28 Hoosier Banker August 2014 Continued from page 26. Act of 2008 (SAFE Act) and its accompanying Regulation H.10 The New Originator Rule defines an LO as: “A person who, in expectation of direct or indirect compensation or other monetary gain or for direct or indirect compensation or other monetary gain, performs any of the following activities: takes an application, offers, arranges, assists a consumer in obtaining or applying to obtain, negotiates, or otherwise obtains or makes an extension of consumer credit for another person through advertising or other means of communication represents to the public that such person can or will perform any of these activities.11” All LOs are subject to these compensation restrictions under the New Originator Rule. Disclosure of NMLSR identifiers and background checks on LOs. The New Originator Rule enhances background checks and disclosure of NMLSR identifiers by requiring a loan originator organization to obtain the following from all12 LOs hired on or after Jan. 10, 2014: • A personal credit report;13 • A criminal background check; and • Information from the NMLSR about any administrative, civil or criminal filings by any government jurisdiction or, in the case of an individual LO who is not registered under the NMLSR, such information from the individual LO. The New Originator Rule also expands14 the use of the NMLSR identifier to require its disclosure on the credit application, the note or loan contract, and the security instrument.15 Many banks have struggled with how best to decide if an LO meets these financial responsibility, character and general fitness requirements. The Official Commentary to new 12 CFR §1026.36(f)(3)(ii)(B) provides the following guidance: “The determination of financial responsibility, character and general fitness required under 1026.36(f)(3) (ii)(B) requires an assessment of all information obtained pursuant to paragraph (f)(3)(i) and any other reasonably available information, including information that is known to the loan originator organization or that would become known to the loan originator organization as part of a reasonably prudent hiring process. A loan originator organization that establishes written procedures for determining whether individuals meet the financial responsibility, character and general fitness standards under 1026.36(f)(3) (ii)(B) and comment 36(f)(3)(ii)(B)-1 and follows those written procedures for an individual complies with the requirement for that individual. ” Banks should look to their internal policies and procedures and ensure they provide for consistency in determining whether an LO hired after Jan. 10, 2014, meets these standards.16 Arbitration clauses. The New Originator Rule prohibits an agree- WWW.MORTGAGEHAZARD.COM Place coverage on uninsured commercial and residential properties within seconds. BLANKET MORTGAGE HAZARD Entire portfolio protection while eliminating insurance follow-up may be less expensive than you think. BLANKET MORTGAGE IMPAIRMENT Total portfolio protection that includes servicing errors and omissions while eliminating insurance follow-up for a low annual premium. OUTSOURCED INSURANCE TRACKING Let us handle your insurance mail, phone calls, send letters and place coverage when needed. FLOOD COVERAGE Protect residential, commercial, REO and mobile home properties located in mandatory Contact Paul Baker or Matt Washer at 888-685-8442 pbaker@leeandmason.com • mwasher@leeandmason.com www.leeandmason.com Are all your mortgage properties insured? LET US HELP YOU PROTECT THEM. PREFERRED SERVICE PROVIDER Lee & Mason Financial Services is the leading provider of mortgage protection programs nationwide. With access to multiple “A Rated” markets, we provide comprehensive and cost e ective solutions to mortgage lenders and services.
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