[Federal Register Volume 74, Number 109 (Tuesday, June 9, 2009)]
[Proposed Rules]
[Pages 27386-27422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-13058]



[[Page 27385]]

  
  
  
  
  
  
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Part II

Department of the Treasury
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Office of the Comptroller of the Currency



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Federal Reserve System

Federal Deposit Insurance Corporation

Department of the Treasury
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Office of Thrift Supervision



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Farm Credit Administration

National Credit Union Administration
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12 CFR Parts 34, 208, 365, et al.



Registration of Mortgage Loan Originators; Proposed Rule

  Federal Register / Vol. 74, No. 109 / Tuesday, June 9, 2009 / 
Proposed Rules  

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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 34

[Docket ID OCC-2009-0005]
RIN 1557-AD23

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Docket No. R-1357]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 365

RIN 3064-AD43

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 563

[Docket No. 2009-0004]
RIN 1550-AC33

FARM CREDIT ADMINISTRATION

12 CFR Part 610

RIN 3052-AC52

NATIONAL CREDIT UNION ADMINISTRATION

12 CFR Part 761

RIN 3133-AD59


Registration of Mortgage Loan Originators

AGENCIES: Office of the Comptroller of the Currency, Treasury (OCC); 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, 
Treasury (OTS); Farm Credit Administration (FCA); and National Credit 
Union Administration (NCUA).

ACTION: Joint notice of proposed rulemaking.

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SUMMARY: The OCC, Board, FDIC, OTS, FCA, and NCUA (collectively, the 
Agencies) are proposing amendments to their rules to implement the 
Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. 
Act). The S.A.F.E. Act requires an employee of a bank, savings 
association, credit union or other depository institution and their 
subsidiaries regulated by a Federal banking agency or an employee of an 
institution regulated by the FCA (collectively, Agency-regulated 
institutions) who acts as a residential mortgage loan originator to 
register with the Nationwide Mortgage Licensing System and Registry 
(Registry), obtain a unique identifier, and maintain this registration. 
This proposal implements these requirements. It also provides that 
Agency-regulated institutions must require their employees who act as 
residential mortgage loan originators to comply with the S.A.F.E. Act's 
requirements to register and obtain a unique identifier and must adopt 
and follow written policies and procedures designed to assure 
compliance with these requirements.

DATES: Comments must be received on or before July 9, 2009. Comments on 
the Paperwork Reduction Act analysis set forth in Part II of the 
Regulatory Analysis Section of this Federal Register notice must be 
received on or before August 10, 2009.

ADDRESSES: Commenters that direct comments to more than one Agency may 
send comments to any of the Agencies and need not send copies of the 
same comment letter to all of the Agencies. Commenters are encouraged 
to use the title ``Registration of Mortgage Loan Originators'' to 
facilitate the organization and distribution of comments among the 
Agencies. Interested parties are invited to submit written comments to:
    Office of the Comptroller of the Currency: Because paper mail in 
the Washington, DC area and at the OCC is subject to delay, commenters 
are encouraged to submit comments by the Federal eRulemaking Portal or 
e-mail, if possible. Please use the title ``Registration of Mortgage 
Loan Originators'' to facilitate the organization and distribution of 
the comments. You may submit comments by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
http://www.regulations.gov, under the ``More Search Options'' tab click 
next to the ``Advanced Docket Search'' option where indicated, select 
``Comptroller of the Currency'' from the agency drop-down menu, then 
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0005'' 
to submit or view public comments and to view supporting and related 
materials for this proposal. The ``How to Use This Site'' link on the 
Regulations.gov home page provides information on using 
Regulations.gov, including instructions for submitting or viewing 
public comments, viewing other supporting and related materials, and 
viewing the docket after the close of the comment period.
     E-mail: [email protected].
     Mail: Office of the Comptroller of the Currency, 250 E 
Street, SW., Mail Stop 2-3, Washington, DC 20219.
     Fax: (202) 874-5274.
     Hand Delivery/Courier: 250 E Street, SW., Mail Stop 2-3, 
Washington, DC 20219.
    Instructions: You must include ``OCC'' as the agency name and 
``Docket Number OCC-2009-0005'' in your comment. In general, OCC will 
enter all comments received into the docket and publish them on the 
Regulations.gov Web site without change, including any business or 
personal information that you provide such as name and address 
information, e-mail addresses, or phone numbers. Comments received, 
including attachments and other supporting materials, are part of the 
public record and subject to public disclosure. Do not enclose any 
information in your comment or supporting materials that you consider 
confidential or inappropriate for public disclosure.
    You may review comments and other related materials that pertain to 
this proposal by any of the following methods:
     Viewing Comments Electronically: Go to http://www.regulations.gov, under the ``More Search Options'' tab click next 
to the ``Advanced Document Search'' option where indicated, select 
``Comptroller of the Currency'' from the agency drop-down menu, then 
click ``Submit.'' In the ``Docket ID'' column, select ``OCC-2009-0005'' 
to view public comments for this rulemaking action.
     Viewing Comments Personally: You may personally inspect 
and photocopy comments at the OCC, 250 E Street, SW., Washington, DC. 
For security reasons, the OCC requires that visitors make an 
appointment to inspect comments. You may do so by calling (202) 874-
4700. Upon arrival, visitors will be required to present valid 
government-issued photo identification and submit to security screening 
in order to inspect and photocopy comments.
     Docket: You may also view or request available background 
documents and project summaries using the methods described above.
    Board of Governors of the Federal Reserve System: You may submit 
comments, identified by Docket No. R-1357, by any of the following 
methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

[[Page 27387]]

     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include the 
docket number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Address to Jennifer J. Johnson, Secretary, Board of 
Governors of the Federal Reserve System, 20th Street and Constitution 
Avenue, NW., Washington, DC 20551.
    All public comments will be made available on the Board's Web site 
at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, unless modified for technical reasons. Accordingly, comments 
will not be edited to remove any identifying or contact information. 
Public comments may also be viewed electronically or in paper in Room 
MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 
9 a.m. and 5 p.m. on weekdays.
    Federal Deposit Insurance Corporation: You may submit comments, 
identified by RIN number, by any of the following methods:
     Agency Web site: http://www.FDIC.gov/regulations/laws/federal/notices.html. Follow instructions for submitting comments on 
the Agency Web site.
     E-mail: [email protected]. Include the RIN number on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, Federal Deposit Insurance Corporation, 550 17th Street, NW., 
Washington, DC 20429.
     Hand Delivery: Comments may be hand delivered to the guard 
station at the rear of the 550 17th Street Building (located on F 
Street) on business days between 7 a.m. and 5 p.m.
    Instructions: All comments received must include the agency name 
and RIN for this rulemaking and will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any 
personal information provided.
    Office of Thrift Supervision: You may submit comments, identified 
by OTS-2009-0004, by any of the following methods:
     Federal eRulemaking Portal--``Regulations.gov'': Go to 
http://www.regulations.gov, under the ``more Search Options'' tab click 
next to the ``Advanced Docket Search'' option where indicated, select 
``Office of Thrift Supervision'' from the agency drop-down menu, then 
click ``Submit.'' In the ``Docket ID'' column, select ``OTS-2009-0004'' 
to submit or view public comments and to view supporting and related 
materials for this proposed rulemaking. The ``How to Use This Site'' 
link on the Regulations.gov home page provides information on using 
Regulations.gov, including instructions for submitting or viewing 
public comments, viewing other supporting and related materials, and 
viewing the docket after the close of the comment period.
     E-mail address: [email protected]. Please 
include OTS-2009-0004 in the subject line of the message and include 
your name and telephone number in the message.
     Mail: Regulation Comments, Chief Counsel's Office, Office 
of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, 
Attention: OTS-2009-0004.
     Facsimile: (202) 906-6518.
     Hand Delivery/Courier: Guard's Desk, East Lobby Entrance, 
1700 G Street, NW., from 9 a.m. to 4 p.m. on business days, Attention: 
Regulation Comments, Chief Counsel's Office, Attention: OTS-2009-0004.
     Instructions: All submissions received must include the 
agency name and docket number for this rulemaking. All comments 
received will be entered into the docket and posted on Regulations.gov 
without change, including any personal information provided. Comments, 
including attachments and other supporting materials received, are part 
of the public record and subject to public disclosure. Do not enclose 
any information in your comment or supporting materials that you 
consider confidential or inappropriate for public disclosure.
     Viewing Comments On-Site: You may inspect comments at the 
Public Reading Room, 1700 G Street, NW., by appointment. To make an 
appointment for access, call (202) 906-5922, send an e-mail to 
public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-6518. (Prior notice identifying the materials you will be 
requesting will assist us in serving you.) We schedule appointments on 
business days between 10 a.m. and 4 p.m. In most cases, appointments 
will be available the next business day following the date we receive a 
request.
    Farm Credit Administration: We offer a variety of methods to 
receive your comments. For accuracy and efficiency reasons, commenters 
are encouraged to submit comments by e-mail or through the FCA's Web 
site or the Federal eRulemaking Portal. As faxes are difficult for us 
to process and achieve compliance with section 508 of the 
Rehabilitation Act, we are no longer accepting comments submitted by 
fax. Regardless of the method you use, please do not submit your 
comment multiple times via different methods. You may submit comments 
by any of the following methods:
     E-mail: Send us an e-mail at [email protected].
     FCA Web site: http://www.fca.gov. Select ``Public 
Commenters,'' then ``Public Comments,'' and follow the directions for 
``Submitting a Comment.''
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Gary K. Van Meter, Deputy Director, Office of 
Regulatory Policy, Farm Credit Administration, 1501 Farm Credit Drive, 
McLean, VA 22102-5090.
    You may review copies of comments we received at our office in 
McLean, Virginia, or from our Web site at http://www.fca.gov. Once you 
are in the Web site, select ``Public Commenters,'' then ``Public 
Comments,'' and follow the directions for ``Reading Submitted Public 
Comments.'' We will show your comments as submitted, but for technical 
reasons we may omit items such as logos and special characters. 
Identifying information that you provide, such as phone numbers and 
addresses, will be publicly available. However, we will attempt to 
remove e-mail addresses to help reduce Internet spam.
    National Credit Union Administration: You may submit comments by 
any of the following methods (please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/proposed_regs.html. Follow the 
instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Notice of Proposed Rulemaking Part 761, Registration 
of Mortgage Loan Originators'' in the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Mary Rupp, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, VA 
22314-3428.
     Hand Delivery/Courier: Address to Mary Rupp, Secretary of 
the Board, National Credit Union Administration. Deliver to guard 
station in the lobby of 1775 Duke Street, Alexandria, VA 22314-3428, on 
business days between 8 a.m. and 5 p.m.

[[Page 27388]]

     Public inspection: All public comments are available on 
the agency's Web site at http://www.ncua.gov/RegulationsOpinionsLaws/comments as submitted, except as may not be possible for technical 
reasons. Public comments will not be edited to remove any identifying 
or contact information. Paper copies of comments may be inspected in 
NCUA's law library, at 1775 Duke Street, Alexandria, VA 22314, by 
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, 
call (703) 518-6546 or send an e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT:
    OCC: Michele Meyer, Assistant Director, and Heidi Thomas, Special 
Counsel, Legislative and Regulatory Activities, (202) 874-5090, and Nan 
Goulet, Senior Advisor, Large Bank Supervision, (202) 874-5224, Office 
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 
20219.
    BOARD: Anne Zorc, Counsel, Legal Division, (202) 452-3876, Virginia 
Gibbs, Senior Supervisory Analyst, (202) 452-2521, and Stanley Rediger, 
Supervisory Financial Analyst, (202) 452-2629, Division of Banking 
Supervision and Regulation, Board of Governors of the Federal Reserve 
System, 20th and C Streets, NW., Washington, DC 20551.
    FDIC: Thomas F. Lyons, Examination Specialist, (202) 898-6850, 
Victoria Pawelski, Policy Analyst, (202) 898-3571, or John P. Kotsiras, 
Financial Analyst, (202) 898-6620, Division of Supervision and Consumer 
Protection; or Richard Foley, Counsel, (202) 898-3784, or Kimberly A. 
Stock, Counsel, (202) 898-3815, Legal Division, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
    OTS: Charlotte M. Bahin, Special Counsel (Special Projects), (202) 
906-6452, Vicki Hawkins-Jones, Special Counsel, Regulations and 
Legislation Division, (202) 906-7034, Debbie Merkle, Project Manager, 
Credit Risk, (202) 906-5688, and Rhonda Daniels, Senior Compliance 
Program Analyst, Consumer Regulations, (202) 906-7158, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.
    FCA: Gary K. Van Meter, Deputy Director, Office of Regulatory 
Policy, Farm Credit Administration, 1501 Farm Credit Drive, McLean, VA, 
(703) 883-4414, TTY (703) 883-4434; Richard A. Katz, Senior Counsel, 
Office of General Counsel, Farm Credit Administration, McLean, VA 
22102-5090, (703) 883-4020, TTY (703) 883-4020; or Jennifer Cohn, 
Senior Counsel, Office of General Counsel, Farm Credit Administration, 
McLean, VA 22102-5090, (703) 883-4020, TTY (703) 883-4020.
    NCUA: Regina Metz, Staff Attorney, Office of General Counsel, at 
the above address or 703-518-6561; or Roger Blake, Program Officer, 
Division of Supervision, Examination & Insurance, at the above address 
or 703-518-6385.

