the requirements 

of this rule with, and maintains a 

unique identifier through, the Registry. 

This definition is the same as that 

included in the S.A.F.E. Act, except that 

the Agencies have modified it to apply 

only to individuals registered pursuant 

to regulations issued by the Agencies. 

Residential mortgage loan. As in the 

S.A.F.E. Act, the proposal defines 

‘‘residential mortgage loan’’ as any loan 

primarily for personal, family, or 

household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act 

(TILA) 19 or residential real estate upon 

which is constructed or intended to be 

constructed a dwelling. In addition, the 

proposal specifically includes in this 

definition refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

secured by a dwelling in order to clarify 

that originators of these types of loans 

are covered by the rule’s requirements. 

The FCA emphasizes that section 

1503(8) of the S.A.F.E. Act and __.102(f) 

do not amend or supersede sections 

1.11(b) and 2.4(b) of the Farm Credit Act 

of 1971, as amended, 12 U.S.C. 2019(b) 

and 2075(b), and their implementing 

regulation, 12 CFR 613.3030(c), which 

establish the purposes for which FCS 

institutions may originate residential 

mortgage loans for eligible rural home 

borrowers. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27393 

20The Registry currently defines ‘‘control’’ as the 

power, directly or indirectly, to direct the 

management or policies of a company or business, 

whether through ownership of securities, by 

contract, or otherwise. Any person who is a general 

partner or executive officer, including Chief 

Executive Officer, Chief Financial Officer, Chief 

Operations Officer, Chief Legal Officer, Chief 

Compliance Officer, Director and individuals with 

similar status or functions; directly or indirectly has 

the right to vote 10 percent or more of a class of 

a voting security or has the power to sell or direct 

the sale of 10 percent or more of a class of voting 

securities; or, in the case of a partnership, has the 

right to receive upon dissolution, or has 

contributed, 10 percent or more of the capital, is 

presumed to control that company. The Agencies 

have requested that this definition be revised to 

include ‘‘Chief Credit Officer.’’ The Registry’s 

current definition of ‘‘Financial services-related’’ 

means pertaining to securities, commodities, 

banking, insurance, consumer lending, or real estate 

(including, but not limited to, acting or being 

associated with a bank or savings association, credit 

union, mortgage lender, mortgage broker, real estate 

salesperson or agent, closing agent, title company, 

or escrow agent). The Agencies have requested that 

this definition be revised to include ‘‘Farm Credit 

System institution’’ and ‘‘appraiser.’’ 21See S.A.F.E. Act at section 1504(a). 

Unique Identifier. The proposal’s 

definition of this term is identical to 

that included in section 1503(12) of the 

S.A.F.E. Act. Specifically, the proposal 

defines ‘‘unique identifier’’ to mean a 

number or other identifier that: (1) 

Permanently identifies a registered 

mortgage loan originator; (2) is assigned 

by protocols established by the Registry 

and the Agencies to facilitate electronic 

tracking of mortgage loan originators, 

and uniform identification of, and 

public access to, the employment 

history of, and the publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators; and 

(3) must not be used for purposes other 

than those set forth in the S.A.F.E. Act. 

In section __.103(d), the proposal uses 

the terms ‘‘control’’ and ‘‘financial 

services-related’’ in the descriptions of 

the information that is required of an 

employee who is a mortgage loan 

originator. These terms are currently 

defined in the web-based form 

collecting information on State-licensed 

mortgage loan originators. In order to 

promote consistency of the information 

collected for Agency-regulated and 

State-licensed mortgage loan originators, 

the Agencies intend that the Registry’s 

definitions of those terms will also be 

used in the web-based form collecting 

information on Agency-regulated 

mortgage loan originators and, therefore 

have not defined them in this 

rulemaking.20

Section __.103—Registration of 

Mortgage Loan Originators 

The S.A.F.E. Act specifically prohibits 

an individual who is an employee of an 

Agency-regulated institution from 

engaging in the business of a loan 

originator without registering as a loan 

originator with the Registry, 

maintaining annually such registration, 

and obtaining a unique identifier 

through the Registry.21 As described 

more specifically below, under § __.103 

of the proposal, both the individual 

employee and the employing institution 

are responsible for complying with 

these requirements. In addition, the 

proposal requires that both the 

employee and the employing institution 

must submit information to the Registry 

for each registration to be complete. 

Employee registration requirement. In 

general, proposed § __.103(a)(1) requires 

employees of Agency-regulated 

institutions who act as a mortgage loan 

originator to register with the Registry, 

maintain their registration, and obtain a 

unique identifier. The Agencies note 

that this requirement would not apply if 

the employee is subject to a de minimis 

exception. This section further provides 

that any employee who is not in 

compliance with the registration and 

unique identifier requirements set forth 

in this subpart, by the expiration of the 

implementation periods specified in 

§ __.103(a)(3) and (a)(4)(ii), as 

applicable, is in violation of the S.A.F.E. 

Act and this rule. The OCC, Board, 

FDIC, and OTS have the authority to 

take enforcement actions against their 

respective Agency-regulated institutions 

and individual employees of those 

institutions who violate the S.A.F.E. Act 

and the final rule, pursuant to 12 U.S.C. 

1818. The FCA has authority to take 

enforcement actions against Farm Credit 

System institutions and individual 

employees who violate the S.A.F.E. Act 

and the final rule pursuant to title V, 

Part C of the Farm Credit Act of 1971, 

as amended, 12 U.S.C. 2261 et seq. The 

NCUA has the authority to take 

enforcement actions against federallyinsured credit unions and their 

employees who violate the S.A.F.E. Act 

and the final rule under 12 U.S.C. 1786. 

Institution requirement. Unless the de 

minimis exception applies, paragraph 

(a)(2) of § __.103 provides that an 

Agency-regulated institution must 

require its employees who are mortgage 

loan originators to register with the 

Registry, maintain this registration, and 

obtain a unique identifier in compliance 

with this subpart. This provision also 

prohibits an Agency-regulated 

institution from permitting its 

employees to act as mortgage loan 

originators unless registered with the 

Registry pursuant to this subpart, after 

the implementation periods specified in 

§§ __.103(a)(3) and (a)(4)(ii), as 

applicable, expire. 

Implementation period for initial 

registrations. The proposal provides a 

grace period for initial registrations. 

Pursuant to paragraph (a)(3) of this 

section, an employee is not required to 

register, and therefore can continue to 

originate residential mortgage loans 

without complying with the rule’s 

registration requirement, for 180 days 

from the date the Agencies provide 

public notice that the Registry is 

accepting initial registrations. After this 

180-day period expires, any existing 

employee or newly hired employee of 

an Agency-regulated institution who is 

subject to the registration requirements 

is prohibited from originating 

residential mortgage loans without first 

meeting the registration requirements. 

The Registry, in consultation with the 

Agencies, is considering a staggered 

registration process for some of the 

larger Agency-regulated institutions in 

order to spread out the registration of 

mortgage loan originators throughout 

this implementation period. This could 

reduce the number of originators 

registering at any one time, thereby 

enabling the Registry to accommodate 

all registrations in a timely and efficient 

manner. 

The Agencies seek comment on 

whether the 180-day implementation 

period will provide Agency-regulated 

institutions and their employees with 

adequate time to complete the initial 

registration process. The Agencies also 

inquire as to whether an alternative 

schedule for implementation and initial 

registrations would be appropriate, what 

such an alternative schedule should be, 

and why it is more appropriate than the 

implementation period proposed by the 

Agencies. In addition, the Agencies 

request comment on whether, and how, 

a staggered registration process should 

be developed. 

The Agencies recognize that Agencyregulated institutions and mortgage loan 

originators need certainty as to when 

the Registry is available to start 

accepting registrations and the date that 

the 180-day clock starts to run. 

Therefore, the Agencies will provide a 

coordinated and simultaneous advance 

notice to Agency-regulated institutions 

of when the Registry will begin 

accepting Federal registrations through 

appropriate means, such as a Federal 

Register publication, Web-site notice, or 

agency bulletin. 

Special rule for previously registered 

employees. Under paragraph (a)(4) of 

§ __.103, properly registered or licensed 

mortgage loan originators will not have 

to re-register when they change 

employment by moving from one 

Agency-regulated institution to another 

or from a State-regulated institution to 

27394 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

22These provisions require: The institution’s 

name, main office address, IRS Employer Tax 

Identification Number, Research Statistics 

Supervision Discount (RSSD) number; primary 

Federal regulator, contact information for 

individuals at the institution for Registry purposes; 

and confirmation that it employs the registrant. 

Information regarding an institution’s RSSD number 

is available from the Board. 

an Agency-regulated institution, 

regardless of whether the change in 

employment is made voluntarily, 

through an acquisition or merger of the 

employee’s prior employer, or through a 

reorganization where previously Statelicensed mortgage loan originators 

become subject to the registration 

requirements of Agency-regulated 

institutions. Specifically, this provision 

provides that if a new employee of an 

Agency-regulated institution had 

previously registered with, and obtained 

a unique identifier from, the Registry 

prior to becoming an employee of that 

institution and has maintained that 

registration (or license, if previously 

employed by a State-regulated entity), 

the registration requirements of this 

subpart are deemed to be met provided 

that: (1) The employee’s employment 

information in the Registry is updated; 

(2) new fingerprints of the employee are 

provided to the Registry for a new 

background check, except in the case of 

mergers, acquisitions or reorganizations; 

(3) information concerning the new 

employing institution is provided to the 

Registry pursuant to § __.103(e)(1)(i), to 

the extent the institution has not 

previously met these requirements, and 

(e)(2)(i) ; 22 and (4) the registration is 

maintained pursuant to the 

requirements of paragraph (b) of this 

section as of the date that the employee 

is employed by the institution. 

In order to reduce regulatory burden 

and to prevent an interruption in 

mortgage origination activity, this 

provision provides a 60-day grace 

period to comply with these 

requirements when a registered 

mortgage loan originator becomes an 

employee of an Agency-regulated 

institution as a result of an acquisition, 

merger, or reorganization. The Agencies 

seek comment on whether this grace 

period is appropriate. 

Continuing a mortgage loan 

originator’s registration from one 

employer to another will reduce 

regulatory burden on Agency-regulated 

institutions as well as the residential 

mortgage industry. In addition, because 

an employee’s unique identifier and 

background information in the Registry 

will remain the same, consumers will be 

able to locate a mortgage loan originator 

who has changed employers. The 

Agencies note that the registration of a 

mortgage loan originator who leaves any 

employer will be inactive until he or she 

is hired by a new institution, his or her 

record is updated in accordance with 

the final rule’s requirements, and the 

new employer acknowledges employing 

the mortgage loan originator through the 

Registry. The individual will be 

prohibited from acting as a mortgage 

loan originator at an Agency-regulated 

institution until such time as the 

registration is reactivated, unless 

covered by the 60-day grace period. 

Maintaining Registration. Under 

§ __.103(b), a registered mortgage loan 

originator must renew his or her 

registration with the Registry during the 

annual renewal period (November 1– 

December 31). To renew, the employee 

must confirm that the information 

previously submitted to the Registry 

remains accurate and complete, 

updating any information as needed. 

Any registration that is not renewed 

during this period will become inactive 

and the individual will be prohibited 

from acting as a mortgage loan 

originator at an Agency-regulated 

institution until such time as the 

registration requirements are met. All 

employee data that has been provided to 

the Registry about the employee will 

remain in the Registry even when the 

employee is in inactive status. Inactive 

mortgage loan originators will not be 

assigned a new unique identifier if they 

reregister. 

In addition to the annual renewal, a 

registration must be updated within 30 

days of the occurrence of any of the 

following events: (1) A change in the 

employee’s name, (2) the registrant 

ceases to be an employee of the 

institution; or (3) any of the employee’s 

responses to the information required 

for registration pursuant to paragraphs 

(d)(1)(iii) through (xi) become 

inaccurate. These annual renewal and 

updating requirements are similar to 

what is required currently for Statelicensed mortgage loan originators. 

This paragraph also provides that any 

employee who registers with the 

Registry must maintain his or her 

registration unless the employee is no 

longer a mortgage loan originator. As a 

result of this provision, once an 

employee registers as a loan originator 

with the Registry, the employee will be 

required to continue this registration 

until he or she is no longer engaged in 

the activity of a mortgage loan 

originator, even if, in any particular 

year, the employee originates fewer 

mortgage loans than the number 

specified in the de minimis exception 

provision. The purpose of this 

requirement is to avoid the creation of 

a timing loophole that could allow 

mortgage loan originators to avoid 

registration requirements. 

The Agencies specifically request 

comment on whether the proposed 

initial registration requirements as well 

as the requirements for maintaining 

registration are adequate and feasible for 

Agency-regulated institutions and their 

employees who are mortgage loan 

originators, yet serve the consumer 

protection purposes enumerated in the 

S.A.F.E. Act. 

Effective date of registrations and 

renewals. Paragraph (c) of this section 

provides that an initial registration is 

effective on the date that the registrant 

receives notification from the Registry 

that all employee and institution 

information required by paragraphs (d) 

and (e) of this section has been 

submitted and the registration is 

complete. 

A renewal or update pursuant to 

paragraph (b) is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

Except as provided by the 180-day 

implementation period in § __.103(a)(3) 

or the 60-day grace period provided in 

§ __.103(a)(4), an employee must not 

engage in mortgage origination if his or 

her registration is not yet effective or 

has not been renewed pursuant to this 

rule. 

Required employee information. 

Paragraph (d) of § __.103 lists the 

categories of information that mortgage 

loan originators, or the employing 

Agency-regulated institution on behalf 

of the mortgage loan originator, will be 

required to submit to the Registry. The 

Registry’s registration form will more 

specifically identify the information 

required. 

Specifically, the proposal requires the 

employee to submit information 

regarding his or her identity (name and 

former names, Social Security number, 

gender, date of birth, and place of birth) 

and home and business contact 

information; date the employee became 

an employee of the Agency-regulated 

institution; financial services-related 

employment and financial history for 

the past 10 years; criminal history 

involving felonies and certain 

misdemeanors; history of financial 

services-related civil actions, 

arbitrations and regulatory and 

disciplinary actions or orders; financial 

services-related professional license 

revocations or suspensions; voluntary or 

involuntary employment terminations 

based on violations of law or industry 

standards of conduct; and certain 

actions listed above that are pending 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27395 

23Further information on the Registry’s 

fingerprint and background check procedures may 

be found on the Registry’s Web site at http:// 

www.stateregulatoryregistry.org/NMLS/. 

against the employee. As explained 

below, the Agency-regulated institution 

must have policies and procedures in 

place for confirming the adequacy and 

accuracy of employee registrations. 

The employee also must provide 

fingerprints, in digital form if 

practicable, and any appropriate 

identifying information to the Registry 

for submission to the FBI and any other 

Federal or State governmental agency or 

entity authorized to do a criminal 

history background check.23 The 

Agencies expect that the Registry will 

submit fingerprints to the FBI for a 

criminal history background check in 

connection with the registration of each 

mortgage loan originator of an Agencyregulated institution. The Agencies, 

however, are not requiring employees to 

obtain new fingerprints for submission 

to the Registry if the employing Agencyregulated institution has the employee’s 

fingerprints on file, provided that the 

fingerprints submitted to the Registry 

were taken less than three years prior to 

the employee’s registration with the 

Registry. If the Agency-regulated 

institution has such fingerprints on file, 

the Registry plans to use these 

fingerprints to run the required criminal 

history background check on the 

mortgage loan originator. 

It is the Agencies’ understanding that 

the Registry plans to support digital 

fingerprinting by October 2009 and 

likely before the initiation of the 

proposed rule’s implementation period. 

