Pub. 5 2010-2011 Issue 4

November/December 2010 15 Extraordinary Service for Extraordinary Members. C OVERED INSTITUTIONS WILL have 180 days from the date the Registry announces it is accepting applications to com- ply. These institutions, however, should begin preparing for the new regulations by creating and adopting the requisite written policies and procedures in ad- vance of the Registry announcement. Compliance examinations will include a review of the institution’s progress with the S.A.F.E. Act’s requirements. Given the extent to which policies and procedures covered by the S.A.F.E. Act will be scrutinized, care should be given to their development. The S.A.F.E. Act sets out the minimum content requirements, which, while helpful, must be tailored by each insti- tution to ensure compliance within its operational environment. Failure of an institution to follow its own policies is certain to create an issue with exam- iners. The rules require an entirely The final rules enacted to carry out the Secure and Fair Enforcement for Mortgage Lending Act (S.A.F.E. Act) became effective Oct. 1. Actual implementation is delayed until the Nationwide Mortgage Licensing System and Registry is established. Better S.A.F.E. Than Sorry! Banks Should Prepare Now for the Regulations to Come Dan Stinnett, Husch Blackwell LLP Q S.A.F.E. — continued on page 16 new type of compliance for many in- stitutions and subtle pitfalls should be avoided. This article explores several of those potential hazards and offers some practical solutions. Additional background concerning the S.A.F.E. Act and its requirements is available from Husch Blackwell LLP at www. huschblackwell.com/safe-act-compli- ance-for-financial-institutions. Process for identifying mort- gage loan originators. Before an institutioncanbegin to identifymortgage loan originators whose registration is required by the S.A.F.E. Act, it must determine which of the institution’s products qualify as mortgage loans. The definition is not limited to loans made to purchase residential real estate or refinance an existing mortgage loan. Rather, any loan primarily intended for personal, family, or household use that is secured by a mortgage, deed of trust, or any other instrument that creates a security interest in a dwelling or on real estate on which a dwelling is to be con- structed is considered a mortgage loan. Therefore, home equity lines of credit or any loan where either a senior or junior lien is created for any purpose includ- ing home improvement, college tuition, and debt consolidation or as additional collateral for any personal loan are also covered loans. Any employee who makes five of these types of loans is a mortgage loan originator. After making four loans, the employee must register before he or she is able to make another loan. An institution with an employee who even occasionally makes any of these loans must have a policy in place to identify how it will monitor loan activity to com- ply with the registration requirement. A practical solutionmight be to register all employees who may intermittently make loans covered by the definition. This approach may be much easier than trying to monitor the number of mortgage loans on an employee-by- employee basis and also may provide COUNSELOR’S CORNER