SUPPLEMENTARY INFORMATION: 

I. Background

A. Statutory Requirements

    The S.A.F.E. Act,\1\ enacted on July 30, 2008, mandates a 
nationwide licensing and/or registration system for mortgage loan 
originators. Specifically, the Act requires all States to provide for a 
licensing regime for mortgage loan originators within one year of 
enactment (or two years for States whose legislatures meet biennially) 
and prohibits an individual employed by a State-regulated institution 
from engaging in the business of residential mortgage loan origination 
without first obtaining and maintaining a license and registration and 
obtaining a unique identifier (State licensing).\2\
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    \1\ The S.A.F.E. Act was enacted as part of the Housing and 
Economic Recovery Act of 2008, Public Law 110-289, Division A, Title 
V, sections 1501-1517, 122 Stat. 2654, 2810-2824 (July 30, 2008), 
codified at 12 U.S.C. 5101-5116. Citations in this preamble are to 
the ``S.A.F.E. Act'' by section number in the public law.
    \2\ If the Secretary of Housing and Urban Development (HUD) 
determines that any State fails, within the statutorily prescribed 
time frame, to establish a licensing regime that meets the 
requirements of the S.A.F.E. Act, the Secretary is required to 
establish a system for the licensing and registration of mortgage 
loan originators in that State. S.A.F.E. Act at section 1508. HUD 
has reviewed the model legislation developed by the Conference of 
State Bank Supervisors and the American Association of Residential 
Mortgage Regulators to assist States in meeting the minimum 
requirements of the S.A.F.E. Act and found it to meet these 
requirements. See 74 FR 312 (Jan. 5, 2009) and  http://www.hud.gov/offices/hsg/sfh/mps/smlicact.cfm.
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    With respect to mortgage loan originators employed by Agency-
regulated institutions, the Act requires the OCC, Board, FDIC, OTS and 
NCUA,\3\ through the Federal Financial Institutions Examination Council 
(FFIEC), and the FCA to develop and maintain a Federal registration 
system, and to implement this system by July 29, 2009 (Federal 
registration). The S.A.F.E. Act specifically prohibits an individual 
employed by an Agency-regulated institution from engaging in the 
business of residential mortgage loan origination without first 
obtaining and maintaining annually a registration as a registered 
mortgage loan originator and obtaining a unique identifier. This 
rulemaking implements these requirements for Agency-regulated 
institutions.
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    \3\ The OCC, Board, FDIC, OTS, and NCUA are referred to both in 
the S.A.F.E. Act and in this rulemaking as the ``Federal banking 
agencies.''
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    The S.A.F.E. Act requires that Federal registration and State 
licensing and registration must be accomplished through the Registry. 
The S.A.F.E. Act provides that the objectives of the Registry, among 
other things, are to aggregate and improve the flow of information to 
and between regulators; provide increased accountability and tracking 
of mortgage loan originators; enhance consumer protections; reduce 
fraud in the residential mortgage loan origination process; and provide 
consumers with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.\4\
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    \4\ See S.A.F.E. Act at section 1502.
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    The S.A.F.E. Act specifically requires the Agencies to jointly 
develop and maintain a system for registering mortgage loan originators 
employed by Agency-regulated institutions with the Registry. In 
connection with this registration, the Agencies at a minimum must 
furnish or cause to be furnished to the Registry information concerning 
the mortgage loan originator's identity, including: (1) Fingerprints 
for submission to the Federal Bureau of Investigation (FBI) and any 
other relevant governmental agency for a State and national criminal 
background check; and (2) personal history and experience, including 
authorization for the Registry to obtain information related to any 
administrative, civil, or criminal findings by any governmental 
jurisdiction.\5\
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    \5\ Id. at section 1507(a).
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B. Implementing the Requirements for Federal Registration

    The Registry is a Web-based system developed and maintained by the 
Conference of State Bank Supervisors (CSBS) and the American 
Association of Residential Mortgage Regulators (AARMR). The Registry 
was launched in January of 2008 for State licensing and registration 
purposes in participating States.\6\ Mortgage loan originators in

[[Page 27389]]

those States complete a single uniform form (known as the MU4) 
electronically. The data provided on the form is stored electronically 
in a secure, centralized repository available to State mortgage 
regulators who use it to process license applications and for 
supervisory purposes.
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    \6\ As of the date of this proposal, 26 States use this system 
to manage the processing of their mortgage licenses. This system is 
owned and operated by the State Regulatory Registry LLC (SRR), a 
limited-liability company established by CSBS as a wholly-owned 
subsidiary to develop and operate nationwide systems for State 
regulators in the financial services industry, and has been built 
and is maintained by the Financial Industry Regulatory Authority 
(FINRA), which operates similar systems in the securities industry. 
To obtain more information on this system, see http://www.stateregulatoryregistry.org. (For purposes of this rulemaking, 
reference to the Registry refers, as applicable, to the system 
itself and to CSBS and SRR.)
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    The Federal banking agencies, through the FFIEC, and the FCA are 
working with CSBS to modify the Registry so that it can accept 
registrations from mortgage loan originators employed by Agency-
regulated institutions. As indicated above, the Registry currently 
supports the licensing of State mortgage lending institutions and their 
mortgage loan originators, a process that involves State authorization 
of individuals to engage in mortgage loan origination. It was not 
originally designed to support the Federal registration of Agency-
regulated institution employees, who do not need additional 
authorization from the appropriate Federal agency to engage in mortgage 
loan origination activities. Furthermore, the S.A.F.E. Act requires new 
enhancements to the current system, such as public access to certain 
mortgage loan originator data and processing of fingerprints through 
the Registry. These differences between the current Registry and the 
Federal registration system required by the S.A.F.E. Act, as well as 
the resulting modifications necessary to support both State licensing 
and Federal registration functions, require careful analysis and raise 
complex legal and system development issues that the Agencies are 
addressing through both this rulemaking and modifications to the 
Registry. These issues include: Consistency of data requirements for 
mortgage loan originators subject to Agency jurisdiction and those 
subject to State jurisdiction; modification to Web-page navigation in 
the current system; registration functionality for the anticipated 
hundreds of thousands of Federal registrants; Federal procurement and 
contracting issues; data privacy and security requirements; and 
protocols for submitting mortgage loan originators' fingerprints to the 
FBI. Furthermore, the modified system is expected to support mortgage 
loan originators who move between the Federal registration and the 
State licensing regimes due to employment changes or who are licensed 
under one or more State regimes and also registered under the Federal 
regime.\7\ The Agencies and CSBS have made substantial progress in 
resolving these issues, and the Agencies expect to enter into an 
agreement with the Registry that will provide for appropriate 
consultation between the Agencies and the Registry concerning 
registrant information requirements and fees, system functionality and 
security, and other operational matters. However, final determination 
of system costs, funding, design, development and deployment will not 
be completed until after the Agencies adopt a final rule establishing 
registration requirements.
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    \7\ The Agencies note that some employees of Agency-regulated 
institutions may also be subject to the State licensing and 
registration regime. For example, employees who act as mortgage loan 
originators for a bank and a nondepository subsidiary of a bank 
holding company would be subject to both regimes.
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    This proposal provides for a 180-day period within which to 
complete initial registrations after the Registry is capable of 
accepting registrations from employees of Agency-regulated 
institutions. During this period, employees of Agency-regulated 
institutions would not be subject to sanctions if they originate 
residential mortgage loans without having completed their registration. 
The Agencies expect that this time period would provide mortgage loan 
originators and the Agency-regulated institutions that employ them 
adequate opportunity to prepare for the registrations required under 
this proposal. The Agencies intend to make a formal public 
announcement, in advance, of the date when the Registry will begin 
accepting registrations from employees of Agency-regulated 
institutions.
    When fully operational, mortgage loan originators and their Agency-
regulated institution employers are expected to have access to the 
Registry, seven days a week, to establish and maintain their 
registrations. Furthermore, the CSBS plans to phase-in system 
enhancements to provide consumers with access to certain information 
from the Registry in order for them to obtain information on State-
licensed and Federally-registered mortgage loan originators.
    As indicated above, and consistent with the S.A.F.E. Act, the 
Registry will not screen or approve registrations received from 
employees of Agency-regulated institutions. Instead, it will be the 
repository of, and conduit for, information on those employees who are 
mortgage loan originators at Agency-regulated institutions. As provided 
in Sec.  ----.104(d) and (h) of the proposed rule, it will be the 
responsibility of the Agency-regulated institution to review its 
employees' submissions as well as any reports received from the 
Registry.

II. Overview of the Proposal

    The proposed rule implements the S.A.F.E. Act's requirements with 
respect to Agency-regulated institutions. It requires individuals 
employed by these institutions who act as mortgage loan originators to 
register with the Registry, obtain unique identifiers, and maintain 
their registrations. The proposal also directs Agency-regulated 
institutions to require compliance with these requirements. 
Furthermore, the proposal requires Agency-regulated institutions to 
adopt and follow written policies and procedures to assure such 
compliance.
    A detailed section-by-section description of this proposal with a 
request for comments is set forth below.

III. Section-by-Section Description of the Proposed Rule

Section ----.101--Authority, Purpose, and Scope

    Section ----.101 \8\ states that this rule implements the S.A.F.E. 
Act's Federal registration requirements, which apply to individuals who 
originate residential mortgage loans, and describes the objectives of 
the S.A.F.E. Act's registration mandate. This section also identifies 
the entities that employ individual mortgage loan originators--entities 
referred to in this preamble discussion as Agency-regulated 
institutions--and that also are covered by this proposal. Under the 
S.A.F.E. Act, a mortgage loan originator must be Federally-registered 
if that individual is an employee of a depository institution, an 
employee of any subsidiary owned and controlled by a depository 
institution and regulated by a Federal banking agency, or an employee 
of an institution regulated by the FCA. Collectively, the Agencies' 
proposed rule applies to a depository institution, any subsidiary of a 
depository institution that is regulated by a Federal banking agency, 
and an institution regulated by the FCA. Section 1503(2) of the 
S.A.F.E. Act provides that ``depository institution'' has the same 
meaning as in section 3 of the Federal Deposit Insurance Act (FDI 
Act),\9\ and

[[Page 27390]]

includes any credit union. The Agencies note that because the 
definition of ``depository institution'' in the FDI Act and in the 
S.A.F.E. Act does not include bank or savings association holding 
companies or their non-depository subsidiaries, employees of these 
entities who act as mortgage loan originators are not covered by the 
Federal registration requirement and, therefore, must comply with State 
registration and licensing requirements.
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    \8\ Because each Agency's proposed rule will amend a different 
part of the Code of Federal Regulations but will have a similar 
numbering, relevant sections are cited, for example, as ``Sec.  --
--.101'' unless otherwise noted.
    \9\ Section 3 of the FDI Act defines ``depository institution'' 
as any bank or savings association. The term ``bank'' in section 3 
of the FDI Act means any national bank, State bank, Federal branch, 
and insured branch and includes any former savings association. The 
term ``savings association'' means any Federal savings association, 
state savings association, and any corporation other than a bank 
that the FDIC and the OTS jointly determine to be operating in 
substantially the same manner as a savings association. 12 U.S.C. 
1813.
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    Each Agency's proposed rule indicates the specific entities covered 
by the proposal. With respect to the OCC, this rule applies to national 
banks, Federal branches and agencies of foreign banks, their operating 
subsidiaries, and their employees who are mortgage loan 
originators.\10\ For the Board, this rule applies to member banks of 
the Federal Reserve System (other than national banks), their 
respective subsidiaries that are not functionally regulated within the 
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended 
(12 U.S.C. 1844(c)(5)); and branches and agencies of foreign banks 
(other than Federal branches, Federal agencies and insured State 
branches of foreign banks) and commercial lending companies owned or 
controlled by foreign banks \11\ and their employees who act as 
mortgage loan originators. For the FDIC, this rule applies to insured 
State nonmember banks (including State-licensed insured branches of 
foreign banks) and their subsidiaries (except brokers, dealers, persons 
providing insurance, investment companies, and investment advisers) and 
their employees who are mortgage loan originators. For the OTS, this 
rule applies to savings associations and their operating subsidiaries, 
and their employees who are mortgage loan originators. For the FCA, 
this rule applies to Farm Credit System (FCS or System) institutions 
that originate residential mortgage loans under sections 1.9(3), 1.11 
and 2.4(a)(2) and (b) of the Farm Credit Act of 1971, as amended, 12 
U.S.C. 2017(3), 2019, and 2075(a)(2) and (b), and their employees who 
are mortgage loan originators.\12\ For the NCUA, this rule applies to 
Federally-insured credit unions and their employees who are mortgage 
loan originators.
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    \10\ The S.A.F.E. Act's definition of depository institution 
includes Federal branches of foreign banks but not Federal agencies 
of foreign banks. However, the OCC has applied the Federal 
registration requirements to these entities because they are 
Federally regulated and have the authority to originate residential 
mortgage loans and, therefore, should not be treated differently 
from other Federally regulated or Federally insured institutions.
    \11\ The Board notes that it proposes to cover branches and 
agencies of foreign banks (other than Federal branches, Federal 
agencies and insured State branches of foreign banks); and 
commercial lending companies owned or controlled by foreign banks 
pursuant to its authority under the International Banking Act (IBA) 
(Chapter 32 of Title 12) to issue such rules it deems necessary in 
order to perform its respective duties and functions under the 
chapter and to administer and carry out the provisions and purposes 
of the chapter and prevent evasions thereof. 12 U.S.C. 3108(a). The 
Board notes that the IBA provides, in relevant part, that the above 
entities shall conduct their operations in the United States in full 
compliance with provisions of any law of the United States which 
imposes requirements that protect the rights of consumers in 
financial transactions, to the extent that the branch, agency, or 
commercial lending company engages in activities that are subject to 
such laws, and apply to State-chartered banks, doing business in the 
State in which such branch or agency or commercial lending company, 
as the case may be, is doing business. 12 U.S.C. 3106a(b)(1). Under 
the Board's proposal the above entities would be subject to the same 
Federal registration requirements as Federal branches, Federal 
agencies and insured State branches of foreign banks, which are 
covered in the OCC and FDIC rules, respectively.
    \12\ Some FCS associations may not exercise their statutory 
authority to make residential mortgage loans, and FCS banks no 
longer engage in residential mortgage origination activities because 
they have transferred their direct lending authority to their 
affiliated associations. The FCA emphasizes that employees of FCS 
banks and associations that do not engage in residential mortgage 
loan origination activities are not subject to the registration 
requirements of the S.A.F.E. and these regulations. The Federal 
Agricultural Mortgage Corporation (Farmer Mac) is an FCS institution 
that among other activities operates a secondary market for rural 
residential mortgage loans. The FCA determines that Farmer Mac 
employees are not subject to the registration requirements of the 
S.A.F.E. Act and these implementing regulations because Farmer Mac 
does not engage in mortgage loan origination activities for rural 
residents. The Farmer Mac secondary market is modeled after Fannie 
Mae and Freddie Mac, and the provisions of the S.A.F.E. Act do not 
expressly apply to employees at Fannie Mae and Freddie Mac.
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    Section 1507 of the S.A.F.E. Act requires the Federal banking 
agencies to make such de minimis exceptions ``as may be appropriate'' 
to the Act's requirements to register and obtain a unique 
identifier.\13\ Section ------.101(c)(2) of the proposed rule states 
that these registration requirements do not apply to an employee of an 
Agency-regulated institution if during the last 12 months: (1) The 
employee acted as a mortgage loan originator for 5 or fewer residential 
mortgage loans; and (2) the Agency-regulated institution employs 
mortgage loan originators who, while excepted from registration 
pursuant to this section, in the aggregate, acted as a mortgage loan 
originator in connection with 25 or fewer residential mortgage 
loans.\14\ An employee must register with the Registry prior to 
engaging in mortgage loan origination activity that exceeds either the 
individual or aggregate limit. The Agencies solicit comment on whether 
the proposed exception adequately and appropriately covers 
circumstances that are truly de minimis and whether any de minimis 
exception is appropriate. \15\
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    \13\ See S.A.F.E. Act at sections 1507(c) (de minimis 
exceptions), 1504(a)(1)(A) (requirement to register), 1504(a)(2) 
(requirement to obtain a unique identifier).
    \14\ For example, assume an Agency-regulated institution has six 
employees, A, B, C, D, E, and F who are not registered loan 
originators for an Agency-regulated institution. Employees A, B, C, 
and D have acted as mortgage loan originators on five mortgage loans 
each during the same 12-month period, while employee E has acted as 
a mortgage loan originator with respect to four mortgage loans 
during this same time. Employee F has not acted as a mortgage loan 
originator during this 12-month period. The institution has not 
exceeded its aggregate exception limit of 25 mortgage loans. 
Employees A, B, C, and D must register before acting as a mortgage 
loan originator with respect to any additional mortgage loan during 
this 12-month period because any one of them would exceed the 
individual exception limit of five mortgage loans each. Employee E, 
who has acted as a mortgage loan originator with respect to four 
loans may act as a mortgage loan originator with respect to one more 
loan because he or she would not exceed the individual exception 
limit of five mortgage loans and the institution would not exceed 
the aggregate exception limit of 25 mortgage loans. After employee E 
acts as a mortgage loan originator with respect to his or her fifth 
loan, and the 25th loan for the institution, the exception in ----
--.101(c) is no longer available to any employee (A, B, C, D, E, or 
F) who acts as a mortgage loan originator at the institution during 
this 12-month period.
    \15\ The FCA joins the Federal banking agencies in proposing a 
de minimis exception pursuant to its authority under section 
5.17(a)(11) of the Farm Credit Act of 1971, as amended, 12 U.S.C. 
2252(a)(11) to ``exercise such incidental powers as may be necessary 
or appropriate to fulfill its duties * * *'' In this case, the FCA 
is exercising its incidental powers to fulfill the requirement in 
the S.A.F.E. Act that it work together the Federal banking agencies 
to develop and maintain a system for registering residential 
mortgage loan originators at Agency-regulated institutions with the 
Registry. A coordinated and uniform approach to the de minimis 
exception among the Agencies is appropriate because it best fulfills 
the objectives of the S.A.F.E. Act.
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    In addition, the Agencies specifically invite comment on: whether 
the individual and institution-wide limits on the number of residential 
mortgage loans for which employees may act as a mortgage loan 
originator without registering and obtaining a unique identifier are 
appropriate; whether the proposed exception is adequately structured to 
prevent manipulation or ``gaming'' of the registration requirements; 
whether an institution should aggregate its residential mortgage loans 
with its subsidiaries when calculating the number of mortgage loans 
originated for purposes of this exception; whether monitoring for 
compliance with the proposed exception would be unduly burdensome for 
Agency-regulated institutions, and if so, how such burden could be 
minimized; and whether the proposed exception is consistent with the