As digital fingerprints are preferable to 

paper fingerprints, the proposed rule 

provides that registrants should submit 

digital fingerprints to the Registry, if 

practicable. If digital fingerprints are not 

available, the Registry will accept 

fingerprint cards, and will convert these 

cards to a digital format. The Agencies 

encourage the use of digital fingerprints 

and note that the proposal’s permission 

to submit fingerprints in paper form is 

intended to enable smaller institutions 

without the capability or feasibility to 

obtain digital fingerprints to comply 

with this requirement. 

The Agencies specifically seek 

comment on whether the three-year age 

limit for existing fingerprints is 

appropriate and whether Agencyregulated institutions currently have 

fingerprints of their employees on file, 

and if so, whether they are in digital or 

paper form. 

Employee authorization and 

attestation. Paragraph (d)(2) of § __.103 

requires the employee, not the 

employing Agency-regulated institution, 

to attest to the correctness of all such 

information submitted to the Registry 

pursuant to paragraph (d)(1), and to 

provide authorization for the Registry 

and the employing Agency-regulated 

institution to obtain information related 

to any administrative, civil or criminal 

findings to which the employee is a 

party. 

In order to provide relevant 

information to consumers and to 

implement the purposes of the S.A.F.E. 

Act, paragraph (d)(2) requires the 

employee, not the employing Agencyregulated institution, to authorize the 

Registry to make available to the public 

the following information submitted to 

the Registry: His or her name; other 

names used; name of current 

employer(s); current principal business 

location(s) and business contact 

information; 10 years of relevant 

employment history; and publicly 

adjudicated or pending disciplinary and 

enforcement actions and arbitrations 

against the employee. The Agencies 

envision that this information will be 

made public in two phases. The first 

phase, implemented at the time the 

Registry begins accepting Federal 

registrations, would provide for public 

accessibility of the employee’s name; 

other names used; name of current 

employer(s); current principal business 

location(s) and business contact 

information; and employment history. 

The remaining categories of information 

(publicly adjudicated or pending 

disciplinary and enforcement actions 

and arbitrations against the employee) 

would be made public at a later date, 

once the Registry, in consultation with 

the Agencies, has designed and 

implemented a system through which 

the registrant may provide additional 

explanatory information to accompany a 

positive response to any of the 

disclosure questions regarding criminal 

history or the other information 

requested in paragraphs (d)(1)(iii) 

through (xi). The Agencies note that 

once the Registry makes this 

enhancement, registered mortgage loan 

originators can provide this explanatory 

language at any time or during the 

annual renewal process, and that this 

explanatory language may be made 

public. Additionally, relevant nonpublic 

information submitted to the Registry 

will be accessible to the Agencies and 

State mortgage regulators, as 

appropriate. 

The institution may provide the 

employee information required under 

§ __.103(d)(1) to the Registry or require 

the employee to provide the information 

to the Registry. Regardless of the 

manner that the information is 

provided, the requirements of the rule 

remain the same: The employee must 

attest to the correctness of the 

information required by § __.103(d) and 

the institution must implement policies 

and procedures to confirm the adequacy 

and accuracy of employee registrations, 

including updates and renewals. 

The Agencies have limited the 

required information to what is 

necessary to meet the objectives of the 

S.A.F.E. Act for the registration of 

residential mortgage loan originators 

employed by Agency-regulated 

institutions and to what is required by 

the Registry’s current data collection 

form for State mortgage loan originators, 

Form MU4. The Agencies believe that 

both the State-licensing and Agencyregistration requirements should collect 

similar information from mortgage loan 

originators in order to effectively track 

loan originators, reduce regulatory 

burden on mortgage loan originators 

who move between institutions with 

differing charters and regulators, and 

permit consumers to review similar 

information on mortgage loan 

originators regardless of the originator’s 

regulator. The Agencies and CSBS have 

worked together to identify what 

information should be required for 

registration and will continue to do so 

going forward. 

The Agencies seek comment on the 

employee data that is proposed to be 

collected, the employee data that is 

proposed to be made public, and 

whether any other additional data 

should be collected or made public. 

Required Agency-regulated institution 

information. Paragraph (e)(1) of 

§ll.103 requires the employing 

Agency-regulated institution to submit 

certain information to the Registry as a 

base record in connection with the 

initial registration of one or more 

mortgage loan originators. Specifically, 

the Agency-regulated institution must 

provide its name, main office address, 

primary Federal regulator, Employer 

Identification Number (EIN) issued by 

the Internal Revenue Service, primary 

point of contact information, and 

contact information for ‘‘system 

administrators.’’ If the Agency-regulated 

institution is a subsidiary, it also must 

indicate that it is a subsidiary and 

provide the name of its parent 

institution, as explained further below. 

System administrators will have the 

authority to enter data required in 

paragraph (e) of this section on the 

Registry and will be responsible for 

keeping institution information and the 

list of employees registered with the 

Registry current, provided these 

individuals do not act as mortgage loan 

originators. The system administrators 

27396 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

may delegate their authority and assign 

as many additional system users as 

necessary to comply with the 

registration requirements of the S.A.F.E. 

Act and the final rule, provided the 

delegated administrators meet this 

paragraph’s requirements. The primary 

point of contact also can be one of the 

system administrators. 

In addition, paragraph (e)(1) requires 

an Agency-regulated institution to 

provide its Research Statistics 

Supervision Discount (RSSD) number. 

The RSSD database is maintained by the 

Board. The Agencies expect to provide 

the Registry with an extract of the 

Board’s database, indexed by RSSD 

number, to facilitate an Agencyregulated 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 data 

supplied by the Agencies. The Agencies 

will establish a mechanism by which 

Agency-regulated institutions that do 

not have an RSSD number will be added 

to the RSSD database. However, an 

operating subsidiary of an Agencyregulated institution will not be 

required to obtain an RSSD number. 

Instead, if an operating subsidiary does 

not have an RSSD number, the operating 

subsidiary will provide its parent 

institution’s RSSD number and indicate 

that it is an operating subsidiary of the 

parent. The Agencies seek comment on 

the proposal to require Agencyregulated institutions to submit their 

RSSD number, and operating 

subsidiaries, if necessary, to submit 

their parent institution’s RSSD number, 

to facilitate an Agency-regulated 

institution’s authorized access to the 

Registry and its establishment of a base 

record, and as identifying data for 

validating the base record. 

Paragraph (e)(1)(ii) of this section 

requires the Agency-regulated 

institution to update any information it 

has submitted within 30 days of the date 

that the information becomes 

inaccurate. 

Paragraph (e)(2) of this section 

requires an Agency-regulated institution 

to provide information to the Registry 

for each employee who acts as a 

mortgage loan originator. The Agencyregulated institution must: (1) After all 

the information required by paragraph 

(d) of this section has been submitted to 

the Registry, confirm that it employs the 

registrant; and (2) within 30 days of the 

date the registrant ceases to be an 

employee of the institution, provide 

notification that it no longer employs 

the registrant and the date the registrant 

ceased being an employee. This 

information will link the registering 

mortgage loan originator to the Agencyregulated institution in order to confirm 

that the registration of the employee is 

valid and legitimate. The Agencies note 

that the Registry’s system protocols will 

not permit the Agency-regulated 

institution to confirm that it employs 

the registrant unless all of the 

employee’s information required by 

paragraph (d) of this section has been 

submitted to the Registry. 

The Agencies anticipate that some 

Agency-regulated institutions may 

select one or more individuals to submit 

the required employee information on 

behalf of each of their mortgage loan 

originators to facilitate this registration 

process. The Agencies also recognize 

the initial volume of new registrants 

could be burdensome on both the 

registrants and on the staff charged with 

completing the registrations. To mitigate 

this burden, the Agencies are 

considering whether to modify the 

Registry to permit a ‘‘batch’’ process for 

Agency-regulated institutions to submit, 

in bulk, some or all of the required 

employee and institution data. 

However, such a process would not 

eliminate completely an individual 

employee’s role in the registration 

process or the employee’s responsibility 

to attest to the accuracy of the data 

submitted on the employee’s behalf. 

Typical automated human resources 

systems likely will not contain all of the 

employee information required to be 

submitted to the Registry Under 

§ll.103(d) of this proposed rule. As a 

result, the institution would need to 

gather the missing information from 

each potential registrant and then 

format it for the batch processing, which 

may create some registration burden on 

administrative staff and lead to possible 

delays, errors, or omissions. 

Alternatively, if the Agencies specify a 

limited set of standard data elements 

that are likely to be contained in an 

institution’s automated human 

resources system, such as name and 

employment date, for the batch file, 

individual employees would still be 

required to access the Registry to 

provide any missing information and 

complete the registration process. In 

either case, employees would still be 

responsible for accessing their record in 

the Registry to attest to the accuracy of 

the information submitted on their 

behalf by the employing institution and 

authorize background checks and public 

access to certain employee information. 

The Agencies seek comment on batch 

processing and welcome suggestions for 

workable alternative approaches that 

could mitigate the initial registration 

burden on Agency-regulated institutions 

and their employees. Comment is also 

sought on the appropriateness of having 

one employee input registration 

information into the Registry on another 

employee’s behalf. 

Section ll.104 Policies and 

Procedures 

Proposed §ll.104 requires Agencyregulated institutions that employ 

mortgage loan originators to adopt and 

follow written policies and procedures 

designed to assure compliance with the 

requirements of the final rule. This 

requirement applies to all Agencyregulated institutions that employ 

individuals who act as mortgage loan 

originators, regardless of the application 

of any de minimis exception to their 

employees. This section requires that 

these policies and procedures must be 

appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the Agencyregulated institution and must at a 

minimum include the following eight 

provisions. 

First, these policies and procedures 

must establish a process for identifying 

which employees of the institution are 

required to be registered mortgage loan 

originators. 

Second, the policies and procedures 

must require that all employees of the 

institution who are mortgage loan 

originators be informed of the 

registration requirements of the S.A.F.E. 

Act and this rule and be instructed on 

how to comply with these requirements 

and procedures, including registering as 

a mortgage loan originator prior to 

engaging in any mortgage loan 

origination activity. 

Third, the policies and procedures 

must establish procedures to comply 

with the unique identifier requirements 

in § ll.105. 

Fourth, these policies and procedures 

must establish reasonable procedures 

for confirming the adequacy and 

accuracy of employee registrations, 

including updates and renewals, by 

comparison with the institution’s 

records. The Agencies do not expect 

Agency-regulated institutions, however, 

to obtain private database searches on 

their pre-existing employees to confirm 

employee information. Instead, 

institutions should compare the 

information supplied by the employee 

for purposes of registering with the 

Registry with the information contained 

in the institution’s own records. 

Fifth, these policies and procedures 

must establish reasonable procedures 

and tracking systems for monitoring 

compliance with registration 

requirements and procedures. AgencyVerDate Nov<24>2008 14:48 Jun 08, 2009 Jkt 217001 PO 00000 Frm 00012 Fmt 4701 Sfmt 4702 E:\FR\FM\09JNP2.SGM 09JNP2
Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27397 

24The Agencies note that the Federal Housing 

Finance Agency (FHFA) has directed Fannie Mae 

and Freddie Mac to require all mortgage loan 

applications taken on and after January 1, 2010 to 

include the mortgage loan originator’s unique 

identifier. See FNMA LL 02–2009: New Mortgage 

Loan Data Requirements (02/13/09). 

regulated institutions will be expected 

to be able to demonstrate compliance 

with the requirements of the S.A.F.E. 

Act and the final rule, such as by 

maintaining appropriate records. 

Sixth, the policies and procedures 

must provide for periodic independent 

testing of the Agency-regulated 

institution’s policies and procedures for 

compliance with the S.A.F.E. Act and 

the final rule, including the registration 

and renewal requirements, and for such 

testing to be conducted by institution 

personnel or by an outside party. 

Seventh, the policies and procedures 

must provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

rule, or the related policies and 

procedures of the institution, including 

prohibiting such employees from acting 

as mortgage loan originators or other 

appropriate disciplinary actions. 

Eighth, the policies and procedures 

must establish a process for reviewing 

the criminal background history reports 

on employees received from the FBI 

through the Registry and taking 

appropriate action consistent with 

applicable law and rules with respect to 

these reports. Moreover, an Agencyregulated institution must maintain 

such records or reports and document 

any action taken with respect to 

applicable employees. Institutions 

should maintain these records 

consistent with applicable 

recordkeeping requirements, if any. 

The Agencies specifically request 

comment on the difficulty of 

establishing suitable policies and 

procedures including the amount of 

time and resources needed for their 

adoption and implementation. The 

Agencies note that these policies and 

procedures should be in place at an 

institution prior to the registration of its 

employees pursuant to this rule. 

Section ll.105 Use of Unique 

Identifier 

Section ll.105(a) of the proposal 

requires an Agency-regulated institution 

to make the unique identifier(s) of its 

registered mortgage loan originator(s) 

available to consumers in a manner and 

method practicable to the institution. 

The Agencies note that an Agencyregulated institution may comply with 

this 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; 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.24

Section ll.105(b) requires a 

registered mortgage loan originator to 

provide the originator’s unique 

identifier to a consumer upon request, 

before acting as a mortgage loan 

originator, and through the originator’s 

initial written communication with a 

consumer, if any. The Agencies intend 

§ll.105(b)(3) of the rule to cover 

written communication from the 

originator specifically for his or her 

customers and not written materials 

distributed by the Agency-regulated 

institution for general use by its 

customers. 

Although a mortgage loan originator 

may change his or her name, change 

employment, or move, the unique 

identifier assigned to the originator by 

the Registry at the originator’s initial 

registration will remain the same. Once 

public access to the Registry is fully 

functional, the unique identifier will 

enable consumer access to an individual 

mortgage loan originator’s profile stored 

in the Registry, including the mortgage 

loan originator’s registration 

information, any State licenses held 

(active or inactive), employment history 

and other information of interest to the 

consumer. If a mortgage loan originator 

is simultaneously employed by more 

than one State or Agency-regulated 

institution, that information also will be 

readily visible to the consumer. 

Therefore, as this unique identifier will 

enable a consumer to obtain important 

information concerning a mortgage loan 

originator from the Registry, a mortgage 

loan originator and the employing 

institution must ensure that the 

consumer has access to it. 

The Agencies seek comment regarding 

the adequacy and appropriateness of 

these unique identifier requirements 

with respect to the consumer protection 

and anti-fraud purposes of the S.A.F.E. 

Act. The Agencies also seek comment 

on whether the proposed rule 

adequately ensures that consumers will 

be made aware that they have the 

opportunity to access information about 

the employment history of, and publicly 

adjudicated disciplinary and 

enforcement actions against, a 

prospective, current, or former mortgage 

loan originator. Furthermore, the 

Agencies seek comment on the specific 

difficulties that an institution or its 

employees may have in complying with 

these requirements and whether there 

may be circumstances when a registered 

mortgage loan originator would not be 

able to provide the unique identifier to 

a consumer before acting as a mortgage 

loan originator. 

Appendix—Examples of Mortgage Loan 

Originators 

As an aid in the understanding, and 

to provide examples of the definition of 

mortgage loan originator, the proposed 

rule includes an Appendix that provides 

examples of the type of activities that 

would cause an employee to fall within 

or outside the definition of mortgage 

loan originator. The examples in this 

Appendix are not all inclusive; they 

illustrate only the issue described and 

do not illustrate any other issues that 

may arise in this proposal. The Agencies 

request comment on whether the 

examples are helpful, and if other 

examples should be added to this 

Appendix or provided to the public by 

other means. 

The Agencies also request comment 

on whether there are mortgage loans for 

which there may be no mortgage loan 

originator. Are there situations where a 

consumer applies for and is offered a 

loan through an automated process 

(such as a prescreened offer extended to 

a consumer as part of a mass mailing or 

an automated loan approval in response 

to an online application) without 

contact with a mortgage loan originator? 

