HUD clarifies mortgage originator role in SAFE Act
The Department of Housing and Urban Development issued a final rule Wednesday defining the role of a mortgage originator for the purpose of state compliance with federal licensing laws. A mortgage originator is someone who "acts as a residential mortgage loan originator with respect to financing that is provided in a commercial context and with some degree of habitualness or repetition," according to the HUD rule. HUD said this does not include employees of government agencies or employees at nonprofit organizations, who act as loan originators as part of their job description. These professionals do not need a state license. The rule also excludes individuals who only work out loan modifications and third-party modifications specialists. The rule ensures compliance with the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, otherwise known as the SAFE Act. The act is part of the Housing and Economic Recovery Act of 2008 with the goal of protecting consumers and eliminating fraud. "The SAFE Act sets nationwide standards for licensing of mortgage loan originators and is an important step in returning integrity and accountability to the residential mortgage loan market,” said Acting FHA Commissioner Bob Ryan. “All 50 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands have enacted legislation to support this law and our final rule provides clarification of the minimum standards against which each state’s laws and regulations will be evaluated.” HUD currently handles enforcement, interpretation and implementation of the SAFE Act, but that duty will be transferred to the Consumer Financial Protection Bureau as of July 21. The final HUD rule will be published in Thursday's Federal Register. Write to Christine Ricciardi.