[[Page 27391]]

consumer protection and fraud prevention purposes of the S.A.F.E. Act.
    The Agencies also solicit comment on whether an asset-based 
threshold is appropriate or whether other types of limits or 
thresholds, or other ways of structuring a de minimis exception, would 
be more appropriate. For example, should the proposed de minimis 
exception be applicable only to Agency-regulated institutions with 
total assets that do not exceed the amount that the Board establishes 
annually for banks, savings associations, and credit unions as an 
exception from the Home Mortgage Disclosure Act (HMDA)? \16\
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    \16\ For 2009, that amount is $39 million. See 73 FR 78616 (Dec. 
23, 2008). Pursuant to the HMDA (12 U.S.C. 2808) and Board 
Regulation C (12 CFR 203.2(e)(1)(i)), the asset-size threshold is 
adjusted annually based on year-to-year changes in the Consumer 
Price Index for Urban Wage Earners and Clerical Workers.
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    Furthermore, please provide comment on whether alternatively, or in 
addition to the foregoing, a de minimis exception should be crafted to 
be event specific. For example, a de minimis exception might provide 
that the registration requirements would not apply to an employee who 
does not regularly function as a mortgage loan originator and who 
originates no more than a small number of loans within a 12-month 
period during the absence (such as vacation or illness) of the 
individual that regularly functions as the Agency-regulated 
institution's mortgage loan originator.
    The Agencies note that the de minimis exception contained in the 
proposed rule would be voluntary; it would not prevent a mortgage loan 
originator who meets the criteria for the exception from registering 
with the Registry if the originator chooses to do so or if his or her 
employer requires registration.

Section ------.102--Definitions

    Section ----.102 defines the various terms used in the proposal. If 
a term is defined in the S.A.F.E. Act, the proposal generally 
incorporates that definition. The proposal has adopted other 
definitions used by the Registry in order to promote consistency and 
comparability, insofar as is feasible, between Federal registration 
requirements and the States' licensing requirements.
    Annual renewal period. The proposal requires that a mortgage loan 
originator renew his or her registration annually during the annual 
renewal period. The annual renewal period is November 1 through 
December 31 of each calendar year and a registered mortgage loan 
originator must renew during this period regardless of the date of the 
initial registration. For example, an employee who registered in 
October 2010 would have to renew between November 1, 2010 and December 
31, 2010. This is the same annual renewal period provided to State 
mortgage loan originators by the Registry. However, the Agencies and 
the Registry are discussing whether an alternate annual renewal period 
for Agency-regulated institutions at a different time of year from the 
annual renewal period of the State mortgage loan originators may be 
more desirable from a technical and operational standpoint. For example 
the final rule may designate the annual renewal period during another 
two-month time period during the year instead of the proposed renewal 
period. Furthermore, the Agencies are considering whether the rule 
should provide for a method in which the rule's registration 
requirements may be temporarily waived, or the initial registration or 
renewal period extended, in case of emergency, systems malfunction, or 
other event beyond the control of the Agency-regulated institution or 
the mortgage loan originator.
    Mortgage loan originator. The proposed definition of ``mortgage 
loan originator'' is based on the definition of the term ``loan 
originator'' included in the S.A.F.E. Act at section 1503(3). 
Specifically, this term means an individual who takes a residential 
mortgage loan application and offers or negotiates terms of a 
residential mortgage loan for compensation or gain. The term does not 
include: (1) Any individual who performs purely administrative or 
clerical tasks on behalf of an individual who is a mortgage loan 
originator; (2) any individual performing only real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) \17\ 
and is licensed or registered as a real estate broker in accordance 
with applicable State law, unless the individual is compensated by a 
lender, a mortgage broker, or other loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator; or (3) any individual 
or entity solely involved in extensions of credit related to timeshare 
plans, as that term is defined in 11 U.S.C. 101(53D).\18\ For purposes 
of this definition, the proposal defines ``administrative or clerical 
tasks'' to mean: (1) The receipt, collection, and distribution of 
information common for the processing or underwriting of a residential 
mortgage loan; and (2) communication with a consumer to obtain 
information necessary for the processing or underwriting of a 
residential mortgage loan. The Agencies note that the appendix to the 
proposal includes examples of the types of activities the Agencies 
consider to be both within and outside the scope of residential 
mortgage loan origination activities.
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    \17\ The S.A.F.E. Act defines ``real estate brokerage activity'' 
to mean any activity that involves offering or providing real estate 
brokerage services to the public, including: (i) Acting as a real 
estate agent or real estate broker for a buyer, seller, lessor, or 
lessee of real property; (ii) bringing together parties interested 
in the sale, purchase, lease, rental, or exchange of real property; 
(iii) negotiating, on behalf of any party, any portion of a contract 
relating to the sale, purchase, lease, rental, or exchange of real 
property (other than in connection with providing financing with 
respect to any such transaction); (iv) engaging in any activity for 
which a person engaged in the activity is required to be registered 
or licensed as a real estate agent or real estate broker under any 
applicable law; and (v) offering to engage in any activity, or act 
in any capacity, described in clause (i), (ii), (iii), or (iv). 
S.A.F.E. Act at Sec.  1503(3)(D). Nothing in this proposal would 
constitute an authorization for Agency-regulated institutions to 
engage in real estate brokerage, or any other activity, for which 
the institution does not have independent authority pursuant to 
Federal or State law, as applicable.
    \18\ ``Timeshare plan'' is defined in 11 U.S.C. 101 (53D) as an 
interest purchased in any arrangement, plan, scheme, or similar 
device, but not including exchange programs, whether by membership, 
agreement, tenancy in common, sale, lease, deed, rental agreement, 
license, right to use agreement, or by any other means, whereby a 
purchaser, in exchange for consideration, receives a right to use 
accommodations, facilities, or recreational sites, whether improved 
or unimproved, for a specific period of time less than a full year 
during any given year, but not necessarily for consecutive years, 
and which extends for a period of more than three years. A 
``timeshare interest'' is that interest purchased in a timeshare 
plan which grants the purchaser the right to use and occupy 
accommodations, facilities, or recreational sites, whether improved 
or unimproved, pursuant to a timeshare plan.
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    To the extent it is within the scope of the S.A.F.E. Act, the 
Agencies are requesting comment on whether the definition of ``mortgage 
loan originator'' should cover individuals who modify existing 
residential mortgage loans. If so, the Agencies seek comment on whether 
these individuals should be excluded from the definition. For example, 
the Agencies are considering whether the final rule should exclude from 
this definition persons who modify an existing residential mortgage 
loan, pursuant to applicable law, provided this modification does not 
constitute a refinancing (that is, the satisfaction or extinguishment 
of the original obligation and replacement by a new obligation) and is 
completed in accordance with a contract between the parties, including 
any workout agreement.

[[Page 27392]]

    The Agencies seek comment on whether an exclusion for individuals 
who modify existing residential mortgage loans would be appropriate in 
light of the S.A.F.E. Act's objectives of providing increased 
accountability and tracking of the mortgage loan originators, enhancing 
consumer protection, reducing fraud in the residential mortgage loan 
origination process, and providing consumers with easily accessible 
information at no charge regarding the employment history of, and 
publicly adjudicated disciplinary and enforcement actions against, 
mortgage loan originators. Comment is also requested on whether the 
final rule should delay the registration requirement for individuals 
engaged in loan modifications for only a specified period in light of 
current economic conditions and the national importance of encouraging 
mortgage lenders to engage in foreclosure mitigation activities.
    Moreover, the Agencies solicit comment on whether individuals who 
engage in approving mortgage loan assumptions should be excluded from 
the proposed definition of ``mortgage loan originator'' and whether 
such approach is consistent with the S.A.F.E. Act's objectives.
    In particular, commenters are encouraged to: (1) Describe the 
extent to which loan modification and assumption activities are staffed 
and managed separately from loan origination activities within the 
institution; (2) provide the number of employees who engage in loan 
modifications or assumptions and do not otherwise act as mortgage loan 
originators; (3) describe the types of contact that staff engaged only 
in modifications or assumptions has with customers and the extent to 
which such staff initiate contact with customers; (4) discuss whether 
loan modification staff ever process loan refinancings; and (5) discuss 
the extent of the information that is gathered from customers in the 
context of the loan modifications and assumptions. With respect to loan 
modifications, describe what staff would handle the transaction if the 
modification process becomes a refinancing of a loan or if a new 
borrower is added in addition to the original borrower (i.e., adding a 
cosigner).
    With respect to assumptions, describe: (1) Whether the loan 
transactions offered by your institution are typically assumable; (2) 
the types of assumptions that are permitted, if any; (3) the type of 
contact between the employee and the new borrower; and (4) differences, 
if any, between underwriting practices for a loan assumption 
transaction and a new loan origination. Comment is also specifically 
requested on whether the exclusion of personnel solely engaged in loan 
modifications and loan assumptions affects a consumer's ability to 
assess the competency and credentials of these personnel, keeping in 
mind the consumer protection and fraud prevention purposes of the 
S.A.F.E. Act.
    To the extent it is within the scope of the S.A.F.E. Act, the 
Agencies also seek comment on whether individuals who engage in certain 
refinancing transactions should be excluded from the definition of 
mortgage loan originator (and, correspondingly whether certain types of 
refinancing transactions should be excluded from the definition of 
residential mortgage loan). Specifically, should an individual who 
engages in refinancings that do not involve a cash-out and are with the 
same lender be excluded from the definition of mortgage loan 
originator? With respect to these specific types of refinancing 
transactions, the Agencies request comment on: (1) Whether such 
transactions have similar results for borrowers as loan modifications; 
(2) whether employees engaged in such refinancing transactions also 
engage in other mortgage loan origination activities; (3) the types of 
contact that employees who engage in these types of refinancings have 
with customers; (4) the extent to which such staff initiate contact 
with customers; and (5) the extent of the information that is gathered 
from customers in the context of these types of refinancing 
transactions.
    Furthermore, the Agencies seek comment on whether individuals who 
engage in loan modification and limited refinancing activities should 
be excluded from the definition of mortgage loan originator only if the 
transactions meet additional criteria. For example, should an 
individual who engages only in loan modification activities be excluded 
from the definition of mortgage loan originator only if the 
modification meets specific criteria such as a lower interest rate, 
reduced payment, elimination of an impending adjustment to the rate, or 
reduction in principal? Comment is requested on criteria that should be 
considered by the Agencies, if any.
    Nationwide Mortgage Licensing System and Registry or Registry. The 
proposal's definition of these terms is based on the definition 
included in the S.A.F.E. Act. Specifically, these terms mean the system 
developed and maintained by the CSBS and the AARMR for the State 
licensing and registration of State-licensed mortgage loan originators 
and the registration of mortgage loan originators pursuant to section 
1507 of the S.A.F.E. Act. The Registry currently supports the licensing 
and registration of State mortgage loan originators. As explained 
above, the Agencies are working with the CSBS to modify the Registry to 
support the registration of mortgage loan originators employed by 
Agency-regulated institutions.
    Registered mortgage loan originator. Pursuant to section 1503(7) of 
the S.A.F.E. Act, the proposal defines this term to mean any individual 
who meets the definition of mortgage loan originator and is an employee 
of an Agency-regulated institution and is registered pursuant to the 
requirements of this rule with, and maintains a unique identifier 
through, the Registry. This definition is the same as that included in 
the S.A.F.E. Act, except that the Agencies have modified it to apply 
only to individuals registered pursuant to regulations issued by the 
Agencies.
    Residential mortgage loan. As in the S.A.F.E. Act, the proposal 
defines ``residential mortgage loan'' as any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act 
(TILA) \19\ or residential real estate upon which is constructed or 
intended to be constructed a dwelling. In addition, the proposal 
specifically includes in this definition refinancings, reverse 
mortgages, home equity lines of credit and other first and second lien 
loans secured by a dwelling in order to clarify that originators of 
these types of loans are covered by the rule's requirements.
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    \19\ TILA defines ``dwelling'' as a residential structure or 
mobile home which contains one-to-four family housing units, or 
individual units of condominiums or cooperatives. 15 U.S.C. 1602(v). 
Board regulations and commentary include in this definition any 
residential structure that contains one to four units, whether or 
not that structure is attached to real property, and includes an 
individual condominium unit, cooperative unit, mobile home, trailer, 
and boat if they are in fact used as a residence. See 12 CFR 
226.2(a)(19) (Regulation Z).
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    The FCA emphasizes that section 1503(8) of the S.A.F.E. Act and --
--.102(f) do not amend or supersede sections 1.11(b) and 2.4(b) of the 
Farm Credit Act of 1971, as amended, 12 U.S.C. 2019(b) and 2075(b), and 
their implementing regulation, 12 CFR 613.3030(c), which establish the 
purposes for which FCS institutions may originate residential mortgage 
loans for eligible rural home borrowers.