To the extent there are such situations, 

please describe the contact and 

communication that a consumer would 

have with the institution and its 

employees. The Agencies also seek 

comment on: (1) The activities 

conducted by employees with respect to 

mortgage loan pre-approval; and (2) the 

typical duties of fulfillment staff that do 

not involve mortgage loan origination 

activities. 

IV. Request for Comments 

The Agencies encourage comment on 

any aspect of this proposal and 

especially on those issues specifically 

noted in this preamble. 

Agency-regulated institutions are 

encouraged to identify how many of 

their employees would qualify as 

residential mortgage loan originators 

under this definition, and therefore, 

would be required to register under this 

proposed rule. Please provide specific 

information on the number of 

employees engaged in mortgage loan 

origination, with both actual count and 

as a percentage of total employees, and 

27398 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

25See 13 CFR 121.201. 

the number of full-time equivalents 

(FTEs) engaged in this activity as 

reported on an institution’s 

Consolidated Reports of Condition and 

Income (Call reports) or Thrift Financial 

Reports, as applicable. It would also be 

very helpful for Agency-regulated 

institutions to identify the internal 

departments to which these employees 

are assigned, and whether they are 

engaged in activities other than 

residential mortgage loan origination. 

Specifically, please discuss the 

estimated numbers of employees who 

act as mortgage loan originators who 

work in the mortgage loan function and 

those that work in divisions outside of 

the mortgage loan origination function. 

Please also describe any activities 

related to mortgage loan origination in 

which the staff outside the mortgage 

loan function engages. Please describe 

whether fulfillment staff or other 

employees who are not loan officers act 

as mortgage loan originators, and the 

estimated numbers of such employees 

that the institution would need to 

register under the proposed rule. This 

information will enable the Agencies to 

estimate the number of employees who 

will seek registration for purposes of 

evaluating system administration needs 

and determining if the proposed 180- 

day implementation period is adequate 

to allow for initial registration. This 

information will also assist the Agencies 

in preparing final analyses of the impact 

of these registrations under the 

Regulatory Flexibility Act, Paperwork 

Reduction Act, Executive Order 12866, 

and the Unfunded Mandates Reform Act 

of 1995, as applicable. 

Solicitation of Comments on Use of 

Plain Language 

Section 722 of the Gramm-LeachBliley Act, Public Law 106–102, sec. 

722, 113 Stat. 1338, 1471 (Nov. 12, 

1999), requires the Federal banking 

agencies to use plain language in all 

proposed and final rules published after 

January 1, 2000. The Agencies invite 

your comments on how to make this 

proposal easier to understand. For 

example: 

• Have we organized the material to 

suit your needs? If not, how could this 

material be better organized? 

• Are the requirements in the 

proposed regulation clearly stated? If 

not, how could the regulation be more 

clearly stated? 

• Does the proposed regulation 

contain language or jargon that is not 

clear? If so, which language requires 

clarification? 

• Would a different format (grouping 

and order of sections, use of headings, 

paragraphing) make the regulation 

easier to understand? If so, what 

changes to the format would make the 

regulation easier to understand? 

• What else could we do to make the 

regulation easier to understand? 

Regulatory Analysis 

A. Regulatory Flexibility Act 

OCC: Pursuant to § 605(b) of the 

Regulatory Flexibility Act, 5 U.S.C. 

605(b) (RFA), the regulatory flexibility 

analysis otherwise required under § 604 

of the RFA is not required if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities and 

publishes its certification and a short, 

explanatory statement in the Federal 

Register along with its rule. 

We have estimated that this proposal 

will not have a significant economic 

impact on a substantial number of small 

entities. Specifically, we estimate that 

653 small national banks are likely to be 

impacted by the NPRM, with an average 

total compliance cost per bank 

estimated at $18,800. We base this 

analysis using the impact of the 

proposed rule on compliance costs as a 

percent of labor costs, as well as 

compliance costs as a percent of 

noninterest expenses. Therefore, 

pursuant to § 605(b) of the RFA, the 

OCC hereby certifies that this proposal 

will not have a significant economic 

impact on a substantial number of small 

entities. Accordingly, a regulatory 

flexibility analysis is not needed. 

Board: Pursuant to § 605(b) of the 

Regulatory Flexibility Act, 5 U.S.C. 

605(b) (RFA), the regulatory flexibility 

analysis otherwise required under § 603 

of the RFA is not required if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities and 

publishes its certification and a short, 

explanatory statement in the Federal 

Register along with its rule. 

The proposed rule applies to all banks 

that are members of the Federal Reserve 

System (other than national banks) and 

certain of their respective subsidiaries, 

branches and Agencies of foreign banks 

(other than Federal branches, Federal 

agencies, and insured State branches of 

foreign banks), and commercial lending 

companies owned or controlled by 

foreign banks. Under regulations issued 

by the Small Business Administration,25

a small entity includes banking 

organizations with assets of $175 

million or less (a small banking 

organization). As of December 31, 2008, 

there were approximately 501 of the 

institutions listed above that are small 

banking organizations. The Board 

believes that there is no significant 

economic impact. Compliance costs are 

estimated to be less than 4% of profits 

for state member banks. For the other 

small banking organizations, the Board 

believes these entities would fall below 

the de miminis exceptions in Section 

ll.101(c)(2) of the proposed rule since 

originating residential mortgages is not 

part of their primary business. The 

agencies proposed the de minimis 

exception in an effort to reduce 

compliance costs on small businesses. 

Therefore, pursuant to § 605(b) of the 

RFA, the Board hereby certifies that this 

proposal will not have a significant 

economic impact on a substantial 

number of small entities. Accordingly, a 

regulatory flexibility analysis is not 

needed. 

FDIC: In accordance with the 

Regulatory Flexibility Act, 5 U.S.C. 601– 

612 (RFA), an agency must publish an 

initial regulatory flexibility analysis 

with its proposed rule, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities 

(defined for purposes of the RFA to 

include banks with less than $175 

million in assets). The FDIC hereby 

certifies that the proposed rule would 

not have a significant economic impact 

on a substantial number of small 

entities. 

Approximately 3,274 FDIC-supervised 

banks are small entities. However, the 

proposed rule would not apply to 

approximately 2,430 of those small 

entities because they originate 25 or 

fewer residential mortgage loans 

annually and therefore would qualify 

for the de minimis exception. Only 

approximately 844 small entities 

supervised by the FDIC—about 26% of 

FDIC-supervised small entities—would 

be subject to the requirements of the 

proposed rule. For those 844 small 

entities, the estimated initial costs for 

complying with the proposed rule 

would represent, on average, 

approximately 0.7% of total non-interest 

expenses, and the annual compliance 

costs would represent, on average, 

approximately 0.3% of total non-interest 

expenses. 

OTS: Pursuant to § 605(b) of the 

Regulatory Flexibility Act, 5 U.S.C. 

605(b) (RFA), the regulatory flexibility 

analysis otherwise required under § 604 

of the RFA is not required if the agency 

certifies that the rule will not have a 

significant economic impact on a 

substantial number of small entities and 

publishes its certification and a short, 

explanatory statement in the Federal 

Register along with its rule. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27399 

We have estimated that this proposal 

will not have a significant economic 

impact on a substantial number of small 

entities. Specifically, we estimate that 

385 small savings associations are likely 

to be impacted by the NPRM, with an 

average total compliance cost per 

savings association estimated at 

$13,311. Therefore, pursuant to § 605(b) 

of the RFA, the OTS hereby certifies that 

this proposal will not have a significant 

economic impact on a substantial 

number of small entities. Accordingly, a 

regulatory flexibility analysis is not 

needed. 

FCA: Pursuant to section 605(b) of the 

Regulatory Flexibility Act, 5 U.S.C. 601 

et seq., FCA hereby certifies that the 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. Each of the 

banks in the Farm Credit System, 

considered together with its affiliated 

associations, has assets and annual 

income in excess of the amounts that 

would qualify them as small entities. 

Therefore, System institutions are not 

‘‘small entities’’ as defined in the 

Regulatory Flexibility Act. 

NCUA: In accordance with the 

Regulatory Flexibility Act, 5 U.S.C. 601– 

612 (RFA), an agency must publish an 

initial regulatory flexibility analysis 

with its proposed rule, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities 

(defined for purposes of the RFA to 

include federally insured credit unions 

with less than $10 million in assets). 

NCUA hereby certifies that the proposed 

rule would not have a significant 

economic impact on a substantial 

number of small entities. 

Approximately 3,231 federally 

insured credit unions are small entities. 

However, the proposed rule would not 

apply to approximately 3,190 of those 

small entities because they originate 25 

or fewer residential mortgage loans 

annually and therefore would qualify 

for the de minimis exception. Only 

approximately 41 small federally 

insured credit unions, about 1.3% of 

small entities, would be subject to the 

requirements of the proposed rule. 

B. Paperwork Reduction Act 

Request for Comment on Proposed 

Information Collection 

In accordance with section 3512 of 

the Paperwork Reduction Act of 1995, 

44 U.S.C. 3501–3521 (‘‘PRA’’), the 

Federal banking agencies may not 

conduct or sponsor, and the respondent 

is not required to respond to, an 

information collection unless it displays 

a currently valid Office of Management 

and Budget (‘‘OMB’’) control number. 

The information collection requirements 

contained in this joint notice of 

proposed rulemaking have been 

submitted by the OCC, FDIC, OTS, and 

NCUA to OMB for review and approval 

under section 3506 of the PRA and 

§ 1320.11 of OMB’s implementing 

regulations (5 CFR part 1320). The FCA 

collects information from Farm Credit 

System institutions, which are Federal 

instrumentalities, in the FCA’s capacity 

as their safety and soundness regulator, 

and, therefore, OMB approval is not 

required for this collection. The Board 

reviewed the proposed rule under the 

authority delegated to the Board by the 

Office of Management and Budget. The 

proposed rule contains requirements 

subject to the PRA. The requirements 

are found in 12 CFR ll.103(a)–(b), 

(d)–(e), ll.104, and ll.105. 

Comments are invited on: 

(a) Whether the collection of 

information is necessary for the proper 

performance of the Federal banking 

agencies’ functions, including whether 

the information has practical utility; 

(b) The accuracy of the estimates of 

the burden of the information 

collection, including the validity of the 

methodology and assumptions used; 

(c) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; 

(d) Ways to minimize the burden of 

the information collection on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology; 

and 

(e) Estimates of capital or startup costs 

and costs of operation, maintenance, 

and purchase of services to provide 

information. 

NCUA: Request for comments related 

to the number of respondents who are 

mortgage loan originators—Some 

federally insured credit unions use a 

credit committee comprised of unpaid 

volunteers to make lending decisions, 

including decisions on mortgage loans 

to members. NCUA requests comments 

on whether these credit committee 

members who work for a credit union in 

an unpaid capacity and approve 

mortgage loans must register. In 

addition, NCUA requests comments on 

whether only some of these credit 

committee members must register, and 

if so, which ones and why. 

All comments will become a matter of 

public record. Comments should be 

addressed to: 

OCC: Communications Division, 

Office of the Comptroller of the 

Currency, Public Information Room, 

Mailstop 1–5, Attention: 1557–AD23, 

250 E Street, SW., Washington, DC 

20219. In addition, comments may be 

sent by fax to (202) 874–5274, or by 

electronic mail to 

regs.comments@occ.treas.gov. You can 

inspect and photocopy comments at the 

OCC, 250 E Street, SW., Washington, DC 

20219. For security reasons, the OCC 

requires that visitors make an 

appointment to inspect comments. You 

may do so by calling (202) 874–4700. 

Upon arrival, visitors will be required to 

present valid government-issued photo 

identification and submit to security 

screening in order to inspect and 

photocopy comments. 

Board: You may submit comments, 

identified by Docket No. R–1357, by any 

of the following methods: 

• Agency Web Site: http:// 

www.federalreserve.gov. Follow the 

instructions for submitting comments 

on the http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: 

regs.comments@federalreserve.gov. 

Include docket number in the subject 

line of the message. 

• FAX: 202–452–3819 or 202–452– 

3102. 

• Mail: Jennifer J. Johnson, Secretary, 

Board of Governors of the Federal 

Reserve System, 20th Street and 

Constitution Avenue, NW., Washington, 

DC 20551. All public comments are 

available from the Board’s Web site at 

http://www.federalreserve.gov/ 

generalinfo/foia/ProposedRegs.cfm as 

submitted, unless modified for technical 

reasons. Accordingly, your comments 

will not be edited to remove any 

identifying or contact information. 

Public comments may also be viewed 

electronically or in paper in Room MP– 

500 of the Board’s Martin Building (20th 

and C Streets, NW.) between 9 a.m. and 

5 p.m. on weekdays. 

FDIC: You may submit written 

comments, identified by the RIN, by any 

of the following methods: 

• Agency Web Site: http:// 

www.fdic.gov/regulations/laws/federal/ 

propose.html. Follow the instructions 

for submitting comments on the FDIC 

Web site. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: Comments@FDIC.gov. 

Include RIN 3064–AD43 on the subject 

line of the message. 

• Mail: Robert E. Feldman, Executive 

Secretary, Attention: Comments, FDIC, 

550 17th Street, NW., Washington, DC 

20429. 

• Hand Delivery/Courier: Guard 

station at the rear of the 550 17th Street 

27400 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

Building (located on F Street) on 

business days between 7 a.m. and 5 p.m. 

Instructions: All comments received 

will be posted generally without change 

to http://www.fdic.gov/regulations/laws/ 

federal/propose/html including any 

personal information provided. 

OTS: Information Collection 

Comments, Chief Counsel’s Office, 

Office of Thrift Supervision, 1700 G 

Street, NW., Washington, DC 20552; 

send a facsimile transmission to (202) 

906–6518; or send an e-mail to 

infocollection.comments@ots.treas.gov. 

OTS will post comments and the related 

index on the OTS Internet site at http:// 

www.ots.treas.gov. In addition, 

interested persons may inspect the 

comments at the Public Reading Room, 

1700 G Street, NW., by appointment. To 

make an appointment, call (202) 906– 

5922, send an e-mail to 

public.info@ots.treas.gov, or send a 

facsimile transmission to (202) 906– 

7755. 

NCUA: You may submit comments by 

any of the following methods (Please 

send comments by one method only): 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• NCUA Web Site: http:// 

www.ncua.gov/ 

RegulationsOpinionsLaws/ 

proposedregs/proposedregs.html. 

Follow the instructions for submitting 

comments. 

• E-mail: Address to 

regcomments@ncua.gov. Include ‘‘[Your 

name] Comments on Notice of Proposed 

Rulemaking Part 761 Registration of 

Mortgage Loan Originators’’ in the email subject line. 

• Fax: (703) 518–6319. Use the 

subject line described above for e-mail. 

• Mail: Address to Jeryl Fish, Deputy 

Chief Information Officer, National 

Credit Union Administration, 1775 

Duke Street, Alexandria, VA 22314– 

3428. 

• Hand Delivery/Courier: Same as 

mail address. Additionally, you should 

send a copy of your comments to the 

OMB Desk Officer for the Federal 

banking agencies, by mail to U.S. Office 

of Management and Budget, 725 17th 

Street, NW., 10235, Washington, DC 

20503, or by fax to (202) 395–6974. 

Proposed Information Collection 

Title of Information Collection: 

Registration of Mortgage Loan 

Originators. 

Frequency of Response: On occasion; 

Annual. 

Affected Public: 

OCC: National banks, Federal 

branches and agencies of foreign banks, 

their operating subsidiaries, and 

employees who are loan originators. 

Board: Member banks of the Federal 

Reserve System (other than national 

banks), their respective subsidiaries that 

are not functionally regulated within the 

meaning of section 5(c)(5) of the Bank 

Holding Company Act; and branches 

and agencies of foreign banks (other 

than Federal branches, Federal agencies 

and insured State branches of foreign 

banks) and commercial lending 

companies owned or controlled by 

foreign banks and their employees who 

act as mortgage loan originators. 

