Original posted on the Housing Wire by Austin Kilgore:
The Department of Housing and Urban Development (HUD) proposed minimum standards for state compliance with the Secure and Fair Enforcement (SAFE) Mortgage Licensing Act of 2008.
The rule (download here) addresses the criteria to determine whether a state’s system for licensing and registering loan originators complies with the law. It also addresses HUD’s enforcement authority including the department’s power to issues summons for information on loan originators, establish systems in states with non-compliant programs and the ability to conduct cease-and-desist proceedings against anyone operating under a HUD-established system who violates the act. HUD is soliciting comments for 60 days on its proposal.
“By introducing nationwide standards of uniform licensing for loan originators, the SAFE Act is taking an important step in returning integrity and accountability to the residential mortgage loan market,” said Federal Housing Administration (FHA) Commissioner David Stevens. “Implementation of this act is a critical addition to our system of regulatory protections that will benefit both consumers and financial institutions.”
The SAFE Act legislation was included in the Housing and Economic Recovery Act of 2008 and is designed to enhance consumer protection and reduce fraud, HUD said. A compliant state program must require originators to take an education course, pass a test, and undergo civil, criminal and financial background checks. All states must have originators licensed by July 31, 2010.