[[Page 27393]]

    Unique Identifier. The proposal's definition of this term is 
identical to that included in section 1503(12) of the S.A.F.E. Act. 
Specifically, the proposal defines ``unique identifier'' to mean a 
number or other identifier that: (1) Permanently identifies a 
registered mortgage loan originator; (2) is assigned by protocols 
established by the Registry and the Agencies to facilitate electronic 
tracking of mortgage loan originators, and uniform identification of, 
and public access to, the employment history of, and the publicly 
adjudicated disciplinary and enforcement actions against, mortgage loan 
originators; and (3) must not be used for purposes other than those set 
forth in the S.A.F.E. Act.
    In section ----.103(d), the proposal uses the terms ``control'' and 
``financial services-related'' in the descriptions of the information 
that is required of an employee who is a mortgage loan originator. 
These terms are currently defined in the web-based form collecting 
information on State-licensed mortgage loan originators. In order to 
promote consistency of the information collected for Agency-regulated 
and State-licensed mortgage loan originators, the Agencies intend that 
the Registry's definitions of those terms will also be used in the web-
based form collecting information on Agency-regulated mortgage loan 
originators and, therefore have not defined them in this 
rulemaking.\20\
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    \20\ The Registry currently defines ``control'' as the power, 
directly or indirectly, to direct the management or policies of a 
company or business, whether through ownership of securities, by 
contract, or otherwise. Any person who is a general partner or 
executive officer, including Chief Executive Officer, Chief 
Financial Officer, Chief Operations Officer, Chief Legal Officer, 
Chief Compliance Officer, Director and individuals with similar 
status or functions; directly or indirectly has the right to vote 10 
percent or more of a class of a voting security or has the power to 
sell or direct the sale of 10 percent or more of a class of voting 
securities; or, in the case of a partnership, has the right to 
receive upon dissolution, or has contributed, 10 percent or more of 
the capital, is presumed to control that company. The Agencies have 
requested that this definition be revised to include ``Chief Credit 
Officer.'' The Registry's current definition of ``Financial 
services-related'' means pertaining to securities, commodities, 
banking, insurance, consumer lending, or real estate (including, but 
not limited to, acting or being associated with a bank or savings 
association, credit union, mortgage lender, mortgage broker, real 
estate salesperson or agent, closing agent, title company, or escrow 
agent). The Agencies have requested that this definition be revised 
to include ``Farm Credit System institution'' and ``appraiser.''
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Section ----.103--Registration of Mortgage Loan Originators

    The S.A.F.E. Act specifically prohibits an individual who is an 
employee of an Agency-regulated institution from engaging in the 
business of a loan originator without registering as a loan originator 
with the Registry, maintaining annually such registration, and 
obtaining a unique identifier through the Registry.\21\ As described 
more specifically below, under Sec.  ----.103 of the proposal, both the 
individual employee and the employing institution are responsible for 
complying with these requirements. In addition, the proposal requires 
that both the employee and the employing institution must submit 
information to the Registry for each registration to be complete.
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    \21\ See S.A.F.E. Act at section 1504(a).
---------------------------------------------------------------------------

    Employee registration requirement. In general, proposed Sec.  --
--.103(a)(1) requires employees of Agency-regulated institutions who 
act as a mortgage loan originator to register with the Registry, 
maintain their registration, and obtain a unique identifier. The 
Agencies note that this requirement would not apply if the employee is 
subject to a de minimis exception. This section further provides that 
any employee who is not in compliance with the registration and unique 
identifier requirements set forth in this subpart, by the expiration of 
the implementation periods specified in Sec.  ----.103(a)(3) and 
(a)(4)(ii), as applicable, is in violation of the S.A.F.E. Act and this 
rule. The OCC, Board, FDIC, and OTS have the authority to take 
enforcement actions against their respective Agency-regulated 
institutions and individual employees of those institutions who violate 
the S.A.F.E. Act and the final rule, pursuant to 12 U.S.C. 1818. The 
FCA has authority to take enforcement actions against Farm Credit 
System institutions and individual employees who violate the S.A.F.E. 
Act and the final rule pursuant to title V, Part C of the Farm Credit 
Act of 1971, as amended, 12 U.S.C. 2261 et seq. The NCUA has the 
authority to take enforcement actions against federally-insured credit 
unions and their employees who violate the S.A.F.E. Act and the final 
rule under 12 U.S.C. 1786.
    Institution requirement. Unless the de minimis exception applies, 
paragraph (a)(2) of Sec.  ----.103 provides that an Agency-regulated 
institution must require its employees who are mortgage loan 
originators to register with the Registry, maintain this registration, 
and obtain a unique identifier in compliance with this subpart. This 
provision also prohibits an Agency-regulated institution from 
permitting its employees to act as mortgage loan originators unless 
registered with the Registry pursuant to this subpart, after the 
implementation periods specified in Sec. Sec.  ----.103(a)(3) and 
(a)(4)(ii), as applicable, expire.
    Implementation period for initial registrations. The proposal 
provides a grace period for initial registrations. Pursuant to 
paragraph (a)(3) of this section, an employee is not required to 
register, and therefore can continue to originate residential mortgage 
loans without complying with the rule's registration requirement, for 
180 days from the date the Agencies provide public notice that the 
Registry is accepting initial registrations. After this 180-day period 
expires, any existing employee or newly hired employee of an Agency-
regulated institution who is subject to the registration requirements 
is prohibited from originating residential mortgage loans without first 
meeting the registration requirements. The Registry, in consultation 
with the Agencies, is considering a staggered registration process for 
some of the larger Agency-regulated institutions in order to spread out 
the registration of mortgage loan originators throughout this 
implementation period. This could reduce the number of originators 
registering at any one time, thereby enabling the Registry to 
accommodate all registrations in a timely and efficient manner.
    The Agencies seek comment on whether the 180-day implementation 
period will provide Agency-regulated institutions and their employees 
with adequate time to complete the initial registration process. The 
Agencies also inquire as to whether an alternative schedule for 
implementation and initial registrations would be appropriate, what 
such an alternative schedule should be, and why it is more appropriate 
than the implementation period proposed by the Agencies. In addition, 
the Agencies request comment on whether, and how, a staggered 
registration process should be developed.
    The Agencies recognize that Agency-regulated institutions and 
mortgage loan originators need certainty as to when the Registry is 
available to start accepting registrations and the date that the 180-
day clock starts to run. Therefore, the Agencies will provide a 
coordinated and simultaneous advance notice to Agency-regulated 
institutions of when the Registry will begin accepting Federal 
registrations through appropriate means, such as a Federal Register 
publication, Web-site notice, or agency bulletin.
    Special rule for previously registered employees. Under paragraph 
(a)(4) of Sec.  ----.103, properly registered or licensed mortgage loan 
originators will not have to re-register when they change employment by 
moving from one Agency-regulated institution to another or from a 
State-regulated institution to

[[Page 27394]]

an Agency-regulated institution, regardless of whether the change in 
employment is made voluntarily, through an acquisition or merger of the 
employee's prior employer, or through a reorganization where previously 
State-licensed mortgage loan originators become subject to the 
registration requirements of Agency-regulated institutions. 
Specifically, this provision provides that if a new employee of an 
Agency-regulated institution had previously registered with, and 
obtained a unique identifier from, the Registry prior to becoming an 
employee of that institution and has maintained that registration (or 
license, if previously employed by a State-regulated entity), the 
registration requirements of this subpart are deemed to be met provided 
that: (1) The employee's employment information in the Registry is 
updated; (2) new fingerprints of the employee are provided to the 
Registry for a new background check, except in the case of mergers, 
acquisitions or reorganizations; (3) information concerning the new 
employing institution is provided to the Registry pursuant to Sec.  --
--.103(e)(1)(i), to the extent the institution has not previously met 
these requirements, and (e)(2)(i) ; \22\ and (4) the registration is 
maintained pursuant to the requirements of paragraph (b) of this 
section as of the date that the employee is employed by the 
institution.
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    \22\ These provisions require: The institution's name, main 
office address, IRS Employer Tax Identification Number, Research 
Statistics Supervision Discount (RSSD) number; primary Federal 
regulator, contact information for individuals at the institution 
for Registry purposes; and confirmation that it employs the 
registrant. Information regarding an institution's RSSD number is 
available from the Board.
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    In order to reduce regulatory burden and to prevent an interruption 
in mortgage origination activity, this provision provides a 60-day 
grace period to comply with these requirements when a registered 
mortgage loan originator becomes an employee of an Agency-regulated 
institution as a result of an acquisition, merger, or reorganization. 
The Agencies seek comment on whether this grace period is appropriate.
    Continuing a mortgage loan originator's registration from one 
employer to another will reduce regulatory burden on Agency-regulated 
institutions as well as the residential mortgage industry. In addition, 
because an employee's unique identifier and background information in 
the Registry will remain the same, consumers will be able to locate a 
mortgage loan originator who has changed employers. The Agencies note 
that the registration of a mortgage loan originator who leaves any 
employer will be inactive until he or she is hired by a new 
institution, his or her record is updated in accordance with the final 
rule's requirements, and the new employer acknowledges employing the 
mortgage loan originator through the Registry. The individual will be 
prohibited from acting as a mortgage loan originator at an Agency-
regulated institution until such time as the registration is 
reactivated, unless covered by the 60-day grace period.
    Maintaining Registration. Under Sec.  ----.103(b), a registered 
mortgage loan originator must renew his or her registration with the 
Registry during the annual renewal period (November 1-December 31). To 
renew, the employee must confirm that the information previously 
submitted to the Registry remains accurate and complete, updating any 
information as needed. Any registration that is not renewed during this 
period will become inactive and the individual will be prohibited from 
acting as a mortgage loan originator at an Agency-regulated institution 
until such time as the registration requirements are met. All employee 
data that has been provided to the Registry about the employee will 
remain in the Registry even when the employee is in inactive status. 
Inactive mortgage loan originators will not be assigned a new unique 
identifier if they reregister.
    In addition to the annual renewal, a registration must be updated 
within 30 days of the occurrence of any of the following events: (1) A 
change in the employee's name, (2) the registrant ceases to be an 
employee of the institution; or (3) any of the employee's responses to 
the information required for registration pursuant to paragraphs 
(d)(1)(iii) through (xi) become inaccurate. These annual renewal and 
updating requirements are similar to what is required currently for 
State-licensed mortgage loan originators.
    This paragraph also provides that any employee who registers with 
the Registry must maintain his or her registration unless the employee 
is no longer a mortgage loan originator. As a result of this provision, 
once an employee registers as a loan originator with the Registry, the 
employee will be required to continue this registration until he or she 
is no longer engaged in the activity of a mortgage loan originator, 
even if, in any particular year, the employee originates fewer mortgage 
loans than the number specified in the de minimis exception provision. 
The purpose of this requirement is to avoid the creation of a timing 
loophole that could allow mortgage loan originators to avoid 
registration requirements.
    The Agencies specifically request comment on whether the proposed 
initial registration requirements as well as the requirements for 
maintaining registration are adequate and feasible for Agency-regulated 
institutions and their employees who are mortgage loan originators, yet 
serve the consumer protection purposes enumerated in the S.A.F.E. Act.
    Effective date of registrations and renewals. Paragraph (c) of this 
section provides that an initial registration is effective on the date 
that the registrant receives notification from the Registry that all 
employee and institution information required by paragraphs (d) and (e) 
of this section has been submitted and the registration is complete.
    A renewal or update pursuant to paragraph (b) is effective on the 
date the registrant receives notification from the Registry that all 
applicable information required by paragraphs (b) and (e) of this 
section has been submitted and the renewal or update is complete.
    Except as provided by the 180-day implementation period in Sec.  --
--.103(a)(3) or the 60-day grace period provided in Sec.  --
--.103(a)(4), an employee must not engage in mortgage origination if 
his or her registration is not yet effective or has not been renewed 
pursuant to this rule.
    Required employee information. Paragraph (d) of Sec.  ----.103 
lists the categories of information that mortgage loan originators, or 
the employing Agency-regulated institution on behalf of the mortgage 
loan originator, will be required to submit to the Registry. The 
Registry's registration form will more specifically identify the 
information required.
    Specifically, the proposal requires the employee to submit 
information regarding his or her identity (name and former names, 
Social Security number, gender, date of birth, and place of birth) and 
home and business contact information; date the employee became an 
employee of the Agency-regulated institution; financial services-
related employment and financial history for the past 10 years; 
criminal history involving felonies and certain misdemeanors; history 
of financial services-related civil actions, arbitrations and 
regulatory and disciplinary actions or orders; financial services-
related professional license revocations or suspensions; voluntary or 
involuntary employment terminations based on violations of law or 
industry standards of conduct; and certain actions listed above that 
are pending

[[Page 27395]]

against the employee. As explained below, the Agency-regulated 
institution must have policies and procedures in place for confirming 
the adequacy and accuracy of employee registrations.
    The employee also must provide fingerprints, in digital form if 
practicable, and any appropriate identifying information to the 
Registry for submission to the FBI and any other Federal or State 
governmental agency or entity authorized to do a criminal history 
background check.\23\ The Agencies expect that the Registry will submit 
fingerprints to the FBI for a criminal history background check in 
connection with the registration of each mortgage loan originator of an 
Agency-regulated institution. The Agencies, however, are not requiring 
employees to obtain new fingerprints for submission to the Registry if 
the employing Agency-regulated institution has the employee's 
fingerprints on file, provided that the fingerprints submitted to the 
Registry were taken less than three years prior to the employee's 
registration with the Registry. If the Agency-regulated institution has 
such fingerprints on file, the Registry plans to use these fingerprints 
to run the required criminal history background check on the mortgage 
loan originator.
---------------------------------------------------------------------------

    \23\ Further information on the Registry's fingerprint and 
background check procedures may be found on the Registry's Web site 
at http://www.stateregulatoryregistry.org/NMLS/.
---------------------------------------------------------------------------