FDIC: State nonmember banks 

(including State-licensed insured 

branches of foreign banks) and their 

subsidiaries (except brokers, dealers, 

persons providing insurance, 

investment companies, and investment 

advisers) and their employees who are 

mortgage loan originators. 

OTS: Savings associations and their 

operating subsidiaries, and their 

employees who are mortgage loan 

originators. 

NCUA: Federally chartered credit 

unions and their employees who are 

mortgage loan originators. 

Abstract: 

Unless the de minimis exception or a 

different implementation period 

applies, §__.103(a) would require an 

employee of a depository institution 

who engages in the business of a 

mortgage loan originator (MLO) to 

register with the Registry, maintain such 

registration, and obtain an unique 

identifier. Under §__.103(b), a 

depository institution would require 

each such registration to be renewed 

annually and updated within 30 days of 

the occurrence of specified events. 

Section __.103(d) describes the 

categories of information that an 

employee, or the employing depository 

institution on the employee’s behalf, 

must submit to the Registry, with the 

employee’s attestation as to the 

correctness of the information supplied, 

and his/her authorization to obtain 

further information. Section __.103(e) 

specifies institution and employee 

information that a depository institution 

would submit to the Registry in 

connection with the initial registration 

of one or more MLOs, and thereafter to 

update. Section __.104 would require 

that an agency-regulated institution 

employing MLOs adopt and follow 

written policies and procedures, at a 

minimum addressing certain specified 

areas, but otherwise appropriate to the 

nature, size and complexity of their 

mortgage lending activities. Section 

__.105 would require a depository 

institution to make the unique 

identifier(s) of its registered MLO(s) 

available to consumers in a manner and 

method practicable to the institution. It 

would also require a registered MLO to 

provide his or her unique identifier to 

a consumer upon request, before acting 

as a MLO, and through the originator’s 

initial written communication with a 

consumer, if any. 

Estimated Burden: 

OCC 

Number of Bank Respondents: 1,771 

(1,464 national banks; 307 operating 

subsidiaries). 

Burden per Bank for Initial Set up: 

351 hours (220 hours to implement 

policies and procedures and establish 

tracking and compliance systems; 131 

hours to establish reporting, filing, and 

information dissemination systems). 

Total Bank Burden for Initial Set up: 

621,621. 

Number of MLO Employees for Initial 

Set up: 117,772. 

Burden per MLO Employee for Initial 

Set up: 3.50 hours (2.50 hours to 

provide information to Registry, and 1 

hour to provide Unique Identifier to a 

consumer, upon request and at initial 

contact). 

Total Burden for MLO Employees for 

Initial Set up: 412,202 hours. 

Number of MLO Employees for 

Registration Update: 58,886. 

Burden per MLO Employee for 

Registration Update: 0.25 hours. 

Total Burden for MLO Employees for 

Registration Update: 14,721.5 hours. 

Total OCC Annual Burden: 

1,048,544.5 hours. 

Board 

Number of Bank Respondents: 2,382. 

Burden per Bank for Initial Set up: 

351 hours (220 hours to implement 

policies and procedures and establish 

tracking and compliance systems; 131 

hours to establish reporting, filing, and 

information dissemination systems). 

Total Bank Burden for Initial Set up: 

836,082 hours. 

Number of MLO Employees for Initial 

Set up: 27,000. 

Burden per MLO Employee for Initial 

Set up: 3.50 hours (2.50 hours to 

provide information to Registry, and 1 

hour to provide Unique Identifier to a 

consumer). 

Total Burden for MLO Employees for 

Initial Set up: 94,500 hours. 

Number of MLO Employees for 

Registration Update: 13,500. 

Burden per MLO Employee for 

Registration Update: 0.25 hours. 

Total Burden for MLO Employees for 

Registration Update: 3,375 hours. 

Total Board Annual Burden: 933,957 

hours. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27401 

FDIC 

Number of Bank Respondents: 5,371. 

Burden per Bank for Initial Set up: 

351 hours (220 hours to implement 

policies and procedures and establish 

tracking and compliance systems; 131 

hours to establish reporting, filing, and 

information dissemination systems). 

Total Bank Burden for Initial Set up: 

1,885,221 hours. 

Number of MLO Employees for Initial 

Set up: 49,719. 

Burden per MLO Employee for Initial 

Set up: 3.50 hours (2.50 hours to 

provide information to Registry, and 1 

hour to provide Unique Identifier to a 

consumer, upon request and at initial 

contact). 

Total Burden for MLO Employees for 

Initial Set up: 174,016.5 hours. 

Number of MLO Employees for 

Registration Update: 24,860. 

Burden per MLO Employee for 

Registration Update: 0.25 hours. 

Total Burden for MLO Employees for 

Registration Update: 6,215 hours. 

Total FDIC Annual Burden: 

2,065,452.5 hours. 

OTS 

Number of Savings Association 

Respondents: 1,022 (802 savings 

associations; 220 operating 

subsidiaries). 

Burden per Savings Association for 

Initial Set up: 351 hours (220 hours to 

implement policies and procedures and 

establish tracking and compliance 

systems; 131 hours to establish 

reporting, filing, and information 

dissemination systems). 

Total Savings Association Burden for 

Initial Set up: 358,722. 

Number of MLO Employees for Initial 

Set up: 48,958. 

Burden per MLO Employee for Initial 

Set up: 3.50 hours (2.50 hours to 

provide information to Registry, and 1 

hour to provide Unique Identifier to a 

consumer, upon request and at initial 

contact). 

Total Burden for MLO Employees for 

Initial Set up: 171,353 hours. 

Number of MLO Employees for 

Registration Update: 24,479. 

Burden per MLO Employee for 

Registration Update: 0.25 hours. 

Total Burden for MLO Employees for 

Registration Update: 6,120 hours. 

Total OTS Annual Burden: 536,195 

hours. 

NCUA 

Number of Credit Union Respondents: 

2,834 credit unions. 

Burden per Credit Union for Initial 

Set up: 351 hours (220 hours to 

implement policies and procedures and 

establish tracking and compliance 

systems; 131 hours to establish 

reporting, filing, and information 

dissemination systems). 

Total Credit Union Burden for Initial 

Set up: 994,734 hours. 

Number of MLO Employees for Initial 

Set up: 23,539. 

Burden per MLO Employee for Initial 

Set up: 3.50 hours (2.25 hours to 

provide information to Registry, and 1 

hour to provide Unique Identifier to a 

consumer, upon request and at initial 

contact). 

Total Burden for MLO Employees for 

Initial Set up: 82,386.5 hours. 

Number of MLO Employees for 

Registration Update: 11,770. 

Burden per MLO Employee for 

Registration Update: 0.25 hours. 

Total Burden for MLO Employees for 

Registration Update: 2,942.50 hours. 

Total NCUA Annual Burden: 

1,080,063 hours. 

C. OCC AND OTS Executive Order 

12866 Determination 

The OCC and the OTS have 

determined that this proposal is not a 

significant regulatory action under 

Executive Order 12866. We have 

concluded that the changes made by 

this rule will not have an annual effect 

on the economy of $100 million or 

more. The OCC and the OTS further 

conclude that this proposal does not 

meet any of the other standards for a 

significant regulatory action set forth in 

Executive Order 12866. 

D. OCC and OTS Unfunded Mandates 

Reform Act of 1995 Determination 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (2 U.S.C. 

1532), requires the OCC and OTS to 

prepare a budgetary impact statement 

before promulgating a rule that includes 

a Federal mandate that may result in the 

expenditure by State, local, and tribal 

governments, in the aggregate, or by the 

private sector, of $100 million or more 

in any one year. However, this 

requirement does not apply to 

regulations that incorporate 

requirements specifically set forth in 

law. Because this proposed rule 

implements the S.A.F.E. Act, the OTS 

and OCC have not conducted an 

Unfunded Mandates Analysis for this 

rulemaking. 

E. NCUA Executive Order 13132 

Determination 

Executive Order 13132 encourages 

independent regulatory agencies to 

consider the impact of their actions on 

state and local interests. In adherence to 

fundamental federalism principles, the 

NCUA, an independent regulatory 

agency as defined in 44 U.S.C. 3502(5) 

voluntarily complies with the Executive 

Order. The proposed rule applies to 

federally insured credit unions and 

would not have substantial direct effects 

on the states, on the connection between 

the national government and the states, 

or on the distribution of power and 

responsibilities among the various 

levels of government. The NCUA has 

determined that the proposed rule does 

not constitute a policy that has 

federalism implications for purposes of 

the Executive Order. 

F. NCUA: The Treasury and General 

Government Appropriations Act, 1999— 

Assessment of Federal Regulations and 

Policies on Families 

The NCUA has determined that this 

proposed rule would not affect family 

well-being within the meaning of 

section 654 of the Treasury and General 

Government Appropriations Act, 1999, 

Public Law 105–277, 112 Stat. 2681 

(1998). 

List of Subjects 

12 CFR Part 34 

Mortgages, National banks, Reporting 

and recordkeeping requirements. 

12 CFR Part 208 

Accounting, Agriculture, Banks, 

Banking, Confidential business 

information, Consumer protection, 

Crime, Currency, Insurance, 

Investments, Mortgages, Reporting and 

recordkeeping requirements, Securities. 

12 CFR Part 365 

Banks, Banking, Mortgages. 

12 CFR Part 563 

Accounting, Administrative practice 

and procedure, Advertising, Conflict of 

interests, Crime, Currency, Holding 

companies, Investments, Mortgages, 

Reporting and recordkeeping 

requirements, Savings associations, 

Securities, Surety bonds. 

12 CFR Part 610 

Banks, Banking, Consumer protection, 

Loan programs—housing and 

community development, Mortgages, 

Reporting and recordkeeping 

requirements, Rural areas. 

12 CFR Part 761 

Credit unions, Mortgages, Reporting 

and recordkeeping requirements. 

27402 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

3The Appendix to this subpart provides 

examples of activities that would, and would not, 

cause an employee to fall within this section’s 

definition of mortgage loan originator. 

Office of the Comptroller of the 

Currency 

12 CFR Chapter I 

Authority and Issuance 

For the reasons set forth in the 

preamble, chapter I of title 12 of the 

Code of Federal Regulations is proposed 

to be amended as follows: 

PART 34—REAL ESTATE LENDING 

AND APPRAISALS 

1. The authority citation for part 34 is 

revised to read as follows: 

Authority: 12 U.S.C. 1 et seq., 29, 93a, 371, 

1701j-3, 1828(o), 3331 et seq., and 5101 et 

seq. 

2. Add Subpart F to part 34 to read 

as follows: 

Subpart F—Registration of Residential 

Mortgage Loan Originators 

Sec. 

34.101 Authority, purpose, and scope. 

34.102 Definitions. 

34.103 Registration of mortgage loan 

originators. 

34.104 Policies and procedures. 

34.105 Use of unique identifier. 

Appendix A to Subpart F of Part 34— 

Examples of Mortgage Loan Originator 

Activities 

Subpart F—Registration of Residential 

Mortgage Loan Originators 

§ 34.101 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

pursuant to the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008, title V of the Housing and 

Economic Recovery Act of 2008 

(S.A.F.E. Act) (Pub. L. 110–289, 122 

Stat. 2654, 12 U.S.C. 5101 et seq.). 

(b) Purpose. This subpart implements 

the S.A.F.E. Act’s Federal registration 

requirement for mortgage loan 

originators. 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; enhancing consumer 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

(c) Scope—(1) In general. This subpart 

applies to national banks, Federal 

branches and agencies of foreign banks, 

their operating subsidiaries (collectively 

referred to in this subpart as national 

banks), and their employees who act as 

mortgage loan originators. 

(2) Exception. (i) This subpart and the 

requirements of sections 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of a national bank if 

during the past 12 months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The national bank employs 

mortgage loan originators who, while 

excepted from registration pursuant to 

paragraph (c)(2)(i)(A) of this section, in 

the aggregate, acted as a mortgage loan 

originator in connection with 25 or 

fewer residential mortgage loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, a national bank 

employee must register with the 

Registry pursuant to this subpart. 

§ 34.102 Definitions. 

For purposes of this subpart F, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 3

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable State law, 

unless the individual is compensated by 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is an employee of a 

national bank; and 

(2) Is registered pursuant to this 

subpart with, and maintains a unique 

identifier through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act, 15 

U.S.C. 1602(v)) or residential real estate 

upon which is constructed or intended 

to be constructed a dwelling, and 

includes refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

that meet the qualifications listed in this 

definition. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those set forth under the 

S.A.F.E. Act. 

§ 34.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each employee of 

a national bank who acts as a mortgage 

loan originator must register with the 

Registry, obtain a unique identifier, and 

maintain this registration in accordance 

with the requirements of this subpart. 

Any such employee who is not in 

compliance with the registration and 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27403 

unique identifier requirements set forth 

in this subpart is in violation of the 

S.A.F.E. Act and this subpart. 

(2) National bank requirement—(i) In 

general. A national bank that employs 

one or more individuals who act as a 

residential mortgage loan originator 

must require each employee who is a 

mortgage loan originator to register with 

the Registry, maintain this registration, 

and obtain a unique identifier in 

accordance with the requirements of 

this subpart. 

(ii) Prohibition. A national bank must 

not permit an employee of the bank who 

is subject to the registration 

requirements of this subpart to act as a 

mortgage loan originator unless such 

employee is registered with the Registry 

pursuant to this subpart. 

(3) Implementation period for initial 

registration. An employee of a national 

bank who is a mortgage loan originator 

must complete an initial registration 

with the Registry pursuant to this 

subpart within 180 days from the date 

that the OCC provides public notice that 

the Registry is accepting registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If an employee of a national 

bank was registered or licensed through, 

and obtained a unique identifier from, 

the Registry prior to becoming an 

employee of the bank and has 

maintained this registration or license, 

the registration requirements of the 

S.A.F.E. Act and this subpart are 

deemed to be met, provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii) of this section; 

(C) The national bank information 

required in paragraphs (e)(1)(i) (to the 

extent the bank has not previously met 

these requirements) and (e)(2)(i) of this 

section is submitted to the Registry; and 

(D) The registration is maintained 

pursuant to paragraphs (b) and (e)(1)(ii) 

of this section, as of the date that the 

employee is employed by the bank. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become national bank 

employees as a result of an acquisition, 

merger or reorganization transaction, the 

bank and employees must comply with 

the requirements of paragraphs 

(a)(4)(i)(A), (C), and (D) of this section 

within 60 days from the effective date 

of the acquisition, merger, or 

reorganization. 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry pursuant to 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be an 

employee of the national bank; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out-of-date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception set forth in § 34.101(c)(2), 

unless the individual is no longer 

engaged in the activity of a mortgage 

loan originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

pursuant to paragraph (a) of this section 

is effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update pursuant to paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, a 

national bank must require each 

employee who is a mortgage loan 

originator to submit to the Registry, or 

must submit on behalf of the employee, 

the following categories of information 

to the extent this information is 

collected by the Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became an employee of the 

bank; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a State or 

Federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a State or 

Federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or State or Federal 

contractor; 

27404 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing institution less than three 

years prior to registration and any 

appropriate identifying information for 

submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

State and national criminal history 

background check. 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this subpart 

must: 

(i) Authorize the Registry and the 

employing institution to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing bank; and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv)–(ix) and (xi) of this 

section. 

(e) Required bank information. A 

national bank must submit the following 

information to the Registry. 

(1) Bank record. (i) In connection with 

the initial registration of one or more 

mortgage loan originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board of Governors of the Federal 

Reserve System; 

(D) Identification of its primary 

Federal regulator; 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the bank’s primary point of contact 

for the Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

bank employees, provided this 

individual and any delegated employee 

does not act as a mortgage loan 

originator; and 

(G) If a subsidiary of a national bank, 

indication that it is a subsidiary and the 

name of its parent bank. 

