The SAFE Act
The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), Section 1503 defines a loan originator as "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."
The SAFE Act only applies to residential loan transactions. A residential loan is defined as any loan that is primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent security interest on a dwelling or residential real estate upon which is constructed or intended to be constructed a dwelling, including manufactured homes. Loans on residential property may be first liens, secondary liens, refinancing, home equity lines of credit and reverse mortgages. A dwelling contains one-to-four family housing units or individual units of condominiums or cooperatives.
Mortgage loan originators are of two classifications under the NMLS system - registered and licensed.
- Loan originators that are employees of a depository institution must register with the NMLS and submit fingerprints to the FBI for criminal background checks. Depository institutions are defined as any bank, savings and loan association, credit union, and Federal Banking Agencies such as the Farm Credit Administration. Upon registration, a Unique Identifier Number will be assigned. Those individuals that are required to register with the NMLS are known as registered mortgage loan originators.
- Loan originators that are NOT employees of a depository institution must be licensed through the NMLS.