    It is the Agencies' understanding that the Registry plans to 
support digital fingerprinting by October 2009 and likely before the 
initiation of the proposed rule's implementation period. As digital 
fingerprints are preferable to paper fingerprints, the proposed rule 
provides that registrants should submit digital fingerprints to the 
Registry, if practicable. If digital fingerprints are not available, 
the Registry will accept fingerprint cards, and will convert these 
cards to a digital format. The Agencies encourage the use of digital 
fingerprints and note that the proposal's permission to submit 
fingerprints in paper form is intended to enable smaller institutions 
without the capability or feasibility to obtain digital fingerprints to 
comply with this requirement.
    The Agencies specifically seek comment on whether the three-year 
age limit for existing fingerprints is appropriate and whether Agency-
regulated institutions currently have fingerprints of their employees 
on file, and if so, whether they are in digital or paper form.
    Employee authorization and attestation. Paragraph (d)(2) of Sec.  
----.103 requires the employee, not the employing Agency-regulated 
institution, to attest to the correctness of all such information 
submitted to the Registry pursuant to paragraph (d)(1), and to provide 
authorization for the Registry and the employing Agency-regulated 
institution to obtain information related to any administrative, civil 
or criminal findings to which the employee is a party.
    In order to provide relevant information to consumers and to 
implement the purposes of the S.A.F.E. Act, paragraph (d)(2) requires 
the employee, not the employing Agency-regulated institution, to 
authorize the Registry to make available to the public the following 
information submitted to the Registry: His or her name; other names 
used; name of current employer(s); current principal business 
location(s) and business contact information; 10 years of relevant 
employment history; and publicly adjudicated or pending disciplinary 
and enforcement actions and arbitrations against the employee. The 
Agencies envision that this information will be made public in two 
phases. The first phase, implemented at the time the Registry begins 
accepting Federal registrations, would provide for public accessibility 
of the employee's name; other names used; name of current employer(s); 
current principal business location(s) and business contact 
information; and employment history. The remaining categories of 
information (publicly adjudicated or pending disciplinary and 
enforcement actions and arbitrations against the employee) would be 
made public at a later date, once the Registry, in consultation with 
the Agencies, has designed and implemented a system through which the 
registrant may provide additional explanatory information to accompany 
a positive response to any of the disclosure questions regarding 
criminal history or the other information requested in paragraphs 
(d)(1)(iii) through (xi). The Agencies note that once the Registry 
makes this enhancement, registered mortgage loan originators can 
provide this explanatory language at any time or during the annual 
renewal process, and that this explanatory language may be made public. 
Additionally, relevant nonpublic information submitted to the Registry 
will be accessible to the Agencies and State mortgage regulators, as 
appropriate.
    The institution may provide the employee information required under 
Sec.  ----.103(d)(1) to the Registry or require the employee to provide 
the information to the Registry. Regardless of the manner that the 
information is provided, the requirements of the rule remain the same: 
The employee must attest to the correctness of the information required 
by Sec.  ----.103(d) and the institution must implement policies and 
procedures to confirm the adequacy and accuracy of employee 
registrations, including updates and renewals.
    The Agencies have limited the required information to what is 
necessary to meet the objectives of the S.A.F.E. Act for the 
registration of residential mortgage loan originators employed by 
Agency-regulated institutions and to what is required by the Registry's 
current data collection form for State mortgage loan originators, Form 
MU4. The Agencies believe that both the State-licensing and Agency-
registration requirements should collect similar information from 
mortgage loan originators in order to effectively track loan 
originators, reduce regulatory burden on mortgage loan originators who 
move between institutions with differing charters and regulators, and 
permit consumers to review similar information on mortgage loan 
originators regardless of the originator's regulator. The Agencies and 
CSBS have worked together to identify what information should be 
required for registration and will continue to do so going forward.
    The Agencies seek comment on the employee data that is proposed to 
be collected, the employee data that is proposed to be made public, and 
whether any other additional data should be collected or made public.
    Required Agency-regulated institution information. Paragraph (e)(1) 
of Sec.  ----.103 requires the employing Agency-regulated institution 
to submit certain information to the Registry as a base record in 
connection with the initial registration of one or more mortgage loan 
originators. Specifically, the Agency-regulated institution must 
provide its name, main office address, primary Federal regulator, 
Employer Identification Number (EIN) issued by the Internal Revenue 
Service, primary point of contact information, and contact information 
for ``system administrators.'' If the Agency-regulated institution is a 
subsidiary, it also must indicate that it is a subsidiary and provide 
the name of its parent institution, as explained further below.
    System administrators will have the authority to enter data 
required in paragraph (e) of this section on the Registry and will be 
responsible for keeping institution information and the list of 
employees registered with the Registry current, provided these 
individuals do not act as mortgage loan originators. The system 
administrators

[[Page 27396]]

may delegate their authority and assign as many additional system users 
as necessary to comply with the registration requirements of the 
S.A.F.E. Act and the final rule, provided the delegated administrators 
meet this paragraph's requirements. The primary point of contact also 
can be one of the system administrators.
    In addition, paragraph (e)(1) requires an Agency-regulated 
institution to provide its Research Statistics Supervision Discount 
(RSSD) number. The RSSD database is maintained by the Board. The 
Agencies expect to provide the Registry with an extract of the Board's 
database, indexed by RSSD number, to facilitate an Agency-regulated 
institution's authorized access to the Registry and its establishment 
of a new base record. Upon receiving the information for a new base 
record from an Agency-regulated institution, the Registry will confirm 
the information by comparing the application with data supplied by the 
Agencies. The Agencies will establish a mechanism by which Agency-
regulated institutions that do not have an RSSD number will be added to 
the RSSD database. However, an operating subsidiary of an Agency-
regulated institution will not be required to obtain an RSSD number. 
Instead, if an operating subsidiary does not have an RSSD number, the 
operating subsidiary will provide its parent institution's RSSD number 
and indicate that it is an operating subsidiary of the parent. The 
Agencies seek comment on the proposal to require Agency-regulated 
institutions to submit their RSSD number, and operating subsidiaries, 
if necessary, to submit their parent institution's RSSD number, to 
facilitate an Agency-regulated institution's authorized access to the 
Registry and its establishment of a base record, and as identifying 
data for validating the base record.
    Paragraph (e)(1)(ii) of this section requires the Agency-regulated 
institution to update any information it has submitted within 30 days 
of the date that the information becomes inaccurate.
    Paragraph (e)(2) of this section requires an Agency-regulated 
institution to provide information to the Registry for each employee 
who acts as a mortgage loan originator. The Agency-regulated 
institution must: (1) After all the information required by paragraph 
(d) of this section has been submitted to the Registry, confirm that it 
employs the registrant; and (2) within 30 days of the date the 
registrant ceases to be an employee of the institution, provide 
notification that it no longer employs the registrant and the date the 
registrant ceased being an employee. This information will link the 
registering mortgage loan originator to the Agency-regulated 
institution in order to confirm that the registration of the employee 
is valid and legitimate. The Agencies note that the Registry's system 
protocols will not permit the Agency-regulated institution to confirm 
that it employs the registrant unless all of the employee's information 
required by paragraph (d) of this section has been submitted to the 
Registry.
    The Agencies anticipate that some Agency-regulated institutions may 
select one or more individuals to submit the required employee 
information on behalf of each of their mortgage loan originators to 
facilitate this registration process. The Agencies also recognize the 
initial volume of new registrants could be burdensome on both the 
registrants and on the staff charged with completing the registrations. 
To mitigate this burden, the Agencies are considering whether to modify 
the Registry to permit a ``batch'' process for Agency-regulated 
institutions to submit, in bulk, some or all of the required employee 
and institution data. However, such a process would not eliminate 
completely an individual employee's role in the registration process or 
the employee's responsibility to attest to the accuracy of the data 
submitted on the employee's behalf. Typical automated human resources 
systems likely will not contain all of the employee information 
required to be submitted to the Registry Under Sec. ----.103(d) of this 
proposed rule. As a result, the institution would need to gather the 
missing information from each potential registrant and then format it 
for the batch processing, which may create some registration burden on 
administrative staff and lead to possible delays, errors, or omissions. 
Alternatively, if the Agencies specify a limited set of standard data 
elements that are likely to be contained in an institution's automated 
human resources system, such as name and employment date, for the batch 
file, individual employees would still be required to access the 
Registry to provide any missing information and complete the 
registration process. In either case, employees would still be 
responsible for accessing their record in the Registry to attest to the 
accuracy of the information submitted on their behalf by the employing 
institution and authorize background checks and public access to 
certain employee information.
    The Agencies seek comment on batch processing and welcome 
suggestions for workable alternative approaches that could mitigate the 
initial registration burden on Agency-regulated institutions and their 
employees. Comment is also sought on the appropriateness of having one 
employee input registration information into the Registry on another 
employee's behalf.

Section ----.104 Policies and Procedures

    Proposed Sec.  ----.104 requires Agency-regulated institutions that 
employ mortgage loan originators to adopt and follow written policies 
and procedures designed to assure compliance with the requirements of 
the final rule. This requirement applies to all Agency-regulated 
institutions that employ individuals who act as mortgage loan 
originators, regardless of the application of any de minimis exception 
to their employees. This section requires that these policies and 
procedures must be appropriate to the nature, size, complexity and 
scope of the mortgage lending activities of the Agency-regulated 
institution and must at a minimum include the following eight 
provisions.
    First, these policies and procedures must establish a process for 
identifying which employees of the institution are required to be 
registered mortgage loan originators.
    Second, the policies and procedures must require that all employees 
of the institution who are mortgage loan originators be informed of the 
registration requirements of the S.A.F.E. Act and this rule and be 
instructed on how to comply with these requirements and procedures, 
including registering as a mortgage loan originator prior to engaging 
in any mortgage loan origination activity.
    Third, the policies and procedures must establish procedures to 
comply with the unique identifier requirements in Sec.  ----.105.
    Fourth, these policies and procedures must establish reasonable 
procedures for confirming the adequacy and accuracy of employee 
registrations, including updates and renewals, by comparison with the 
institution's records. The Agencies do not expect Agency-regulated 
institutions, however, to obtain private database searches on their 
pre-existing employees to confirm employee information. Instead, 
institutions should compare the information supplied by the employee 
for purposes of registering with the Registry with the information 
contained in the institution's own records.
    Fifth, these policies and procedures must establish reasonable 
procedures and tracking systems for monitoring compliance with 
registration requirements and procedures. Agency-

[[Page 27397]]

regulated institutions will be expected to be able to demonstrate 
compliance with the requirements of the S.A.F.E. Act and the final 
rule, such as by maintaining appropriate records.
    Sixth, the policies and procedures must provide for periodic 
independent testing of the Agency-regulated institution's policies and 
procedures for compliance with the S.A.F.E. Act and the final rule, 
including the registration and renewal requirements, and for such 
testing to be conducted by institution personnel or by an outside 
party.
    Seventh, the policies and procedures must provide for appropriate 
action in the case of any employee who fails to comply with the 
registration requirements of the S.A.F.E. Act, this rule, or the 
related policies and procedures of the institution, including 
prohibiting such employees from acting as mortgage loan originators or 
other appropriate disciplinary actions.
    Eighth, the policies and procedures must establish a process for 
reviewing the criminal background history reports on employees received 
from the FBI through the Registry and taking appropriate action 
consistent with applicable law and rules with respect to these reports. 
Moreover, an Agency-regulated institution must maintain such records or 
reports and document any action taken with respect to applicable 
employees. Institutions should maintain these records consistent with 
applicable recordkeeping requirements, if any.
    The Agencies specifically request comment on the difficulty of 
establishing suitable policies and procedures including the amount of 
time and resources needed for their adoption and implementation. The 
Agencies note that these policies and procedures should be in place at 
an institution prior to the registration of its employees pursuant to 
this rule.

Section ----.105 Use of Unique Identifier

    Section ----.105(a) of the proposal requires an Agency-regulated 
institution to make the unique identifier(s) of its registered mortgage 
loan originator(s) available to consumers in a manner and method 
practicable to the institution. The Agencies note that an Agency-
regulated institution may comply with this requirement in a number of 
ways. For example, the institution may choose to direct consumers to a 
listing of registered mortgage loan originators and their unique 
identifiers on its Web site; post this information prominently in a 
publicly accessible place, such as a branch office lobby or lending 
office reception area; or establish a process to ensure that 
institution personnel provide the unique identifier of a registered 
mortgage loan originator to consumers who request it from employees 
other than the mortgage loan originator.\24\
---------------------------------------------------------------------------

    \24\ The Agencies note that the Federal Housing Finance Agency 
(FHFA) has directed Fannie Mae and Freddie Mac to require all 
mortgage loan applications taken on and after January 1, 2010 to 
include the mortgage loan originator's unique identifier. See FNMA 
LL 02-2009: New Mortgage Loan Data Requirements (02/13/09).
---------------------------------------------------------------------------

    Section ----.105(b) requires a registered mortgage loan originator 
to provide the originator's unique identifier to a consumer upon 
request, before acting as a mortgage loan originator, and through the 
originator's initial written communication with a consumer, if any. The 
Agencies intend Sec.  ----.105(b)(3) of the rule to cover written 
communication from the originator specifically for his or her customers 
and not written materials distributed by the Agency-regulated 
institution for general use by its customers.
    Although a mortgage loan originator may change his or her name, 
change employment, or move, the unique identifier assigned to the 
originator by the Registry at the originator's initial registration 
will remain the same. Once public access to the Registry is fully 
functional, the unique identifier will enable consumer access to an 
individual mortgage loan originator's profile stored in the Registry, 
including the mortgage loan originator's registration information, any 
State licenses held (active or inactive), employment history and other 
information of interest to the consumer. If a mortgage loan originator 
is simultaneously employed by more than one State or Agency-regulated 
institution, that information also will be readily visible to the 
consumer. Therefore, as this unique identifier will enable a consumer 
to obtain important information concerning a mortgage loan originator 
from the Registry, a mortgage loan originator and the employing 
institution must ensure that the consumer has access to it.
    The Agencies seek comment regarding the adequacy and 
appropriateness of these unique identifier requirements with respect to 
the consumer protection and anti-fraud purposes of the S.A.F.E. Act. 
The Agencies also seek comment on whether the proposed rule adequately 
ensures that consumers will be made aware that they have the 
opportunity to access information about the employment history of, and 
publicly adjudicated disciplinary and enforcement actions against, a 
prospective, current, or former mortgage loan originator. Furthermore, 
the Agencies seek comment on the specific difficulties that an 
institution or its employees may have in complying with these 
requirements and whether there may be circumstances when a registered 
mortgage loan originator would not be able to provide the unique 
identifier to a consumer before acting as a mortgage loan originator.

Appendix--Examples of Mortgage Loan Originators

    As an aid in the understanding, and to provide examples of the 
definition of mortgage loan originator, the proposed rule includes an 
Appendix that provides examples of the type of activities that would 
cause an employee to fall within or outside the definition of mortgage 
loan originator. The examples in this Appendix are not all inclusive; 
they illustrate only the issue described and do not illustrate any 
other issues that may arise in this proposal. The Agencies request 
comment on whether the examples are helpful, and if other examples 
should be added to this Appendix or provided to the public by other 
means.
    The Agencies also request comment on whether there are mortgage 
loans for which there may be no mortgage loan originator. Are there 
situations where a consumer applies for and is offered a loan through 
an automated process (such as a prescreened offer extended to a 
consumer as part of a mass mailing or an automated loan approval in 
response to an online application) without contact with a mortgage loan 
originator? To the extent there are such situations, please describe 
the contact and communication that a consumer would have with the 
institution and its employees. The Agencies also seek comment on: (1) 
The activities conducted by employees with respect to mortgage loan 
pre-approval; and (2) the typical duties of fulfillment staff that do 
not involve mortgage loan origination activities.