(ii) A national bank must update the 

information required by this paragraph 

(e) within 30 days of the date that this 

information becomes inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be an employee of 

the bank, notification that it no longer 

employs the registrant and the date the 

registrant ceased being an employee. 

§ 34.104 Policies and procedures. 

A national bank that employs 

mortgage loan originators must adopt 

and follow written policies and 

procedures designed to assure 

compliance with this subpart. These 

policies and procedures must be 

appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the bank. At a 

minimum, these policies and 

procedures must: 

(a) Establish a process for identifying 

which employees of the bank are 

required to be registered mortgage loan 

originators; 

(b) Require that all employees of the 

national bank who are mortgage loan 

originators be informed of the 

registration requirements of the S.A.F.E. 

Act and this subpart and be instructed 

on how to comply with such 

requirements and procedures; 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 34.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this subpart to be 

conducted by bank personnel or by an 

outside party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

subpart, or the bank’s related policies 

and procedures, including prohibiting 

such employees from acting as mortgage 

loan originators or other appropriate 

disciplinary actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 34.103(d)(1)(xii), 

taking appropriate action consistent 

with applicable law and rules with 

respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 34.105 Use of unique identifier. 

(a) The national 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. 

Appendix A to Subpart F of Part 34— 

Examples of Mortgage Loan Originator 

Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause an employee of a national bank to fall 

within or outside the definition of mortgage 

loan originator. The examples in this 

Appendix are not all inclusive. They 

illustrate only the issue described and do not 

illustrate any other issues that may arise 

under this subpart. For the purposes of the 

examples below, the term ‘‘loan’’ refers to a 

residential mortgage loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes or does not take, a loan 

application. 

(1) Taking an application includes: 

Receiving information that is sufficient to 

determine whether the consumer qualifies for 

a loan, even if the employee has had no 

contact with the consumer and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a consumer to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a consumer who is filling out 

an application by clarifying what type of 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27405 

7The Appendix to this subpart provides 

examples of activities that would, and would not, 

cause an employee to fall within this section’s 

definition of mortgage loan originator. 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to consumer inquiries. 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

(i) Presenting a loan offer to a consumer for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding 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, that includes a lower interest 

rate or lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to consumer queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the national 

bank); 

(ii) In response to a consumer’s request, 

informing a consumer of the loan rates that 

are publicly available such as on the national 

bank’s Web site for specific types of loan 

products without communicating to the 

consumer whether qualifications are met for 

that loan product; 

(iii) Collecting information about a 

consumer in order to provide the consumer 

with information on loan products for which 

the consumer generally may qualify, without 

presenting a specific loan offer to the 

consumer for acceptance, either verbally or 

in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a consumer about those 

arrangements, provided that communication 

with the consumer only verifies loan terms 

already offered or negotiated; or 

(v) Providing a consumer with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the bank. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain.’’ 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the national bank. 

Federal Reserve System 

12 CFR Chapter II 

Authority and Issuance 

For the reasons set forth in the 

preamble, chapter II of title 12 of the 

Code of Federal Regulations is proposed 

to be amended as follows: 

PART 208—MEMBERSHIP OF STATE 

BANKING INSTITUTIONS IN THE 

FEDERAL RESERVE SYSTEM 

(REGULATION H) 

1. The authority citation for part 208 

is revised to read as follows: 

Authority: 12 U.S.C. 24, 36, 92a, 93a, 

248(a), 248(c), 321–338a, 371d, 461, 481–486, 

601, 611, 1814, 1816, 1820(d)(9), 1823(j), 

1828(o), 1831, 1831o, 1831p–1, 1831r–1, 

1831w, 1831x, 1835a, 1882, 2901–2907, 

3105, 3106a(b)(1), 3108(a), 3310, 3331–3351, 

and 3906–3909, 5101 et seq., 15 U.S.C. 78b, 

78l(b), 78l(g), 78l(i), 780–4(c)(5), 78q, 78q–1, 

78w, 1681s, 1681w, 6801 and 6805; 31 U.S.C. 

5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106, 

and 4128. 

2. Subpart I, consisting of §§ 208.100 

and 208.101, is redesignated as Subpart 

J, consisting of §§ 208.110 and 208.111. 

3. New subpart I is added to read as 

follows: 

Subpart I—Registration of Residential 

Mortgage Loan Originators 

Sec. 

208.101 Authority, purpose, and scope. 

208.102 Definitions. 

208.103 Registration of mortgage loan 

originators. 

208.104 Policies and procedures. 

208.105 Use of unique identifier. 

Appendix A to Subpart I of Part 208— 

Examples of Mortgage Loan Originator 

Activities 

Subpart I—Registration of Residential 

Mortgage Loan Originators 

§ 208.101 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

by the Board of Governors of the Federal 

Reserve System (Board) pursuant to the 

Secure and Fair Enforcement for 

Mortgage Licensing Act of 2008, title V 

of the Housing and Economic Recovery 

Act of 2008 (S.A.F.E. Act) (Pub. L. 110– 

289, 122 Stat. 2654, 12 U.S.C. 5101 et 

seq.), 12 U.S.C. 248(a), 3106a(b)(1), and 

3108(a). 

(b) Purpose. This subpart implements 

the S.A.F.E. Act’s Federal registration 

requirement for mortgage loan 

originators. 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; enhancing consumer 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

(c) Scope—(1) In general. This subpart 

applies to member banks of the Federal 

Reserve System (other than national 

banks); their respective subsidiaries that 

are not functionally regulated within the 

meaning of section 5(c)(5) of the Bank 

Holding Company Act, as amended (12 

U.S.C. 1844(c)(5)); branches and 

agencies of foreign banks (other than 

federal branches, Federal agencies and 

insured state branches of foreign banks), 

and commercial lending companies 

owned or controlled by foreign banks 

(collectively referred to in this subpart 

as banks), and their employees who act 

as mortgage loan originators. 

(2) Exception. (i) This subpart and the 

requirements of sections 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of a bank if during the 

past 12 months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The bank employs mortgage loan 

originators who, while excepted from 

registration pursuant to paragraph 

(c)(2)(i)(A) of this section, in the 

aggregate, acted as a mortgage loan 

originator in connection with 25 or 

fewer residential mortgage loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, a bank employee must 

register with the Registry pursuant to 

this subpart. 

§ 208.102 Definitions. 

For purposes of this subpart, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 7

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable State law, 

unless the individual is compensated by 

27406 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is an employee of a 

bank; and 

(2) Is registered pursuant to this 

subpart with, and maintains a unique 

identifier through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act, 15 

U.S.C. 1602(v)) or residential real estate 

upon which is constructed or intended 

to be constructed a dwelling, and 

includes refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

that meet the qualifications listed in this 

definition. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those set forth under the 

S.A.F.E. Act. 

§ 208.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each employee of 

a bank who acts as a mortgage loan 

originator must register with the 

Registry, obtain a unique identifier, and 

maintain this registration in accordance 

with the requirements of this subpart. 

Any such employee who is not in 

compliance with the registration and 

unique identifier requirements set forth 

in this subpart is in violation of the 

S.A.F.E. Act and this subpart. 

(2) Bank requirement—(i) In general. 

A bank that employs one or more 

individuals who act as a residential 

mortgage loan originator must require 

each employee who is a mortgage loan 

originator to register with the Registry, 

maintain this registration, and obtain a 

unique identifier in accordance with the 

requirements of this subpart. 

(ii) Prohibition. A bank must not 

permit an employee of the bank who is 

subject to the registration requirements 

of this subpart to act as a mortgage loan 

originator unless such employee is 

registered with the Registry pursuant to 

this subpart. 

(3) Implementation period for initial 

registration. An employee of a bank who 

is a mortgage loan originator must 

complete an initial registration with the 

Registry pursuant to this subpart within 

180 days from the date that the Board 

provides public notice that the Registry 

is accepting registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If an employee of a bank was 

registered or licensed through, and 

obtained a unique identifier from, the 

Registry prior to becoming an employee 

of the bank and has maintained this 

registration or license, the registration 

requirements of the S.A.F.E. Act and 

this subpart are deemed to be met, 

provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii) of this section; 

(C) The bank information required in 

paragraphs (e)(1)(i) (to the extent the 

bank has not previously met these 

requirements) and (e)(2)(i) of this 

section is submitted to the Registry; and 

(D) The registration is maintained 

pursuant to paragraphs (b) and (e)(1)(ii) 

of this section, as of the date that the 

employee is employed by the bank. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become bank employees 

as a result of an acquisition, merger or 

reorganization transaction, the bank and 

employees must comply with the 

requirements of paragraphs (a)(4)(i)(A), 

(C), and (D) of this section within 60 

days from the effective date of the 

acquisition, merger, or reorganization. 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry pursuant to 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be an 

employee of the bank; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out-of-date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception set forth in 

§ 208.101(c)(2), unless the individual is 

no longer engaged in the activity of a 

mortgage loan originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

pursuant to paragraph (a) of this section 

is effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update pursuant to paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, a 

bank must require each employee who 

is a mortgage loan originator to submit 

to the Registry, or must submit on behalf 

of the employee, the following 

categories of information to the extent 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27407 

this information is collected by the 

Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became an employee of the 

bank; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a State or 

Federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a State or 

Federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or State or Federal 

contractor; 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing institution less than three 

years prior to registration and any 

appropriate identifying information for 

submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

State and national criminal history 

background check. 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this subpart 

must: 

(i) Authorize the Registry and the 

employing institution to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing bank; and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv)–(ix) and (xi) of this 

section. 

(e) Required bank information. A 

bank must submit the following 

information to the Registry. 

(1) Bank record. (i) In connection with 

the initial registration of one or more 

mortgage loan originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board; 

(D) Identification of its primary 

Federal regulator; 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the bank’s primary point of contact 

for the Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

bank employees, provided this 

individual and any delegated employee 

does not act as a mortgage loan 

originator; and 

(G) If a subsidiary of a bank, 

indication that it is a subsidiary and the 

name of its parent bank. 

(ii) A bank must update the 

information required by this paragraph 

(e) within 30 days of the date that this 

information becomes inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be an employee of 

the bank, notification that it no longer 

employs the registrant and the date the 

registrant ceased being an employee. 

§ 208.104 Policies and procedures. 

A bank that employs mortgage loan 

originators must adopt and follow 

written policies and procedures 

designed to assure compliance with this 

subpart. These policies and procedures 

must be appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the bank. At a 

minimum, these policies and 

procedures must: 

(a) Establish a process for identifying 

which employees of the bank are 

required to be registered mortgage loan 

originators; 

(b) Require that all employees of the 

bank who are mortgage loan originators 

be informed of the registration 

requirements of the S.A.F.E. Act and 

this subpart and be instructed on how 

to comply with such requirements and 

procedures; 

27408 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 208.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this subpart to be 

conducted by bank personnel or by an 

outside party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

subpart, or the bank’s related policies 

and procedures, including prohibiting 

such employees from acting as mortgage 

loan originators or other appropriate 

disciplinary actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 208.103(d)(1)(xii), 

taking appropriate action consistent 

with applicable law and rules with 

respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 208.105 Use of unique identifier. 

(a) The 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. 

Appendix A to Subpart I of Part 208— 

Examples of Mortgage Loan Originator 

Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause an employee of a bank to fall within 

or outside the definition of mortgage loan 

originator. The examples in this Appendix 

are not all inclusive. They illustrate only the 

issue described and do not illustrate any 

other issues that may arise under this 

subpart. For the purposes of the examples 

below, the term ‘‘loan’’ refers to a residential 

mortgage loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes, or does not take, a loan 

application. 

(1) Taking an application includes: 

receiving information that is sufficient to 

determine whether the consumer qualifies for 

a loan, even if the employee has had no 

contact with the consumer and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a consumer to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a consumer who is filling out 

an application by clarifying what type of 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to consumer inquiries. 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

(i) Presenting a loan offer to a consumer for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding 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, that includes a lower interest 

rate or lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to consumer queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the bank); 

(ii) In response to a consumer’s request, 

informing a consumer of the loan rates that 

are publicly available such as on the bank’s 

Web site for specific types of loan products 

without communicating to the consumer 

whether qualifications are met for that loan 

product; 

(iii) Collecting information about a 

consumer in order to provide the consumer 

with information on loan products for which 

the consumer generally may qualify, without 

presenting a specific loan offer to the 

consumer for acceptance, either verbally or 

in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a consumer about those 

arrangements, provided that communication 

with the consumer only verifies loan terms 

already offered or negotiated; or 

(v) Providing a consumer with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the bank. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain.’’ 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the bank. 

4. Section 208.111 is amended by 

redesignating footnotes 7 and 8 as 

footnotes 8 and 9, respectively, and by 

revising newly designated footnote 9 to 

read as follows: 

§ 208.111 Obligations concerning 

institutional customers. 

* * * * * 

9See footnote 8 in paragraph (d) of this 

section. 

Federal Deposit Insurance Corporation 

12 CFR Chapter III 

Authority and Issuance 

For the reasons set forth in the 

preamble, the Federal Deposit Insurance 

Corporation proposes to amend 

subchapter B of chapter III of title 12 of 

the Code of Federal Regulations by 

amending part 365 as follows: 

PART 365—REAL ESTATE LENDING 

STANDARDS 

1. The authority citation for part 365 

is revised to read as follows: 

Authority: 12 U.S.C. 1828(o) and 5101 et 

seq. 

2. Sections 365.1 and 365.2 and 

Appendix A are placed under a new 

subpart A, and the heading for new 

subpart A is added to read as follows: 

Subpart A—Real Estate Lending 

Standards 

§ 365.1 [Amended] 

3. Section 365.1 is amended by 

removing ‘‘part’’ and adding ‘‘subpart’’ 

in its place. 

4. Appendix A to Part 365 is 

redesignated as Appendix A to Subpart 

A of Part 365, and the heading is revised 

to read as follows: 

Appendix A to Subpart A of Part 365— 

Interagency Guidelines for Real Estate 

Lending Policies 

5. New subpart B is added to read as 

follows: 

Subpart B—Registration of Mortgage Loan 

Originators 

Sec. 

365.101 Authority, purpose, and scope. 

365.102 Definitions. 

365.103 Registration of mortgage loan 

originators. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27409 

1The Appendix to this subpart provides 

examples of activities that would, and would not, 

cause an employee to fall within this section’s 

definition of mortgage loan originator. 

365.104 Policies and procedures. 

365.105 Use of unique identifier. 

Appendix A to Subpart B of Part 365— 

Examples of Mortgage Loan Originator 

Activities. 

Subpart B—Registration of Residential 

Mortgage Loan Originators 

§ 365.101 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

pursuant to the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008, title V of the Housing and 

Economic Recovery Act of 2008 

(S.A.F.E. Act) (Pub. L. 110–289, 122 

Stat. 2654, 12 U.S.C. 5101 et seq.). 

(b) Purpose. This subpart implements 

the S.A.F.E. Act’s Federal registration 

requirement for mortgage loan 

originators. 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; enhancing consumer 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

(c) Scope—(1) In general. This subpart 

applies to insured state nonmember 

banks (including state-licensed insured 

branches of foreign banks) and their 

subsidiaries (except brokers, dealers, 

persons providing insurance, 

investment companies, and investment 

advisers) (collectively referred to in this 

subpart as insured state nonmember 

banks), and their employees who act as 

mortgage loan originators. 

(2) Exception. (i) This subpart and the 

requirements of sections 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of an insured state 

nonmember bank if during the past 12 

months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The insured state nonmember 

bank employs mortgage loan originators 

who, while excepted from registration 

pursuant to paragraph (c)(2)(i)(A) of this 

section, in the aggregate, acted as a 

mortgage loan originator in connection 

with 25 or fewer residential mortgage 

loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, an insured state 

nonmember bank employee must 

register with the Registry pursuant to 

this subpart. 

§ 365.102 Definitions. 

For purposes of this subpart, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 1

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable State law, 

unless the individual is compensated by 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is an employee of an 

insured state nonmember bank; and 

(2) Is registered pursuant to this 

subpart with, and maintains a unique 

identifier through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act, 15 

U.S.C. 1602(v)) or residential real estate 

upon which is constructed or intended 

to be constructed a dwelling, and 

includes refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

that meet the qualifications listed in this 

definition. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those set forth under the 

S.A.F.E. Act. 

§ 365.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each employee of 

an insured state nonmember bank who 

acts as a mortgage loan originator must 

register with the Registry, obtain a 

unique identifier, and maintain this 

registration in accordance with the 

requirements of this subpart. Any such 

employee who is not in compliance 

with the registration and unique 

identifier requirements set forth in this 

subpart is in violation of the S.A.F.E. 

Act and this subpart. 

(2) Insured state nonmember bank 

requirement—(i) In general. An insured 

state nonmember bank that employs one 

or more individuals who act as a 

residential mortgage loan originator 

must require each employee who is a 

mortgage loan originator to register with 

the Registry, maintain this registration, 

and obtain a unique identifier in 

accordance with the requirements of 

this subpart. 

(ii) Prohibition. An insured state 

nonmember bank must not permit an 

employee of the bank who is subject to 

the registration requirements of this 

subpart to act as a mortgage loan 

27410 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

originator unless such employee is 

registered with the Registry pursuant to 

this subpart. 

(3) Implementation period for initial 

registration. An employee of an insured 

state nonmember bank who is a 

mortgage loan originator must complete 

an initial registration with the Registry 

pursuant to this subpart within 180 days 

from the date that the FDIC provides 

public notice that the Registry is 

accepting registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If an employee of an insured 

state nonmember bank was registered or 

licensed through, and obtained a unique 

identifier from, the Registry prior to 

becoming an employee of the bank and 

has maintained this registration or 

license, the registration requirements of 

the S.A.F.E. Act and this subpart are 

deemed to be met, provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii) of this section; 

(C) The insured state nonmember 

bank information required in paragraphs 

(e)(1)(i) (to the extent the bank has not 

previously met these requirements) and 

(e)(2)(i) of this section is submitted to 

the Registry; and 

(D) The registration is maintained 

pursuant to paragraphs (b) and (e)(1)(ii) 

of this section, as of the date that the 

employee is employed by the bank. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become insured state 

nonmember bank employees as a result 

of an acquisition, merger or 

reorganization transaction, the bank and 

employees must comply with the 

requirements of paragraphs (a)(4)(i)(A), 

(C), and (D) of this section within 60 

days from the effective date of the 

acquisition, merger, or reorganization. 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry pursuant to 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be an 

employee of the insured state 

nonmember bank; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out-of-date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception set forth in 

§ 365.101(c)(2), unless the individual is 

no longer engaged in the activity of a 

mortgage loan originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

pursuant to paragraph (a) of this section 

is effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update pursuant to paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, an 

insured state nonmember bank must 

require each employee who is a 

mortgage loan originator to submit to 

the Registry, or must submit on behalf 

of the employee, the following 

categories of information to the extent 

this information is collected by the 

Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became an employee of the 

bank; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a State or 

Federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a State or 

Federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or State or Federal 

contractor; 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27411 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing institution less than three 

years prior to registration and any 

appropriate identifying information for 

submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

State and national criminal history 

background check. 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this subpart 

must: 

(i) Authorize the Registry and the 

employing institution to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing bank; and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv)–(ix) and (xi) of this 

section. 

(e) Required bank information. An 

insured state nonmember bank must 

submit the following information to the 

Registry. 

(1) Bank record. (i) In connection with 

the initial registration of one or more 

mortgage loan originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board of Governors of the Federal 

Reserve System; 

(D) Identification of its primary 

Federal regulator; 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the bank’s primary point of contact 

for the Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

bank employees, provided this 

individual and any delegated employee 

does not act as a mortgage loan 

originator; and 

(G) If a subsidiary of an insured state 

nonmember bank, indication that it is a 

subsidiary and the name of its parent 

bank. 

(ii) An insured state nonmember bank 

must update the information required 

by this paragraph (e) within 30 days of 

the date that this information becomes 

inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be an employee of 

the bank, notification that it no longer 

employs the registrant and the date the 

registrant ceased being an employee. 

§ 365.104 Policies and procedures. 

An insured state nonmember bank 

that employs mortgage loan originators 

must adopt and follow written policies 

and procedures designed to assure 

compliance with this subpart. These 

policies and procedures must be 

appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the bank. At a 

minimum, these policies and 

procedures must: 

(a) Establish a process for identifying 

which employees of the bank are 

required to be registered mortgage loan 

originators; 

(b) Require that all employees of the 

insured state nonmember bank who are 

mortgage loan originators be informed of 

the registration requirements of the 

S.A.F.E. Act and this subpart and be 

instructed on how to comply with such 

requirements and procedures; 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 365.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this subpart to be 

conducted by bank personnel or by an 

outside party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

subpart, or the bank’s related policies 

and procedures, including prohibiting 

such employees from acting as mortgage 

loan originators or other appropriate 

disciplinary actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 365.103(d)(1)(xii), 

taking appropriate action consistent 

with applicable law and rules with 

respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 365.105 Use of unique identifier. 

(a) An 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. 

Appendix A to Subpart B of Part 365— 

Examples of Mortgage Loan Originator 

Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause an employee of an insured state 

nonmember bank to fall within or outside the 

definition of mortgage loan originator. The 

examples in this Appendix are not all 

inclusive. They illustrate only the issue 

described and do not illustrate any other 

issues that may arise under this subpart. For 

the purposes of the examples below, the term 

‘‘loan’’ refers to a residential mortgage loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes or does not take, a loan 

application. 

(1) Taking an application includes: 

Receiving information that is sufficient to 

determine whether the consumer qualifies for 

a loan, even if the employee has had no 

contact with the consumer and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a consumer to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a consumer who is filling out 

an application by clarifying what type of 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to consumer inquiries. 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

27412 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

1The Appendix to this subpart provides 

examples of activities that would, and would not, 

cause an employee to fall within this section’s 

definition of mortgage loan originator. 

(i) Presenting a loan offer to a consumer for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding 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, that includes a lower interest 

rate or lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to consumer queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the insured state 

nonmember bank); 

(ii) In response to a consumer’s request, 

informing a consumer of the loan rates that 

are publicly available such as on the insured 

state nonmember bank’s Web site for specific 

types of loan products without 

communicating to the consumer whether 

qualifications are met for that loan product; 

(iii) Collecting information about a 

consumer in order to provide the consumer 

with information on loan products for which 

the consumer generally may qualify, without 

presenting a specific loan offer to the 

consumer for acceptance, either verbally or 

in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a consumer about those 

arrangements, provided that communication 

with the consumer only verifies loan terms 

already offered or negotiated; or 

(v) Providing a consumer with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the bank. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain.’’ 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the insured state nonmember 

bank. 

Office of Thrift Supervision 

12 CFR Chapter V 

Authority and Issuance 

For the reasons set forth in the 

preamble, chapter V of title 12 of the 

Code of Federal Regulations is proposed 

to be amended as follows: 

PART 563—SAVINGS 

ASSOCIATIONS—OPERATIONS 

1. The authority citation for part 563 

is revised to read as follows: 

Authority: 12 U.S.C. 375b, 1462, 1462a, 

1463, 1464, 1467a, 1468, 1817, 1820, 1828, 

1831o, 3806, 5101 et seq.; 31 U.S.C. 5318; 42 

U.S.C. 4106. 

2. Add Subpart D to part 563 to read 

as follows: 

Subpart D—Registration of Residential 

Mortgage Loan Originators 

Sec. 

563.101 Authority, purpose, and scope. 

563.102 Definitions. 

563.103 Registration of mortgage loan 

originators. 

563.104 Policies and procedures. 

563.105 Use of unique identifier. 

Appendix A to Subpart D of Part 563— 

Examples of Mortgage Loan Originator 

Activities. 

Subpart D—Registration of Residential 

Mortgage Loan Originators 

§ 563.101 Authority, purpose, and scope. 

(a) Authority. This subpart is issued 

pursuant to the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008, title V of the Housing and 

Economic Recovery Act of 2008 

(S.A.F.E. Act) (Pub. L. 110–289, 122 

Stat. 2654, 12 U.S.C. 5101 et seq.). 

(b) Purpose. This subpart implements 

the S.A.F.E. Act’s Federal registration 

requirement for mortgage loan 

originators. 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; enhancing consumer 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

(c) Scope—(1) In general. This subpart 

applies to savings associations and their 

operating subsidiaries (collectively 

referred to in this subpart as savings 

associations), and their employees who 

act as mortgage loan originators. 

(2) Exception. (i) This subpart and the 

requirements of section 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of a savings association 

if during the past 12 months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The savings association does not 

employ mortgage loan originators who, 

while excepted from registration 

pursuant to paragraph (c)(2)(i)(A) of this 

section, in the aggregate, acted as a 

mortgage loan originator in connection 

with more than 25 residential mortgage 

loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, a savings association 

employee must register with the 

Registry pursuant to this subpart. 

§ 563.102 Definitions. 

For purposes of this subpart D, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 1

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable State law, 

unless the individual is compensated by 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27413 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is an employee of a 

savings association; and 

(2) Is registered pursuant to this 

subpart with, and maintains a unique 

identifier through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act) or 

residential real estate upon which is 

constructed or intended to be 

constructed a dwelling, and includes 

refinancings, reverse mortgages, home 

equity lines of credit and other first and 

second lien loans that meet the 

qualifications listed in this definition. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those set forth under the 

S.A.F.E. Act. 

§ 563.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each employee of 

a savings association who acts as a 

mortgage loan originator must register 

with the Registry, obtain a unique 

identifier, and maintain this registration 

in accordance with the requirements of 

this subpart. Any such employee who is 

not in compliance with the registration 

and unique identifier requirements set 

forth in this subpart is in violation of 

the S.A.F.E. Act and this subpart. 

(2) Savings association requirement— 

(i) In general. A savings association that 

employs one or more individuals who 

act as a residential mortgage loan 

originator must require each employee 

who is a mortgage loan originator to 

register with the Registry, maintain this 

registration, and obtain a unique 

identifier in accordance with the 

requirements of this subpart. 

(ii) Prohibition. A savings association 

must not permit an employee of the 

association who is subject to the 

registration requirements of this subpart 

to act as a mortgage loan originator 

unless such employee is registered with 

the Registry pursuant to this subpart. 

(3) Implementation period for initial 

registration. An employee of a savings 

association who is a mortgage loan 

originator must complete an initial 

registration with the Registry pursuant 

to this subpart within 180 days from the 

date that the OTS provides public notice 

that the Registry is accepting 

registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If an employee of a savings 

association was registered or licensed 

through, and obtained a unique 

identifier from, the Registry prior to 

becoming an employee of the 

association and has maintained this 

registration or license, the registration 

requirements of the S.A.F.E. Act and 

this subpart are deemed to be met, 

provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii); 

(C) The savings association 

information required in paragraphs 

(e)(1)(i) (to the extent the association has 

not previously met these requirements) 

and (e)(2)(i) of this section is submitted 

to the Registry; and 

(D) The registration is maintained 

pursuant to paragraphs (b) and (e)(1)(ii) 

of this section, as of the date that the 

employee is employed by the 

association. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become savings 

association employees as a result of an 

acquisition, merger or reorganization 

transaction, the association and 

employees must comply with the 

requirements of paragraphs (a)(4)(i)(A), 

(C), and (D) of this section within 60 

days from the effective date of the 

acquisition, merger, or reorganization. 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry pursuant to 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be an 

employee of the savings association; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out-of-date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception set forth in 

§ 563.101(c)(2), unless the individual is 

no longer engaged in the activity of a 

mortgage loan originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

pursuant to paragraph (a) of this section 

is effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update pursuant to paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) and 

of this section has been submitted and 

the renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, a 

savings association must require each 

employee who is a mortgage loan 

originator to submit to the Registry, or 

must submit on behalf of the employee, 

the following categories of information 

to the extent this information is 

collected by the Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became an employee of the 

association; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

27414 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a State or 

Federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a State or 

Federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or State or Federal 

contractor; 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing savings association less 

than three years prior to registration and 

any appropriate identifying information 

for submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

State and national criminal history 

background check; 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this subpart 

must: 

(i) Authorize the Registry and the 

employing institution to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing savings association; 

and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv), (v), (vi), (vii), (viii), 

(ix), and (xi) of this section. 

(e) Required savings association 

information. A savings association must 

submit the following information to the 

Registry. 

(1) Savings association record. (i) In 

connection with the initial registration 

of one or more mortgage loan 

originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board of Governors of the Federal 

Reserve System; 

(D) Identification of its primary 

Federal regulator; 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the savings association’s primary 

point of contact for the Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

savings association employees, provided 

this individual and any delegated 

employee does not act as a mortgage 

loan originator; 

(G) If an operating subsidiary of a 

savings association, indication that it is 

a subsidiary and the name of its parent 

savings association. 

(ii) A savings association must update 

the information required by this 

paragraph (e) within 30 days of the date 

that this information becomes 

inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be an employee of 

the savings association, notification that 

it no longer employs the registrant and 

the date the registrant ceased being an 

employee. 

§ 563.104 Policies and procedures. 

A savings association that employs 

mortgage loan originators must adopt 

and follow written policies and 

procedures designed to assure 

compliance with this subpart. These 

policies and procedures must be 

appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the savings 

association. At a minimum, these 

policies and procedures must: 

(a) Establish a process for identifying 

which employees of the savings 

association are required to be registered 

mortgage loan originators; 

(b) Require that all employees of the 

savings association who are mortgage 

loan originators be informed of the 

registration requirements of the S.A.F.E. 

Act and this subpart and be instructed 

on how to comply with such 

requirements and procedures; 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 563.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this subpart to be 

conducted by savings association 

personnel or by an outside party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

subpart, or the savings association’s 

related policies and procedures, 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27415 

including prohibiting such employees 

from acting as mortgage loan originators 

or other appropriate disciplinary 

actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 563.103(d)(1)(xii) of 

this section, taking appropriate action 

consistent with applicable law and rules 

with respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 563.105 Use of unique identifier. 

(a) The savings association 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. 

Appendix A to Subpart D of Part 563— 

Examples of Mortgage Loan Originator 

Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause an employee of a savings association to 

fall within or outside the definition of 

mortgage loan originator. The examples in 

this Appendix are not all inclusive. They 

illustrate only the issue described and do not 

illustrate any other issues that may arise 

under this subpart. For the purposes of the 

examples below, the term ‘‘loan’’ refers to a 

residential mortgage loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes or does not take, a loan 

application. 

(1) Taking an application includes: 

receiving information that is sufficient to 

determine whether the consumer qualifies for 

a loan, even if the employee has had no 

contact with the consumer and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a consumer to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a consumer who is filling out 

an application by clarifying what type of 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to consumer inquiries. 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

(i) Presenting a loan offer to a consumer for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding 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, that includes a lower interest 

rate or lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to consumer queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the savings 

association); 

(ii) In response to a consumer’s request, 

informing a consumer of the loan rates that 

are publicly available such as on the savings 

association’s Web site for specific types of 

loan products without communicating to the 

consumer whether qualifications are met for 

that loan product; 

(iii) Collecting information about a 

consumer in order to provide the consumer 

with information on loan products for which 

the consumer generally may qualify, without 

presenting a specific loan offer to the 

consumer for acceptance, either verbally or 

in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a consumer about those 

arrangements, provided that communication 

with the consumer only verifies loan terms 

already offered or negotiated; or 

(v) Providing a consumer with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the savings association. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain.’’ 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the savings association. 