IV. Request for Comments

    The Agencies encourage comment on any aspect of this proposal and 
especially on those issues specifically noted in this preamble.
    Agency-regulated institutions are encouraged to identify how many 
of their employees would qualify as residential mortgage loan 
originators under this definition, and therefore, would be required to 
register under this proposed rule. Please provide specific information 
on the number of employees engaged in mortgage loan origination, with 
both actual count and as a percentage of total employees, and

[[Page 27398]]

the number of full-time equivalents (FTEs) engaged in this activity as 
reported on an institution's Consolidated Reports of Condition and 
Income (Call reports) or Thrift Financial Reports, as applicable. It 
would also be very helpful for Agency-regulated institutions to 
identify the internal departments to which these employees are 
assigned, and whether they are engaged in activities other than 
residential mortgage loan origination. Specifically, please discuss the 
estimated numbers of employees who act as mortgage loan originators who 
work in the mortgage loan function and those that work in divisions 
outside of the mortgage loan origination function. Please also describe 
any activities related to mortgage loan origination in which the staff 
outside the mortgage loan function engages. Please describe whether 
fulfillment staff or other employees who are not loan officers act as 
mortgage loan originators, and the estimated numbers of such employees 
that the institution would need to register under the proposed rule. 
This information will enable the Agencies to estimate the number of 
employees who will seek registration for purposes of evaluating system 
administration needs and determining if the proposed 180-day 
implementation period is adequate to allow for initial registration. 
This information will also assist the Agencies in preparing final 
analyses of the impact of these registrations under the Regulatory 
Flexibility Act, Paperwork Reduction Act, Executive Order 12866, and 
the Unfunded Mandates Reform Act of 1995, as applicable.

Solicitation of Comments on Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, Public Law 106-102, sec. 
722, 113 Stat. 1338, 1471 (Nov. 12, 1999), requires the Federal banking 
agencies to use plain language in all proposed and final rules 
published after January 1, 2000. The Agencies invite your comments on 
how to make this proposal easier to understand. For example:
     Have we organized the material to suit your needs? If not, 
how could this material be better organized?
     Are the requirements in the proposed regulation clearly 
stated? If not, how could the regulation be more clearly stated?
     Does the proposed regulation contain language or jargon 
that is not clear? If so, which language requires clarification?
     Would a different format (grouping and order of sections, 
use of headings, paragraphing) make the regulation easier to 
understand? If so, what changes to the format would make the regulation 
easier to understand?
     What else could we do to make the regulation easier to 
understand?

Regulatory Analysis

A. Regulatory Flexibility Act

    OCC: Pursuant to Sec.  605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise 
required under Sec.  604 of the RFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities and publishes its certification 
and a short, explanatory statement in the Federal Register along with 
its rule.
    We have estimated that this proposal will not have a significant 
economic impact on a substantial number of small entities. 
Specifically, we estimate that 653 small national banks are likely to 
be impacted by the NPRM, with an average total compliance cost per bank 
estimated at $18,800. We base this analysis using the impact of the 
proposed rule on compliance costs as a percent of labor costs, as well 
as compliance costs as a percent of noninterest expenses. Therefore, 
pursuant to Sec.  605(b) of the RFA, the OCC hereby certifies that this 
proposal will not have a significant economic impact on a substantial 
number of small entities. Accordingly, a regulatory flexibility 
analysis is not needed.
    Board: Pursuant to Sec.  605(b) of the Regulatory Flexibility Act, 
5 U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise 
required under Sec.  603 of the RFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities and publishes its certification 
and a short, explanatory statement in the Federal Register along with 
its rule.
    The proposed rule applies to all banks that are members of the 
Federal Reserve System (other than national banks) and certain of their 
respective subsidiaries, branches and Agencies of foreign banks (other 
than Federal branches, Federal agencies, and insured State branches of 
foreign banks), and commercial lending companies owned or controlled by 
foreign banks. Under regulations issued by the Small Business 
Administration,\25\ a small entity includes banking organizations with 
assets of $175 million or less (a small banking organization). As of 
December 31, 2008, there were approximately 501 of the institutions 
listed above that are small banking organizations. The Board believes 
that there is no significant economic impact. Compliance costs are 
estimated to be less than 4% of profits for state member banks. For the 
other small banking organizations, the Board believes these entities 
would fall below the de miminis exceptions in Section ----.101(c)(2) of 
the proposed rule since originating residential mortgages is not part 
of their primary business. The agencies proposed the de minimis 
exception in an effort to reduce compliance costs on small businesses. 
Therefore, pursuant to Sec.  605(b) of the RFA, the Board hereby 
certifies that this proposal will not have a significant economic 
impact on a substantial number of small entities. Accordingly, a 
regulatory flexibility analysis is not needed.
---------------------------------------------------------------------------

    \25\ See 13 CFR 121.201.
---------------------------------------------------------------------------

    FDIC: In accordance with the Regulatory Flexibility Act, 5 U.S.C. 
601-612 (RFA), an agency must publish an initial regulatory flexibility 
analysis with its proposed rule, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities (defined for purposes of the RFA to include 
banks with less than $175 million in assets). The FDIC hereby certifies 
that the proposed rule would not have a significant economic impact on 
a substantial number of small entities.
    Approximately 3,274 FDIC-supervised banks are small entities. 
However, the proposed rule would not apply to approximately 2,430 of 
those small entities because they originate 25 or fewer residential 
mortgage loans annually and therefore would qualify for the de minimis 
exception. Only approximately 844 small entities supervised by the 
FDIC--about 26% of FDIC-supervised small entities--would be subject to 
the requirements of the proposed rule. For those 844 small entities, 
the estimated initial costs for complying with the proposed rule would 
represent, on average, approximately 0.7% of total non-interest 
expenses, and the annual compliance costs would represent, on average, 
approximately 0.3% of total non-interest expenses.
    OTS: Pursuant to Sec.  605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise 
required under Sec.  604 of the RFA is not required if the agency 
certifies that the rule will not have a significant economic impact on 
a substantial number of small entities and publishes its certification 
and a short, explanatory statement in the Federal Register along with 
its rule.

[[Page 27399]]

    We have estimated that this proposal will not have a significant 
economic impact on a substantial number of small entities. 
Specifically, we estimate that 385 small savings associations are 
likely to be impacted by the NPRM, with an average total compliance 
cost per savings association estimated at $13,311. Therefore, pursuant 
to Sec.  605(b) of the RFA, the OTS hereby certifies that this proposal 
will not have a significant economic impact on a substantial number of 
small entities. Accordingly, a regulatory flexibility analysis is not 
needed.
    FCA: Pursuant to section 605(b) of the Regulatory Flexibility Act, 
5 U.S.C. 601 et seq., FCA hereby certifies that the proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. Each of the banks in the Farm Credit System, considered 
together with its affiliated associations, has assets and annual income 
in excess of the amounts that would qualify them as small entities. 
Therefore, System institutions are not ``small entities'' as defined in 
the Regulatory Flexibility Act.
    NCUA: In accordance with the Regulatory Flexibility Act, 5 U.S.C. 
601-612 (RFA), an agency must publish an initial regulatory flexibility 
analysis with its proposed rule, unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities (defined for purposes of the RFA to include 
federally insured credit unions with less than $10 million in assets). 
NCUA hereby certifies that the proposed rule would not have a 
significant economic impact on a substantial number of small entities.
    Approximately 3,231 federally insured credit unions are small 
entities. However, the proposed rule would not apply to approximately 
3,190 of those small entities because they originate 25 or fewer 
residential mortgage loans annually and therefore would qualify for the 
de minimis exception. Only approximately 41 small federally insured 
credit unions, about 1.3% of small entities, would be subject to the 
requirements of the proposed rule.

B. Paperwork Reduction Act

Request for Comment on Proposed Information Collection
    In accordance with section 3512 of the Paperwork Reduction Act of 
1995, 44 U.S.C. 3501-3521 (``PRA''), the Federal banking agencies may 
not conduct or sponsor, and the respondent is not required to respond 
to, an information collection unless it displays a currently valid 
Office of Management and Budget (``OMB'') control number. The 
information collection requirements contained in this joint notice of 
proposed rulemaking have been submitted by the OCC, FDIC, OTS, and NCUA 
to OMB for review and approval under section 3506 of the PRA and Sec.  
1320.11 of OMB's implementing regulations (5 CFR part 1320). The FCA 
collects information from Farm Credit System institutions, which are 
Federal instrumentalities, in the FCA's capacity as their safety and 
soundness regulator, and, therefore, OMB approval is not required for 
this collection. The Board reviewed the proposed rule under the 
authority delegated to the Board by the Office of Management and 
Budget. The proposed rule contains requirements subject to the PRA. The 
requirements are found in 12 CFR ----.103(a)-(b), (d)-(e), ----.104, 
and ----.105.
    Comments are invited on:
    (a) Whether the collection of information is necessary for the 
proper performance of the Federal banking agencies' functions, 
including whether the information has practical utility;
    (b) The accuracy of the estimates of the burden of the information 
collection, including the validity of the methodology and assumptions 
used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or startup costs and costs of operation, 
maintenance, and purchase of services to provide information.
    NCUA: Request for comments related to the number of respondents who 
are mortgage loan originators--Some federally insured credit unions use 
a credit committee comprised of unpaid volunteers to make lending 
decisions, including decisions on mortgage loans to members. NCUA 
requests comments on whether these credit committee members who work 
for a credit union in an unpaid capacity and approve mortgage loans 
must register. In addition, NCUA requests comments on whether only some 
of these credit committee members must register, and if so, which ones 
and why.
    All comments will become a matter of public record. Comments should 
be addressed to:
    OCC: Communications Division, Office of the Comptroller of the 
Currency, Public Information Room, Mailstop 1-5, Attention: 1557-AD23, 
250 E Street, SW., Washington, DC 20219. In addition, comments may be 
sent by fax to (202) 874-5274, or by electronic mail to 
[email protected]. You can inspect and photocopy comments at 
the OCC, 250 E Street, SW., Washington, DC 20219. For security reasons, 
the OCC requires that visitors make an appointment to inspect comments. 
You may do so by calling (202) 874-4700. Upon arrival, visitors will be 
required to present valid government-issued photo identification and 
submit to security screening in order to inspect and photocopy 
comments.
    Board: You may submit comments, identified by Docket No. R-1357, by 
any of the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include docket 
number in the subject line of the message.
     FAX: 202-452-3819 or 202-452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551. All public comments are available from the 
Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. 
Accordingly, your comments will not be edited to remove any identifying 
or contact information. Public comments may also be viewed 
electronically or in paper in Room MP-500 of the Board's Martin 
Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on 
weekdays.
    FDIC: You may submit written comments, identified by the RIN, by 
any of the following methods:
     Agency Web Site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow the instructions for submitting comments 
on the FDIC Web site.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include RIN 3064-AD43 on the 
subject line of the message.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, FDIC, 550 17th Street, NW., Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street

[[Page 27400]]

Building (located on F Street) on business days between 7 a.m. and 5 
p.m.
    Instructions: All comments received will be posted generally 
without change to http://www.fdic.gov/regulations/laws/federal/propose/html including any personal information provided.
    OTS: Information Collection Comments, Chief Counsel's Office, 
Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552; 
send a facsimile transmission to (202) 906-6518; or send an e-mail to 
[email protected]. OTS will post comments and the 
related index on the OTS Internet site at http://www.ots.treas.gov. In 
addition, interested persons may inspect the comments at the Public 
Reading Room, 1700 G Street, NW., by appointment. To make an 
appointment, call (202) 906-5922, send an e-mail to 
public.info@ots.treas.gov">public.info@ots.treas.gov, or send a facsimile transmission to (202) 
906-7755.
    NCUA: You may submit comments by any of the following methods 
(Please send comments by one method only):
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     NCUA Web Site: http://www.ncua.gov/RegulationsOpinionsLaws/proposedregs/proposedregs.html. Follow the 
instructions for submitting comments.
     E-mail: Address to [email protected]. Include ``[Your 
name] Comments on Notice of Proposed Rulemaking Part 761 Registration 
of Mortgage Loan Originators'' in the e-mail subject line.
     Fax: (703) 518-6319. Use the subject line described above 
for e-mail.
     Mail: Address to Jeryl Fish, Deputy Chief Information 
Officer, National Credit Union Administration, 1775 Duke Street, 
Alexandria, VA 22314-3428.
     Hand Delivery/Courier: Same as mail address. Additionally, 
you should send a copy of your comments to the OMB Desk Officer for the 
Federal banking agencies, by mail to U.S. Office of Management and 
Budget, 725 17th Street, NW., 10235, Washington, DC 20503, or by fax to 
(202) 395-6974.
Proposed Information Collection
    Title of Information Collection: Registration of Mortgage Loan 
Originators.
    Frequency of Response: On occasion; Annual.
    Affected Public:
    OCC: National banks, Federal branches and agencies of foreign 
banks, their operating subsidiaries, and employees who are loan 
originators.
    Board: Member banks of the Federal Reserve System (other than 
national banks), their respective subsidiaries that are not 
functionally regulated within the meaning of section 5(c)(5) of the 
Bank Holding Company Act; and branches and agencies of foreign banks 
(other than Federal branches, Federal agencies and insured State 
branches of foreign banks) and commercial lending companies owned or 
controlled by foreign banks and their employees who act as mortgage 
loan originators.
    FDIC: State nonmember banks (including State-licensed insured 
branches of foreign banks) and their subsidiaries (except brokers, 
dealers, persons providing insurance, investment companies, and 
investment advisers) and their employees who are mortgage loan 
originators.
    OTS: Savings associations and their operating subsidiaries, and 
their employees who are mortgage loan originators.
    NCUA: Federally chartered credit unions and their employees who are 
mortgage loan originators.
    Abstract:
    Unless the de minimis exception or a different implementation 
period applies, Sec. ----.103(a) would require an employee of a 
depository institution who engages in the business of a mortgage loan 
originator (MLO) to register with the Registry, maintain such 
registration, and obtain an unique identifier. Under Sec. ----.103(b), 
a depository institution would require each such registration to be 
renewed annually and updated within 30 days of the occurrence of 
specified events. Section ----.103(d) describes the categories of 
information that an employee, or the employing depository institution 
on the employee's behalf, must submit to the Registry, with the 
employee's attestation as to the correctness of the information 
supplied, and his/her authorization to obtain further information. 
Section ----.103(e) specifies institution and employee information that 
a depository institution would submit to the Registry in connection 
with the initial registration of one or more MLOs, and thereafter to 
update. Section ----.104 would require that an agency-regulated 
institution employing MLOs adopt and follow written policies and 
procedures, at a minimum addressing certain specified areas, but 
otherwise appropriate to the nature, size and complexity of their 
mortgage lending activities. Section ----.105 would require a 
depository institution to make the unique identifier(s) of its 
registered MLO(s) available to consumers in a manner and method 
practicable to the institution. It would also require a registered MLO 
to provide his or her unique identifier to a consumer upon request, 
before acting as a MLO, and through the originator's initial written 
communication with a consumer, if any.
    Estimated Burden:

OCC

    Number of Bank Respondents: 1,771 (1,464 national banks; 307 
operating subsidiaries).
    Burden per Bank for Initial Set up: 351 hours (220 hours to 
implement policies and procedures and establish tracking and compliance 
systems; 131 hours to establish reporting, filing, and information 
dissemination systems).
    Total Bank Burden for Initial Set up: 621,621.
    Number of MLO Employees for Initial Set up: 117,772.
    Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours 
to provide information to Registry, and 1 hour to provide Unique 
Identifier to a consumer, upon request and at initial contact).
    Total Burden for MLO Employees for Initial Set up: 412,202 hours.
    Number of MLO Employees for Registration Update: 58,886.
    Burden per MLO Employee for Registration Update: 0.25 hours.
    Total Burden for MLO Employees for Registration Update: 14,721.5 
hours.
    Total OCC Annual Burden: 1,048,544.5 hours.

Board

    Number of Bank Respondents: 2,382.
    Burden per Bank for Initial Set up: 351 hours (220 hours to 
implement policies and procedures and establish tracking and compliance 
systems; 131 hours to establish reporting, filing, and information 
dissemination systems).
    Total Bank Burden for Initial Set up: 836,082 hours.
    Number of MLO Employees for Initial Set up: 27,000.
    Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours 
to provide information to Registry, and 1 hour to provide Unique 
Identifier to a consumer).
    Total Burden for MLO Employees for Initial Set up: 94,500 hours.
    Number of MLO Employees for Registration Update: 13,500.
    Burden per MLO Employee for Registration Update: 0.25 hours.
    Total Burden for MLO Employees for Registration Update: 3,375 
hours.
    Total Board Annual Burden: 933,957 hours.

[[Page 27401]]

FDIC

    Number of Bank Respondents: 5,371.
    Burden per Bank for Initial Set up: 351 hours (220 hours to 
implement policies and procedures and establish tracking and compliance 
systems; 131 hours to establish reporting, filing, and information 
dissemination systems).
    Total Bank Burden for Initial Set up: 1,885,221 hours.
    Number of MLO Employees for Initial Set up: 49,719.
    Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours 
to provide information to Registry, and 1 hour to provide Unique 
Identifier to a consumer, upon request and at initial contact).
    Total Burden for MLO Employees for Initial Set up: 174,016.5 hours.
    Number of MLO Employees for Registration Update: 24,860.
    Burden per MLO Employee for Registration Update: 0.25 hours.
    Total Burden for MLO Employees for Registration Update: 6,215 
hours.
    Total FDIC Annual Burden: 2,065,452.5 hours.

OTS

    Number of Savings Association Respondents: 1,022 (802 savings 
associations; 220 operating subsidiaries).
    Burden per Savings Association for Initial Set up: 351 hours (220 
hours to implement policies and procedures and establish tracking and 
compliance systems; 131 hours to establish reporting, filing, and 
information dissemination systems).
    Total Savings Association Burden for Initial Set up: 358,722.
    Number of MLO Employees for Initial Set up: 48,958.
    Burden per MLO Employee for Initial Set up: 3.50 hours (2.50 hours 
to provide information to Registry, and 1 hour to provide Unique 
Identifier to a consumer, upon request and at initial contact).
    Total Burden for MLO Employees for Initial Set up: 171,353 hours.
    Number of MLO Employees for Registration Update: 24,479.
    Burden per MLO Employee for Registration Update: 0.25 hours.
    Total Burden for MLO Employees for Registration Update: 6,120 
hours.
    Total OTS Annual Burden: 536,195 hours.

NCUA

    Number of Credit Union Respondents: 2,834 credit unions.
    Burden per Credit Union for Initial Set up: 351 hours (220 hours to 
implement policies and procedures and establish tracking and compliance 
systems; 131 hours to establish reporting, filing, and information 
dissemination systems).
    Total Credit Union Burden for Initial Set up: 994,734 hours.
    Number of MLO Employees for Initial Set up: 23,539.
    Burden per MLO Employee for Initial Set up: 3.50 hours (2.25 hours 
to provide information to Registry, and 1 hour to provide Unique 
Identifier to a consumer, upon request and at initial contact).
    Total Burden for MLO Employees for Initial Set up: 82,386.5 hours.
    Number of MLO Employees for Registration Update: 11,770.
    Burden per MLO Employee for Registration Update: 0.25 hours.
    Total Burden for MLO Employees for Registration Update: 2,942.50 
hours.
    Total NCUA Annual Burden: 1,080,063 hours.

C. OCC AND OTS Executive Order 12866 Determination

    The OCC and the OTS have determined that this proposal is not a 
significant regulatory action under Executive Order 12866. We have 
concluded that the changes made by this rule will not have an annual 
effect on the economy of $100 million or more. The OCC and the OTS 
further conclude that this proposal does not meet any of the other 
standards for a significant regulatory action set forth in Executive 
Order 12866.

D. OCC and OTS Unfunded Mandates Reform Act of 1995 Determination

    Section 202 of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1532), requires the OCC and OTS to prepare a budgetary impact statement 
before promulgating a rule that includes a Federal mandate that may 
result in the expenditure by State, local, and tribal governments, in 
the aggregate, or by the private sector, of $100 million or more in any 
one year. However, this requirement does not apply to regulations that 
incorporate requirements specifically set forth in law. Because this 
proposed rule implements the S.A.F.E. Act, the OTS and OCC have not 
conducted an Unfunded Mandates Analysis for this rulemaking.

E. NCUA Executive Order 13132 Determination

    Executive Order 13132 encourages independent regulatory agencies to 
consider the impact of their actions on state and local interests. In 
adherence to fundamental federalism principles, the NCUA, an 
independent regulatory agency as defined in 44 U.S.C. 3502(5) 
voluntarily complies with the Executive Order. The proposed rule 
applies to federally insured credit unions and would not have 
substantial direct effects on the states, on the connection between the 
national government and the states, or on the distribution of power and 
responsibilities among the various levels of government. The NCUA has 
determined that the proposed rule does not constitute a policy that has 
federalism implications for purposes of the Executive Order.

F. NCUA: The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families

    The NCUA has determined that this proposed rule would not affect 
family well-being within the meaning of section 654 of the Treasury and 
General Government Appropriations Act, 1999, Public Law 105-277, 112 
Stat. 2681 (1998).

List of Subjects

12 CFR Part 34

    Mortgages, National banks, Reporting and recordkeeping 
requirements.

12 CFR Part 208

    Accounting, Agriculture, Banks, Banking, Confidential business 
information, Consumer protection, Crime, Currency, Insurance, 
Investments, Mortgages, Reporting and recordkeeping requirements, 
Securities.

12 CFR Part 365

    Banks, Banking, Mortgages.

12 CFR Part 563

    Accounting, Administrative practice and procedure, Advertising, 
Conflict of interests, Crime, Currency, Holding companies, Investments, 
Mortgages, Reporting and recordkeeping requirements, Savings 
associations, Securities, Surety bonds.

12 CFR Part 610

    Banks, Banking, Consumer protection, Loan programs--housing and 
community development, Mortgages, Reporting and recordkeeping 
requirements, Rural areas.

12 CFR Part 761

    Credit unions, Mortgages, Reporting and recordkeeping requirements.

[[Page 27402]]

Office of the Comptroller of the Currency

12 CFR Chapter I

Authority and Issuance

    For the reasons set forth in the preamble, chapter I of title 12 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 34--REAL ESTATE LENDING AND APPRAISALS

    1. The authority citation for part 34 is revised to read as 
follows:

    Authority:  12 U.S.C. 1 et seq., 29, 93a, 371, 1701j-3, 1828(o), 
3331 et seq., and 5101 et seq.

    2. Add Subpart F to part 34 to read as follows:
Subpart F--Registration of Residential Mortgage Loan Originators
Sec.
34.101 Authority, purpose, and scope.
34.102 Definitions.
34.103 Registration of mortgage loan originators.
34.104 Policies and procedures.
34.105 Use of unique identifier.
Appendix A to Subpart F of Part 34--Examples of Mortgage Loan 
Originator Activities

Subpart F--Registration of Residential Mortgage Loan Originators


Sec.  34.101  Authority, purpose, and scope.

    (a) Authority. This subpart is issued pursuant to the Secure and 
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the 
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
    (b) Purpose. This subpart implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of mortgage 
loan originators; enhancing consumer protections; reducing fraud in the 
residential mortgage loan origination process; and providing consumers 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This subpart applies to national banks, 
Federal branches and agencies of foreign banks, their operating 
subsidiaries (collectively referred to in this subpart as national 
banks), and their employees who act as mortgage loan originators.
    (2) Exception. (i) This subpart and the requirements of sections 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of a national bank if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The national bank employs mortgage loan originators who, while 
excepted from registration pursuant to paragraph (c)(2)(i)(A) of this 
section, in the aggregate, acted as a mortgage loan originator in 
connection with 25 or fewer residential mortgage loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, a 
national bank employee must register with the Registry pursuant to this 
subpart.


Sec.  34.102  Definitions.

    For purposes of this subpart F, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \3\ means an individual who:
---------------------------------------------------------------------------

    \3\ The Appendix to this subpart provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable State law, unless the individual is compensated by a lender, 
a mortgage broker, or other mortgage loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator in paragraph (b)(1) of 
this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
consumer to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to section 1507 of the S.A.F.E. Act.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of a national bank; and
    (2) Is registered pursuant to this subpart with, and maintains a 
unique identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 
U.S.C. 1602(v)) or residential real estate upon which is constructed or 
intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
second lien loans that meet the qualifications listed in this 
definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.


Sec.  34.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of a national bank who acts as a mortgage loan originator must 
register with the Registry, obtain a unique identifier, and maintain 
this registration in accordance with the requirements of this subpart. 
Any such employee who is not in compliance with the registration and

[[Page 27403]]

unique identifier requirements set forth in this subpart is in 
violation of the S.A.F.E. Act and this subpart.
    (2) National bank requirement--(i) In general. A national bank that 
employs one or more individuals who act as a residential mortgage loan 
originator must require each employee who is a mortgage loan originator 
to register with the Registry, maintain this registration, and obtain a 
unique identifier in accordance with the requirements of this subpart.
    (ii) Prohibition. A national bank must not permit an employee of 
the bank who is subject to the registration requirements of this 
subpart to act as a mortgage loan originator unless such employee is 
registered with the Registry pursuant to this subpart.
    (3) Implementation period for initial registration. An employee of 
a national bank who is a mortgage loan originator must complete an 
initial registration with the Registry pursuant to this subpart within 
180 days from the date that the OCC provides public notice that the 
Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of a national bank was 
registered or licensed through, and obtained a unique identifier from, 
the Registry prior to becoming an employee of the bank and has 
maintained this registration or license, the registration requirements 
of the S.A.F.E. Act and this subpart are deemed to be met, provided 
that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii) of this 
section;
    (C) The national bank information required in paragraphs (e)(1)(i) 
(to the extent the bank has not previously met these requirements) and 
(e)(2)(i) of this section is submitted to the Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the bank.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become national bank employees as a result of an acquisition, merger or 
reorganization transaction, the bank and employees must comply with the 
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section 
within 60 days from the effective date of the acquisition, merger, or 
reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the national bank; 
or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception set forth in Sec.  34.101(c)(2), unless the 
individual is no longer engaged in the activity of a mortgage loan 
originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration pursuant to paragraph (a) of this section is effective on 
the date the registrant receives notification from the Registry that 
all information required by paragraphs (d) and (e) of this section has 
been submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) of this section has been submitted and the 
renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, a national bank must require 
each employee who is a mortgage loan originator to submit to the 
Registry, or must submit on behalf of the employee, the following 
categories of information to the extent this information is collected 
by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the bank;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or unsatisfied judgments or liens against the 
employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust;
    (v) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (vi) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a State or Federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;

[[Page 27404]]

    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action listed in paragraphs (d)(1)(iii) through (ix) of this 
section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing institution less than three years prior to 
registration and any appropriate identifying information for submission 
to the Federal Bureau of Investigation and any governmental agency or 
entity authorized to receive such information in connection with a 
State and national criminal history background check.
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this subpart must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing bank; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv)-(ix) and (xi) of this section.
    (e) Required bank information. A national bank must submit the 
following information to the Registry.
    (1) Bank record. (i) In connection with the initial registration of 
one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the bank's primary point of contact for the 
Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other bank 
employees, provided this individual and any delegated employee does not 
act as a mortgage loan originator; and
    (G) If a subsidiary of a national bank, indication that it is a 
subsidiary and the name of its parent bank.
    (ii) A national bank must update the information required by this 
paragraph (e) within 30 days of the date that this information becomes 
inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the bank, notification that it no longer employs the 
registrant and the date the registrant ceased being an employee.


Sec.  34.104  Policies and procedures.

    A national bank that employs mortgage loan originators must adopt 
and follow written policies and procedures designed to assure 
compliance with this subpart. These policies and procedures must be 
appropriate to the nature, size, complexity and scope of the mortgage 
lending activities of the bank. At a minimum, these policies and 
procedures must:
    (a) Establish a process for identifying which employees of the bank 
are required to be registered mortgage loan originators;
    (b) Require that all employees of the national bank who are 
mortgage loan originators be informed of the registration requirements 
of the S.A.F.E. Act and this subpart and be instructed on how to comply 
with such requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  34.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this 
subpart to be conducted by bank personnel or by an outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this subpart, or the bank's related policies and procedures, including 
prohibiting such employees from acting as mortgage loan originators or 
other appropriate disciplinary actions; and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
34.103(d)(1)(xii), taking appropriate action consistent with applicable 
law and rules with respect to these reports, and for maintaining 
records of these reports and actions taken with respect to applicable 
employees.


Sec.  34.105  Use of unique identifier.

    (a) The national bank shall make the unique identifier(s) of its 
registered mortgage loan originator(s) available to consumers in a 
manner and method practicable to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any.

Appendix A to Subpart F of Part 34--Examples of Mortgage Loan 
Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of a national bank to fall 
within or outside the definition of mortgage loan originator. The 
examples in this Appendix are not all inclusive. They illustrate 
only the issue described and do not illustrate any other issues that 
may arise under this subpart. For the purposes of the examples 
below, the term ``loan'' refers to a residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes or does not take, a loan application.
    (1) Taking an application includes: Receiving information that 
is sufficient to determine whether the consumer qualifies for a 
loan, even if the employee has had no contact with the consumer and 
is not responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of

[[Page 27405]]

information is necessary for the application or otherwise explaining 
the loan application process in response to consumer inquiries.
    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a consumer's request for a lower rate or 
lower points on a pending loan application by presenting to the 
consumer a revised loan offer, either verbally or in writing, that 
includes a lower interest rate or lower points than the original 
offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to consumer 
queries regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the national 
bank);
    (ii) In response to a consumer's request, informing a consumer 
of the loan rates that are publicly available such as on the 
national bank's Web site for specific types of loan products without 
communicating to the consumer whether qualifications are met for 
that loan product;
    (iii) Collecting information about a consumer in order to 
provide the consumer with information on loan products for which the 
consumer generally may qualify, without presenting a specific loan 
offer to the consumer for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated; or
    (v) Providing a consumer with information unrelated to loan 
terms, such as the best days of the month for scheduling loan 
closings at the bank.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain.''
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out employment duties, 
even if the employee does not receive a referral fee or commission 
or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the national 
bank.