Farm Credit Administration 

12 CFR Chapter VI 

Authority and Issuance 

For the reasons set forth in the 

preamble, chapter VI of title 12 of the 

Code of Federal Regulations is proposed 

to be amended by adding new part 610 

to chapter VI to read as follows: 

PART 610—REGISTRATION OF 

MORTGAGE LOAN ORIGINATORS 

Sec. 

610.101 Authority, purpose, and scope. 

610.102 Definitions. 

610.103 Registration of mortgage loan 

originators. 

610.104 Policies and procedures. 

610.105 Use of unique identifier. 

Appendix A to Part 610—Examples of 

Mortgage Loan Originator Activities 

Authority: Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 

1.13, 2.2, 2.4, 2.12, 5.9, 5.17, 7.2, 7.6, 7.8 of 

the Farm Credit Act (12 U.S.C. 2013, 2015, 

2017, 2018, 2019, 2021, 2073, 2075, 2093, 

2243, 2252, 2279a–2, 2279b, 2279c–10); and 

Secs. 1501 et seq. of the S.A.F.E. Act (12 

U.S.C. 5101 et seq.) 

§ 610.101 Authority, purpose, and scope. 

(a) Authority. This part is issued 

pursuant to the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008, title V of the Housing and 

Economic Recovery Act of 2008 

(S.A.F.E. Act) (Pub. L. 110–289, 122 

Stat. 2654 (2008), 12 U.S.C. 5101 et 

seq.). 

(b) Purpose. This part implements the 

S.A.F.E. Act’s Federal registration 

requirement for mortgage loan 

originators. 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; enhancing consumer 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing consumers with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, mortgage loan originators. 

(c) Scope—(1) In general. This part 

applies to any Farm Credit System 

lending institution that actually 

originates residential mortgage loans 

pursuant to its authority under sections 

1.9(3), 1.11, or 2.4(a) and (b) of the Farm 

Credit Act of 1971, as amended, and 

their employees who act as mortgage 

loan originators. 

(2) Exception. (i) This part and the 

requirements of sections 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of a Farm Credit 

System institution if during the past 12 

months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The Farm Credit System 

institution employs mortgage loan 

originators who, while excepted from 

registration pursuant to paragraph 

(c)(2)(i)(A) of this section, in the 

27416 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

1The Appendix to this part provides examples of 

activities that would, and would not, cause an 

employee to fall within this section’s definition of 

mortgage loan originator. 

aggregate, acted as a mortgage loan 

originator in connection with 25 or 

fewer residential mortgage loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, a Farm Credit System 

institution employee must register with 

the Registry pursuant to this part. 

§ 610.102 Definitions. 

For purposes of this part, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 1

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable State law, 

unless the individual is compensated by 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a consumer to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the State licensing and 

registration of State-licensed mortgage 

loan originators and the registration of 

mortgage loan originators pursuant to 

section 1507 of the S.A.F.E. Act. 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is an employee of a 

Farm Credit System institution; and 

(2) Is registered pursuant to this part 

with, and maintains a unique identifier 

through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act, 15 

U.S.C. 1602(v)) or residential real estate 

upon which is constructed or intended 

to be constructed a dwelling, and 

includes refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

that meet the qualifications listed in this 

definition. This definition does not 

amend or supersede § 613.3030(c) of 

this chapter. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those set forth under the 

S.A.F.E. Act. 

§ 610.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each employee of 

a Farm Credit System institution who 

acts as a mortgage loan originator must 

register with the Registry, obtain a 

unique identifier, and maintain this 

registration in accordance with the 

requirements of this part. Any such 

employee who is not in compliance 

with the registration and unique 

identifier requirements set forth in this 

part is in violation of the S.A.F.E. Act 

and this part. 

(2) Farm Credit System institution 

requirement—(i) In general. A Farm 

Credit System institution that employs 

one or more individuals who act as a 

residential mortgage loan originator 

must require each employee who is a 

mortgage loan originator to register with 

the Registry, maintain this registration, 

and obtain a unique identifier in 

accordance with the requirements of 

this part. 

(ii) Prohibition. A Farm Credit System 

institution must not permit an employee 

who is subject to the registration 

requirements of this part to act as a 

mortgage loan originator unless such 

employee is registered with the Registry 

pursuant to this part. 

(3) Implementation period for initial 

registration. An employee of a Farm 

Credit System institution who is a 

mortgage loan originator must complete 

an initial registration with the Registry 

pursuant to this part within 180 days 

from the date that the Farm Credit 

Administration provides public notice 

that the Registry is accepting 

registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If an employee of a Farm Credit 

System institution was registered or 

licensed through, and obtained a unique 

identifier from, the Registry prior to 

becoming an employee of the Farm 

Credit System institution and has 

maintained this registration or license, 

the registration requirements of the 

S.A.F.E. Act and this part are deemed to 

be met, provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii) of this section; 

(C) The Farm Credit System 

institution information required in 

paragraphs (e)(1)(i) (to the extent the 

Farm Credit System institution has not 

previously met these requirements) and 

(e)(2)(i) of this section is submitted to 

the Registry; and 

(D) The registration is maintained 

pursuant to paragraphs (b) and (e)(1)(ii) 

of this section, as of the date that the 

employee is employed by the Farm 

Credit System institution. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become employees of 

another Farm Credit System institution 

as a result of a consolidation, merger or 

reorganization transaction, the Farm 

Credit System institution and employee 

must comply with the requirements of 

paragraphs (a)(4)(i)(A), (C), and (D) of 

this section within 60 days from the 

effective date of the consolidation, 

merger, or reorganization. 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27417 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry pursuant to 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be an 

employee of the Farm Credit System 

institution; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out-of-date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception set forth in 

§ 610.101(c)(2), unless the individual is 

no longer engaged in the activity of a 

mortgage loan originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

pursuant to paragraph (a) of this section 

is effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update pursuant to paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, a 

Farm Credit System institution must 

require each employee who is a 

mortgage loan originator to submit to 

the Registry, or must submit on behalf 

of the employee, the following 

categories of information to the extent 

this information is collected by the 

Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became an employee of the 

Farm Credit System institution; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a State or 

Federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a State or 

Federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or State or Federal 

contractor; 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing institution less than three 

years prior to registration and any 

appropriate identifying information for 

submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

State and national criminal history 

background check. 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this part 

must: 

(i) Authorize the Registry and the 

employing institution to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing Farm Credit System 

institution; and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv)–(ix) and (xi) of this 

section. 

(e) Required information. A Farm 

Credit System institution must submit 

the following information to the 

Registry. 

(1) Farm Credit System institution 

record. (i) In connection with the initial 

registration of one or more mortgage 

loan originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board of Governors of the Federal 

Reserve System; 

(D) Identification of its primary 

Federal regulator; 

27418 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the Farm Credit System institution’s 

primary point of contact for the 

Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

employees of the Farm Credit System 

institution, provided this individual and 

any delegated employee does not act as 

a mortgage loan originator; and 

(G) If an operating subsidiary of an 

agricultural credit association, 

indication that it is a subsidiary and the 

name of its parent agricultural credit 

association. 

(ii) A Farm Credit System institution 

must update the information required 

by this paragraph (e) within 30 days of 

the date that this information becomes 

inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be an employee of 

the Farm Credit System institution, 

notification that it no longer employs 

the registrant and the date the registrant 

ceased being an employee. 

§ 610.104 Policies and procedures. 

A Farm Credit System institution that 

employs mortgage loan originators must 

adopt and follow written policies and 

procedures designed to assure 

compliance with this part. These 

policies and procedures must be 

appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the Farm Credit 

System institution. At a minimum, these 

policies and procedures must: 

(a) Establish a process for identifying 

which employees of the Farm Credit 

System institution are required to be 

registered mortgage loan originators; 

(b) Require that all employees of the 

Farm Credit System institution who are 

mortgage loan originators be informed of 

the registration requirements of the 

S.A.F.E. Act and this part and be 

instructed on how to comply with such 

requirements and procedures; 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 610.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this part to be 

conducted by Farm Credit System 

institution personnel or by an outside 

party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

part, or the Farm Credit System 

institution’s related policies and 

procedures, including prohibiting such 

employees from acting as mortgage loan 

originators or other appropriate 

disciplinary actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 610.103(d)(1)(xii), 

taking appropriate action consistent 

with applicable law and rules with 

respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 610.105 Use of unique identifier. 

(a) The Farm Credit System 

institution 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. 

Appendix A to Part 610—Examples of 

Mortgage Loan Originator Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause an employee of a Farm Credit System 

institution to fall within or outside the 

definition of mortgage loan originator. The 

examples in this Appendix are not all 

inclusive. They illustrate only the issue 

described and do not illustrate any other 

issues that may arise under this part. For the 

purposes of the examples below, the term 

‘‘loan’’ refers to a residential mortgage loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes or does not take, a loan 

application. 

(1) Taking an application includes: 

receiving information that is sufficient to 

determine whether the consumer qualifies for 

a loan, even if the employee has had no 

contact with the consumer and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a consumer to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a consumer who is filling out 

an application by clarifying what type of 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to consumer inquiries. 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

(i) Presenting a loan offer to a consumer for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding 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, that includes a lower interest 

rate or lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to consumer queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the Farm Credit 

System institution); 

(ii) In response to a consumer’s request, 

informing a consumer of the loan rates that 

are publicly available such as on the Farm 

Credit System institution’s Web site for 

specific types of loan products without 

communicating to the consumer whether 

qualifications are met for that loan product; 

(iii) Collecting information about a 

consumer in order to provide the consumer 

with information on loan products for which 

the consumer generally may qualify, without 

presenting a specific loan offer to the 

consumer for acceptance, either verbally or 

in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a consumer about those 

arrangements, provided that communication 

with the consumer only verifies loan terms 

already offered or negotiated; or 

(v) Providing a consumer with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the Farm Credit System institution. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain.’’ 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27419 

1The Appendix to this part provides examples of 

activities that would, and would not, cause an 

employee to fall within this section’s definition of 

mortgage loan originator. 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the Farm Credit System 

institution. 

National Credit Union Administration 

12 CFR Chapter VII 

Authority and Issuance 

For the reasons stated in the 

preamble, the National Credit Union 

Administration proposes to amend 

chapter VII of title 12 of the Code of 

Federal Regulations to add a new part 

761 as follows: 

PART 761—REGISTRATION OF 

RESIDENTIAL MORTGAGE LOAN 

ORIGINATORS 

Sec. 

761.101 Authority, purpose, and scope. 

761.102 Definitions. 

761.103 Registration of mortgage loan 

originators. 

761.104 Policies and procedures. 

761.105 Use of unique identifier. 

Appendix A to Part 761—Examples of 

Mortgage Loan Originator Activities. 

Authority: 12 U.S.C. 1751 et seq. and 5101 

et seq. 

§ 761.101 Authority, purpose, and scope. 

(a) Authority. The National Credit 

Union Administration is issuing part 

761 under the Secure and Fair 

Enforcement for Mortgage Licensing Act 

of 2008, title V of the Housing and 

Economic Recovery Act of 2008 

(S.A.F.E. Act) (Pub. L. 110–289, 122 

Stat. 2654, 12 U.S.C. 5101 et seq.). 

(b) Purpose. This part implements the 

S.A.F.E. Act’s federal registration 

requirement for mortgage loan 

originators. 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 loan 

originators; enhancing member 

protections; reducing fraud in the 

residential mortgage loan origination 

process; and providing members with 

easily accessible information at no 

charge regarding the employment 

history of, and publicly adjudicated 

disciplinary and enforcement actions 

against, loan originators. 

(c) Scope—(1) In general. This part 

applies to federally insured credit 

unions and their employees who act as 

mortgage loan originators. 

(2) Exception. (i) This part and the 

requirements of section 1504(a)(1)(A) 

and (2) of the S.A.F.E. Act do not apply 

to any employee of a federally insured 

credit union if during the past 12 

months: 

(A) The employee acted as a mortgage 

loan originator for 5 or fewer residential 

mortgage loans; and 

(B) The credit union employs 

mortgage loan originators who, while 

excepted from registration under 

paragraph (c)(2)(i)(A) of this section, in 

the aggregate, acted as a mortgage loan 

originator in connection with 25 or 

fewer residential mortgage loans. 

(ii) Prior to engaging in mortgage loan 

origination activity that exceeds either 

the individual or the aggregate 

exception limit, a credit union 

employee must register with the 

Registry under this part. 

§ 761.102 Definitions. 

For purposes of this part, the 

following definitions apply: 

(a) Annual renewal period means 

November 1 through December 31 of 

each year. 

(b)(1) Mortgage loan originator 1

means an individual who: 

(i) Takes a residential mortgage loan 

application; and 

(ii) Offers or negotiates terms of a 

residential mortgage loan for 

compensation or gain. 

(2) The term mortgage loan originator 

does not include: 

(i) An individual who performs 

purely administrative or clerical tasks 

on behalf of an individual who is 

described in paragraph (b)(1) of this 

section; 

(ii) An individual who only performs 

real estate brokerage activities (as 

defined in section 1503(3)(D) of the 

S.A.F.E. Act) and is licensed or 

registered as a real estate broker in 

accordance with applicable state law, 

unless the individual is compensated by 

a lender, a mortgage broker, or other 

mortgage loan originator or by any agent 

of such lender, mortgage broker, or other 

mortgage loan originator, and meets the 

definition of mortgage loan originator in 

paragraph (b)(1) of this section; or 

(iii) An individual or entity solely 

involved in extensions of credit related 

to timeshare plans, as that term is 

defined in 11 U.S.C. 101(53D). 

(3) Administrative or clerical tasks 

means the receipt, collection, and 

distribution of information common for 

the processing or underwriting of a 

residential mortgage loan and 

communication with a member to 

obtain information necessary for the 

processing or underwriting of a 

residential mortgage loan. 

(c) Nationwide Mortgage Licensing 

System and Registry or Registry means 

the system developed and maintained 

by the Conference of State Bank 

Supervisors and the American 

Association of Residential Mortgage 

Regulators for the state licensing and 

registration of state-licensed mortgage 

loan originators and the registration of 

mortgage loan originators under section 

1507 of the S.A.F.E. Act. 

(d) Registered mortgage loan 

originator or registrant means any 

individual who: 

(1) Meets the definition of mortgage 

loan originator and is a credit union 

employee; and 

(2) Is registered under this part with, 

and maintains a unique identifier 

through, the Registry. 

(e) Residential mortgage loan means 

any loan primarily for personal, family, 

or household use that is secured by a 

mortgage, deed of trust, or other 

equivalent consensual security interest 

on a dwelling (as defined in section 

103(v) of the Truth in Lending Act (15 

U.S.C. 1602(v))) or residential real estate 

upon which is constructed or intended 

to be constructed a dwelling, and 

includes refinancings, reverse 

mortgages, home equity lines of credit 

and other first and second lien loans 

that meet the qualifications listed in this 

definition. 

(f) Unique identifier means a number 

or other identifier that: 

(1) Permanently identifies a registered 

mortgage loan originator; 

(2) Is assigned by protocols 

established by the Nationwide Mortgage 

Licensing System and Registry, the 

Federal banking agencies, and the Farm 

Credit Administration to facilitate: 

(i) Electronic tracking of mortgage 

loan originators; and 

(ii) Uniform identification of, and 

public access to, the employment 

history of and the publicly adjudicated 

disciplinary and enforcement actions 

against mortgage loan originators; and 

(3) Must not be used for purposes 

other than those under the S.A.F.E. Act. 

§ 761.103 Registration of mortgage loan 

originators. 

(a) Registration requirement—(1) 

Employee registration. Each credit 

union employee who acts as a mortgage 

loan originator must register with the 

Registry, obtain a unique identifier, and 

maintain this registration in accordance 

with the requirements of this part. Any 

such employee who is not in 

compliance with the registration and 

unique identifier requirements in this 

part is in violation of the S.A.F.E. Act 

and this part. 

27420 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

(2) Credit union requirement—(i) In 

general. A credit union that employs 

one or more individuals who act as a 

residential mortgage loan originator 

must require each employee who is a 

mortgage loan originator to register with 

the Registry, maintain this registration, 

and obtain a unique identifier in 

accordance with the requirements of 

this part. 

(ii) Prohibition. A credit union must 

not permit its employee who is subject 

to this part’s registration requirements 

to act as a mortgage loan originator 

unless such employee is registered with 

the Registry under this part. 

(3) Implementation period for initial 

registration. A credit union employee 

who is a mortgage loan originator must 

complete an initial registration with the 

Registry under this part within 180 days 

from the date that the National Credit 

Union Administration provides public 

notice that the Registry is accepting 

registrations. 

(4) Employees previously registered or 

licensed through the Registry—(i) In 

general. If a credit union employee was 

registered or licensed through, and 

obtained a unique identifier from, the 

Registry prior to becoming a credit 

union employee and has maintained 

this registration or license, the 

registration requirements of the S.A.F.E. 

Act and this part are deemed to be met, 

provided that: 

(A) The employment information in 

paragraphs (d)(1)(i)(C) and (d)(1)(ii) of 

this section is updated and the 

requirements of paragraph (d)(2) of this 

section are met; 

(B) New fingerprints of the employee 

are submitted to the Registry for a 

background check, as required by 

paragraph (d)(1)(xii) of this section; 

(C) The credit union information 

required in paragraphs (e)(1)(i) (to the 

extent the credit union has not 

previously met these requirements) and 

(e)(2)(i) of this section is submitted to 

the Registry; and 

(D) The registration is maintained 

under paragraphs (b) and (e)(1)(ii) of 

this section, as of the date that the 

employee is employed by the credit 

union. 

(ii) Implementation period for certain 

acquisitions, mergers or reorganizations. 

When registered or licensed mortgage 

loan originators become credit union 

employees as a result of an acquisition, 

merger or reorganization transaction, the 

credit union and employee must comply 

with the requirements of paragraphs 

(a)(4)(i)(A), (C), and (D) of this section 

within 60 days from the effective date 

of the acquisition, merger, or 

reorganization. 

(b) Maintaining registration. (1) A 

mortgage loan originator who is 

registered with the Registry under 

paragraph (a) of this section must: 

(i) Renew the registration during the 

annual renewal period, confirming the 

responses set forth in paragraphs 

(d)(1)(i) through (xi) of this section 

remain accurate and complete, and 

updating this information, as 

appropriate; and 

(ii) Update the registration within 30 

days of any of the following events: 

(A) A change in the name of the 

registrant; 

(B) The registrant ceases to be a credit 

union employee; or 

(C) The information required under 

paragraphs (d)(1)(iii) through (xi) of this 

section becomes inaccurate, incomplete, 

or out of date. 

(2) A registered mortgage loan 

originator must maintain his or her 

registration, notwithstanding the 

originator’s subsequent qualification for 

the exception in § 761.101(c)(2), unless 

the individual is no longer engaged in 

the activity of a mortgage loan 

originator. 

(c) Effective dates—(1) Initial 

registration. An initial registration 

under paragraph (a) of this section is 

effective on the date the registrant 

receives notification from the Registry 

that all information required by 

paragraphs (d) and (e) of this section has 

been submitted and the registration is 

complete. 

(2) Renewals or updates. A renewal or 

update under paragraph (b) of this 

section is effective on the date the 

registrant receives notification from the 

Registry that all applicable information 

required by paragraphs (b) and (e) of 

this section has been submitted and the 

renewal or update is complete. 

(d) Required employee information— 

(1) In general. For purposes of the 

registration required by this section, a 

credit union must require each 

employee who is a mortgage loan 

originator to submit to the Registry, or 

must submit on behalf of the employee, 

the following categories of information 

to the extent this information is 

collected by the Registry: 

(i) Identifying information, including 

the employee’s: 

(A) Name and any other names used; 

(B) Home address; 

(C) Address of the employee’s 

principal business location and business 

contact information; 

(D) Social security number; 

(E) Gender; and 

(F) Date and place of birth; 

(ii) Financial services-related 

employment history for the 10 years 

prior to the date of registration or 

renewal, including the date the 

employee became a credit union 

employee; 

(iii) Financial information for the 10 

years prior to the date of registration or 

renewal constituting a history of any 

personal bankruptcy; business 

bankruptcy based upon events that 

occurred while the employee exercised 

control over an organization; denied, 

paid out, or revoked bonds; or 

unsatisfied judgments or liens against 

the employee; 

(iv) Felony convictions or other final 

criminal actions involving a felony 

against the employee or organizations 

controlled by the employee; or 

misdemeanor convictions or other final 

misdemeanor actions against the 

employee or organizations controlled by 

the employee involving financial 

services, a financial services-related 

business, dishonesty, or breach of trust; 

(v) Civil judicial actions against the 

employee in connection with financial 

services-related activities, dismissals 

with settlements, judicial findings that 

the employee violated financial 

services-related statutes or regulations, 

except for actions dismissed without a 

settlement agreement; 

(vi) Actions or orders by a state or 

federal regulatory agency or foreign 

financial regulatory authority that: 

(A) Found the employee to have made 

a false statement or omission or been 

dishonest, unfair or unethical; to have 

been involved in a violation of a 

financial services-related regulation or 

statute; or to have been a cause of a 

financial services-related business 

having its authorization to do business 

denied, suspended, revoked or 

restricted; 

(B) Are entered against the employee 

in connection with a financial servicesrelated activity; 

(C) Denied, suspended, or revoked the 

employee’s registration or license to 

engage in a financial services-related 

activity; disciplined the employee or 

otherwise by order prevented the 

employee from associating with a 

financial services-related business or 

restricted the employee’s activities; or 

(D) Barred the employee from 

association with an entity regulated by 

the agency or authority or from engaging 

in a financial services-related business; 

(vii) Final orders issued by a state or 

federal regulatory agency or foreign 

financial regulatory authority based on 

violations of any law or regulation that 

prohibits fraudulent, manipulative or 

deceptive conduct; 

(viii) Revocation or suspension of the 

employee’s authorization to act as an 

attorney, accountant, or state or federal 

contractor; 

Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 27421 

(ix) Customer-initiated financial 

services-related arbitration or civil 

action against the employee that 

required action, including settlements; 

(x) Disclosure of any voluntary or 

involuntary employment terminations 

resulting from allegations accusing the 

employee of violating a statute, 

regulation, or industry standard of 

conduct; fraud; dishonesty; theft; or the 

wrongful taking of property; 

(xi) Any pending actions against the 

employee that could result in an action 

listed in paragraphs (d)(1)(iii) through 

(ix) of this section; and 

(xii) Fingerprints of the employee, in 

digital form if practicable, collected by 

the employing credit union less than 

three years prior to registration and any 

appropriate identifying information for 

submission to the Federal Bureau of 

Investigation and any governmental 

agency or entity authorized to receive 

such information in connection with a 

state and national criminal history 

background check; 

(2) Employee authorization and 

attestation. An employee registering as 

a mortgage loan originator or renewing 

his or her registration under this part 

must: 

(i) Authorize the Registry and the 

employing credit union to obtain 

information related to any 

administrative, civil or criminal 

findings, to which the employee is a 

party, made by any governmental 

jurisdiction; 

(ii) Attest to the correctness of all 

information required by paragraph (d) of 

this section, whether submitted by the 

employee or on behalf of the employee 

by the employing credit union; and 

(iii) Authorize the Registry to make 

available to the public information 

required by paragraphs (d)(1)(i)(A) and 

(C), (d)(1)(ii), (iv)–(ix) and (xi) of this 

section. 

(e) Required credit union information. 

A credit union must submit the 

following information to the Registry: 

(1) Credit union record. (i) In 

connection with the initial registration 

of one or more mortgage loan 

originators: 

(A) Name and main office address; 

(B) Internal Revenue Service 

Employer Tax Identification Number 

(EIN); 

(C) Research Statistics Supervision 

and Discount (RSSD) number, as issued 

by the Board of Governors of the Federal 

Reserve System; 

(D) Identification of the National 

Credit Union Administration as its 

primary Federal regulator; 

(E) Name(s) and contact information 

of the individual(s) with authority to act 

as the credit union’s primary point of 

contact for the Registry; 

(F) Name(s) and contact information 

of the individual(s) with authority to 

enter data required in paragraph (e) of 

this section on the Registry and who 

may delegate this authority to other 

credit union employees, provided this 

individual and any delegated employee 

does not act as a mortgage loan 

originator. 

(ii) A credit union must update the 

information required by this paragraph 

(e) within 30 days of the date that this 

information becomes inaccurate. 

(2) Employee information. In 

connection with the registration of each 

employee who acts as a mortgage loan 

originator: 

(i) After the information required by 

paragraph (d) of this section has been 

submitted to the Registry, confirmation 

that it employs the registrant; and 

(ii) Within 30 days of the date the 

registrant ceases to be a credit union 

employee, notification that it no longer 

employs the registrant and the date the 

registrant ceased being an employee. 

§ 761.104 Policies and procedures. 

A credit union that employs mortgage 

loan originators must adopt and follow 

written policies and procedures 

designed to assure compliance with this 

part. These policies and procedures 

must be appropriate to the nature, size, 

complexity and scope of the mortgage 

lending activities of the credit union. At 

a minimum, these policies and 

procedures must: 

(a) Establish a process for identifying 

which credit union employees are 

required to be registered mortgage loan 

originators; 

(b) Require that all credit union 

employees who are mortgage loan 

originators be informed of the 

registration requirements of the S.A.F.E. 

Act and this part and be instructed on 

how to comply with such requirements 

and procedures; 

(c) Establish procedures to comply 

with the unique identifier requirements 

in § 761.105; 

(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 reasonable procedures 

and tracking systems for monitoring 

compliance with registration and 

renewal requirements and procedures; 

(f) Provide for independent testing for 

compliance with this part to be 

conducted by credit union personnel or 

by an outside party; 

(g) Provide for appropriate action in 

the case of any employee who fails to 

comply with the registration 

requirements of the S.A.F.E. Act, this 

part, or the credit union’s related 

policies and procedures, including 

prohibiting such employees from acting 

as mortgage loan originators or other 

appropriate disciplinary actions; and 

(h) Establish a process for reviewing 

employee criminal history background 

reports received from the Registry in 

connection with § 761.103(d)(1)(xii), 

taking appropriate action consistent 

with applicable law and rules with 

respect to these reports, and for 

maintaining records of these reports and 

actions taken with respect to applicable 

employees. 

§ 761.105 Use of unique identifier. 

(a) The credit union shall make the 

unique identifier(s) of its registered 

mortgage loan originator(s) available to 

members in a manner and method 

practicable to the credit union. 

(b) A registered mortgage loan 

originator shall provide his or her 

unique identifier to a member: 

(1) Upon request; 

(2) Before acting as a mortgage loan 

originator; and 

(3) Through the originator’s initial 

written communication with a member, 

if any. 

Appendix A to Part 761—Examples of 

Mortgage Loan Originator Activities 

This Appendix provides examples to aid in 

the understanding of activities that would 

cause a credit union employee to fall within 

or outside the definition of mortgage loan 

originator. The examples in this Appendix 

are not all inclusive. They illustrate only the 

issue described and do not illustrate any 

other issues that may arise under this part. 

For the purposes of the examples below, the 

term ‘‘loan’’ refers to a residential mortgage 

loan. 

(a) Taking a loan application: The 

following examples illustrate when an 

employee takes or does not take, a loan 

application. 

(1) Taking an application includes: 

receiving information that is sufficient to 

determine whether the member qualifies for 

a loan, even if the employee has had no 

contact with the member and is not 

responsible for further verification of 

information. 

(2) Taking an application does not include 

any of the following activities performed 

solely or in combination: 

(i) Contacting a member to verify the 

information in the loan application by 

obtaining documentation, such as tax returns 

or payroll receipts; 

(ii) Receiving a loan application through 

the mail and forwarding it, without review, 

to loan approval personnel; or 

(iii) Assisting a member who is filling out 

an application by clarifying what type of 

information is necessary for the application 

or otherwise explaining the loan application 

process in response to member inquiries. 

27422 Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / Proposed Rules 

(b) Offering or negotiating terms of a loan: 

The following examples are designed to 

illustrate when an employee offers or 

negotiates terms of a loan, and conversely, 

what does not constitute offering or 

negotiating terms of a loan. 

(1) Offering or negotiating the terms of a 

loan includes: 

(i) Presenting a loan offer to a member for 

acceptance, either verbally or in writing, 

even if further verification of information is 

necessary and the offer is conditional; or 

(ii) Responding to a member’s request for 

a lower rate or lower points on a pending 

loan application by presenting to the member 

a revised loan offer, either verbally or in 

writing, that includes a lower interest rate or 

lower points than the original offer. 

(2) Offering or negotiating terms of a loan 

does not include solely or in combination: 

(i) Providing general explanations in 

response to member queries regarding 

qualification for a specific loan product, such 

as explaining loan terminology (i.e., debt-toincome ratio) or lending policies (i.e., the 

loan-to-value ratio policy of the credit 

union); 

(ii) In response to a member’s request, 

informing a member of the loan rates that are 

publicly available such as on the credit 

union’s Web site for specific types of loan 

products without communicating to the 

member whether qualifications are met for 

that loan product; 

(iii) Collecting information about a member 

in order to provide the member with 

information on loan products for which the 

member generally may qualify, without 

presenting a specific loan offer to the member 

for acceptance, either verbally or in writing; 

(iv) Arranging the loan closing or other 

aspects of the loan process, including 

communicating with a member about those 

arrangements, provided that communication 

with the member only verifies loan terms 

already offered or negotiated; or 

(v) Providing a member with information 

unrelated to loan terms, such as the best days 

of the month for scheduling loan closings at 

the credit union. 

(c) The following examples illustrate when 

an employee does or does not offer or 

negotiate terms of a loan ‘‘for compensation 

or gain’’: 

(1) Offering or negotiating terms of a loan 

for compensation or gain includes engaging 

in any of the activities in paragraph (b)(1) of 

this Appendix in the course of carrying out 

employment duties, even if the employee 

does not receive a referral fee or commission 

or other special compensation for the loan. 

(2) Offering or negotiating terms of a loan 

for compensation or gain does not include 

engaging in a seller-financed transaction for 

the employee’s personal property that does 

not involve the credit union. 

Dated: May 27, 2009. 

John C. Dugan, 

Comptroller of the Currency. 

By the order of the Board of Governors of 

the Federal Reserve System, May 28, 2009. 

Robert deV. Frierson, 

Deputy Secretary of the Board. 

By order of the Board of Directors. 

Dated at Washington, DC, the 29th day of 

May 2009. 

Federal Deposit Insurance Corporation. 

Robert E. Feldman, 

Executive Secretary. 

Dated: May 28, 2009. 

By the Office of Thrift Supervision, 

John E. Bowman, 

Acting Director. 

Dated: May 28, 2009. 

Roland E. Smith, 

Secretary, Farm Credit Administration Board. 

By the National Credit Union 

Administration Board on May 26, 2009. 

Mary Rupp, 

Secretary of the Board. 

[FR Doc. E9–13058 Filed 6–8–09; 8:45 am] 

BILLING CODE 4810–33–P, 6210–01–P; 6714–01–P; 

6720–01–P; 6705–01–P; 7535–01–P