Federal Reserve System

12 CFR Chapter II

Authority and Issuance

    For the reasons set forth in the preamble, chapter II of title 12 
of the Code of Federal Regulations is proposed to be amended as 
follows:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

    1. The authority citation for part 208 is revised to read as 
follows:

    Authority: 12 U.S.C. 24, 36, 92a, 93a, 248(a), 248(c), 321-338a, 
371d, 461, 481-486, 601, 611, 1814, 1816, 1820(d)(9), 1823(j), 
1828(o), 1831, 1831o, 1831p-1, 1831r-1, 1831w, 1831x, 1835a, 1882, 
2901-2907, 3105, 3106a(b)(1), 3108(a), 3310, 3331-3351, and 3906-
3909, 5101 et seq., 15 U.S.C. 78b, 78l(b), 78l(g), 78l(i), 780-
4(c)(5), 78q, 78q-1, 78w, 1681s, 1681w, 6801 and 6805; 31 U.S.C. 
5318, 42 U.S.C. 4012a, 4104a, 4104b, 4106, and 4128.

    2. Subpart I, consisting of Sec. Sec.  208.100 and 208.101, is 
redesignated as Subpart J, consisting of Sec. Sec.  208.110 and 
208.111.
    3. New subpart I is added to read as follows:
Subpart I--Registration of Residential Mortgage Loan Originators
Sec.
208.101 Authority, purpose, and scope.
208.102 Definitions.
208.103 Registration of mortgage loan originators.
208.104 Policies and procedures.
208.105 Use of unique identifier.
Appendix A to Subpart I of Part 208--Examples of Mortgage Loan 
Originator Activities

Subpart I--Registration of Residential Mortgage Loan Originators


Sec.  208.101  Authority, purpose, and scope.

    (a) Authority. This subpart is issued by the Board of Governors of 
the Federal Reserve System (Board) pursuant to the Secure and Fair 
Enforcement for Mortgage Licensing Act of 2008, title V of the Housing 
and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 
Stat. 2654, 12 U.S.C. 5101 et seq.), 12 U.S.C. 248(a), 3106a(b)(1), and 
3108(a).
    (b) Purpose. This subpart implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of mortgage 
loan originators; enhancing consumer protections; reducing fraud in the 
residential mortgage loan origination process; and providing consumers 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This subpart applies to member banks of 
the Federal Reserve System (other than national banks); their 
respective subsidiaries that are not functionally regulated within the 
meaning of section 5(c)(5) of the Bank Holding Company Act, as amended 
(12 U.S.C. 1844(c)(5)); branches and agencies of foreign banks (other 
than federal branches, Federal agencies and insured state branches of 
foreign banks), and commercial lending companies owned or controlled by 
foreign banks (collectively referred to in this subpart as banks), and 
their employees who act as mortgage loan originators.
    (2) Exception. (i) This subpart and the requirements of sections 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of a bank if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The bank employs mortgage loan originators who, while excepted 
from registration pursuant to paragraph (c)(2)(i)(A) of this section, 
in the aggregate, acted as a mortgage loan originator in connection 
with 25 or fewer residential mortgage loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, a bank 
employee must register with the Registry pursuant to this subpart.


Sec.  208.102  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \7\ means an individual who:
---------------------------------------------------------------------------

    \7\ The Appendix to this subpart provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable State law, unless the individual is compensated by

[[Page 27406]]

a lender, a mortgage broker, or other mortgage loan originator or by 
any agent of such lender, mortgage broker, or other mortgage loan 
originator, and meets the definition of mortgage loan originator in 
paragraph (b)(1) of this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
consumer to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to section 1507 of the S.A.F.E. Act.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of a bank; and
    (2) Is registered pursuant to this subpart with, and maintains a 
unique identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 
U.S.C. 1602(v)) or residential real estate upon which is constructed or 
intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
second lien loans that meet the qualifications listed in this 
definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.


Sec.  208.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of a bank who acts as a mortgage loan originator must register 
with the Registry, obtain a unique identifier, and maintain this 
registration in accordance with the requirements of this subpart. Any 
such employee who is not in compliance with the registration and unique 
identifier requirements set forth in this subpart is in violation of 
the S.A.F.E. Act and this subpart.
    (2) Bank requirement--(i) In general. A bank that employs one or 
more individuals who act as a residential mortgage loan originator must 
require each employee who is a mortgage loan originator to register 
with the Registry, maintain this registration, and obtain a unique 
identifier in accordance with the requirements of this subpart.
    (ii) Prohibition. A bank must not permit an employee of the bank 
who is subject to the registration requirements of this subpart to act 
as a mortgage loan originator unless such employee is registered with 
the Registry pursuant to this subpart.
    (3) Implementation period for initial registration. An employee of 
a bank who is a mortgage loan originator must complete an initial 
registration with the Registry pursuant to this subpart within 180 days 
from the date that the Board provides public notice that the Registry 
is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of a bank was registered or 
licensed through, and obtained a unique identifier from, the Registry 
prior to becoming an employee of the bank and has maintained this 
registration or license, the registration requirements of the S.A.F.E. 
Act and this subpart are deemed to be met, provided that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii) of this 
section;
    (C) The bank information required in paragraphs (e)(1)(i) (to the 
extent the bank has not previously met these requirements) and 
(e)(2)(i) of this section is submitted to the Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the bank.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become bank employees as a result of an acquisition, merger or 
reorganization transaction, the bank and employees must comply with the 
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section 
within 60 days from the effective date of the acquisition, merger, or 
reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the bank; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception set forth in Sec.  208.101(c)(2), unless the 
individual is no longer engaged in the activity of a mortgage loan 
originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration pursuant to paragraph (a) of this section is effective on 
the date the registrant receives notification from the Registry that 
all information required by paragraphs (d) and (e) of this section has 
been submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) of this section has been submitted and the 
renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, a bank must require each 
employee who is a mortgage loan originator to submit to the Registry, 
or must submit on behalf of the employee, the following categories of 
information to the extent

[[Page 27407]]

this information is collected by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the bank;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or unsatisfied judgments or liens against the 
employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust;
    (v) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (vi) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a State or Federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;
    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action listed in paragraphs (d)(1)(iii) through (ix) of this 
section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing institution less than three years prior to 
registration and any appropriate identifying information for submission 
to the Federal Bureau of Investigation and any governmental agency or 
entity authorized to receive such information in connection with a 
State and national criminal history background check.
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this subpart must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing bank; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv)-(ix) and (xi) of this section.
    (e) Required bank information. A bank must submit the following 
information to the Registry.
    (1) Bank record. (i) In connection with the initial registration of 
one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board;
    (D) Identification of its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the bank's primary point of contact for the 
Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other bank 
employees, provided this individual and any delegated employee does not 
act as a mortgage loan originator; and
    (G) If a subsidiary of a bank, indication that it is a subsidiary 
and the name of its parent bank.
    (ii) A bank must update the information required by this paragraph 
(e) within 30 days of the date that this information becomes 
inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the bank, notification that it no longer employs the 
registrant and the date the registrant ceased being an employee.


Sec.  208.104  Policies and procedures.

    A bank that employs mortgage loan originators must adopt and follow 
written policies and procedures designed to assure compliance with this 
subpart. These policies and procedures must be appropriate to the 
nature, size, complexity and scope of the mortgage lending activities 
of the bank. At a minimum, these policies and procedures must:
    (a) Establish a process for identifying which employees of the bank 
are required to be registered mortgage loan originators;
    (b) Require that all employees of the bank who are mortgage loan 
originators be informed of the registration requirements of the 
S.A.F.E. Act and this subpart and be instructed on how to comply with 
such requirements and procedures;

[[Page 27408]]

    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  208.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this 
subpart to be conducted by bank personnel or by an outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this subpart, or the bank's related policies and procedures, including 
prohibiting such employees from acting as mortgage loan originators or 
other appropriate disciplinary actions; and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
208.103(d)(1)(xii), taking appropriate action consistent with 
applicable law and rules with respect to these reports, and for 
maintaining records of these reports and actions taken with respect to 
applicable employees.


Sec.  208.105  Use of unique identifier.

    (a) The bank shall make the unique identifier(s) of its registered 
mortgage loan originator(s) available to consumers in a manner and 
method practicable to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any.

Appendix A to Subpart I of Part 208--Examples of Mortgage Loan 
Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of a bank to fall within or 
outside the definition of mortgage loan originator. The examples in 
this Appendix are not all inclusive. They illustrate only the issue 
described and do not illustrate any other issues that may arise 
under this subpart. For the purposes of the examples below, the term 
``loan'' refers to a residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes, or does not take, a loan application.
    (1) Taking an application includes: receiving information that 
is sufficient to determine whether the consumer qualifies for a 
loan, even if the employee has had no contact with the consumer and 
is not responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of information is necessary for the application 
or otherwise explaining the loan application process in response to 
consumer inquiries.
    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a consumer's request for a lower rate or 
lower points on a pending loan application by presenting to the 
consumer a revised loan offer, either verbally or in writing, that 
includes a lower interest rate or lower points than the original 
offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to consumer 
queries regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the bank);
    (ii) In response to a consumer's request, informing a consumer 
of the loan rates that are publicly available such as on the bank's 
Web site for specific types of loan products without communicating 
to the consumer whether qualifications are met for that loan 
product;
    (iii) Collecting information about a consumer in order to 
provide the consumer with information on loan products for which the 
consumer generally may qualify, without presenting a specific loan 
offer to the consumer for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated; or
    (v) Providing a consumer with information unrelated to loan 
terms, such as the best days of the month for scheduling loan 
closings at the bank.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain.''
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out employment duties, 
even if the employee does not receive a referral fee or commission 
or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the bank.

    4. Section 208.111 is amended by redesignating footnotes 7 and 8 as 
footnotes 8 and 9, respectively, and by revising newly designated 
footnote 9 to read as follows:


Sec.  208.111  Obligations concerning institutional customers.

* * * * *

    \9\ See footnote 8 in paragraph (d) of this section.

Federal Deposit Insurance Corporation

12 CFR Chapter III

Authority and Issuance

    For the reasons set forth in the preamble, the Federal Deposit 
Insurance Corporation proposes to amend subchapter B of chapter III of 
title 12 of the Code of Federal Regulations by amending part 365 as 
follows:

PART 365--REAL ESTATE LENDING STANDARDS

    1. The authority citation for part 365 is revised to read as 
follows:

    Authority:  12 U.S.C. 1828(o) and 5101 et seq.

    2. Sections 365.1 and 365.2 and Appendix A are placed under a new 
subpart A, and the heading for new subpart A is added to read as 
follows:

Subpart A--Real Estate Lending Standards


Sec.  365.1  [Amended]

    3. Section 365.1 is amended by removing ``part'' and adding 
``subpart'' in its place.
    4. Appendix A to Part 365 is redesignated as Appendix A to Subpart 
A of Part 365, and the heading is revised to read as follows:

Appendix A to Subpart A of Part 365--Interagency Guidelines for Real 
Estate Lending Policies

    5. New subpart B is added to read as follows:
Subpart B--Registration of Mortgage Loan Originators
Sec.
365.101 Authority, purpose, and scope.
365.102 Definitions.
365.103 Registration of mortgage loan originators.

[[Page 27409]]

365.104 Policies and procedures.
365.105 Use of unique identifier.
Appendix A to Subpart B of Part 365--Examples of Mortgage Loan 
Originator Activities.

Subpart B--Registration of Residential Mortgage Loan Originators


Sec.  365.101  Authority, purpose, and scope.

    (a) Authority. This subpart is issued pursuant to the Secure and 
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the 
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
    (b) Purpose. This subpart implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of mortgage 
loan originators; enhancing consumer protections; reducing fraud in the 
residential mortgage loan origination process; and providing consumers 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This subpart applies to insured state 
nonmember banks (including state-licensed insured branches of foreign 
banks) and their subsidiaries (except brokers, dealers, persons 
providing insurance, investment companies, and investment advisers) 
(collectively referred to in this subpart as insured state nonmember 
banks), and their employees who act as mortgage loan originators.
    (2) Exception. (i) This subpart and the requirements of sections 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of an insured state nonmember bank if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The insured state nonmember bank employs mortgage loan 
originators who, while excepted from registration pursuant to paragraph 
(c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage 
loan originator in connection with 25 or fewer residential mortgage 
loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, an 
insured state nonmember bank employee must register with the Registry 
pursuant to this subpart.


Sec.  365.102  Definitions.

    For purposes of this subpart, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------

    \1\ The Appendix to this subpart provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable State law, unless the individual is compensated by a lender, 
a mortgage broker, or other mortgage loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator in paragraph (b)(1) of 
this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
consumer to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to section 1507 of the S.A.F.E. Act.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of an insured state nonmember bank; and
    (2) Is registered pursuant to this subpart with, and maintains a 
unique identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 
U.S.C. 1602(v)) or residential real estate upon which is constructed or 
intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
second lien loans that meet the qualifications listed in this 
definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.


Sec.  365.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of an insured state nonmember bank who acts as a mortgage loan 
originator must register with the Registry, obtain a unique identifier, 
and maintain this registration in accordance with the requirements of 
this subpart. Any such employee who is not in compliance with the 
registration and unique identifier requirements set forth in this 
subpart is in violation of the S.A.F.E. Act and this subpart.
    (2) Insured state nonmember bank requirement--(i) In general. An 
insured state nonmember bank that employs one or more individuals who 
act as a residential mortgage loan originator must require each 
employee who is a mortgage loan originator to register with the 
Registry, maintain this registration, and obtain a unique identifier in 
accordance with the requirements of this subpart.
    (ii) Prohibition. An insured state nonmember bank must not permit 
an employee of the bank who is subject to the registration requirements 
of this subpart to act as a mortgage loan

[[Page 27410]]

originator unless such employee is registered with the Registry 
pursuant to this subpart.
    (3) Implementation period for initial registration. An employee of 
an insured state nonmember bank who is a mortgage loan originator must 
complete an initial registration with the Registry pursuant to this 
subpart within 180 days from the date that the FDIC provides public 
notice that the Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of an insured state nonmember 
bank was registered or licensed through, and obtained a unique 
identifier from, the Registry prior to becoming an employee of the bank 
and has maintained this registration or license, the registration 
requirements of the S.A.F.E. Act and this subpart are deemed to be met, 
provided that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii) of this 
section;
    (C) The insured state nonmember bank information required in 
paragraphs (e)(1)(i) (to the extent the bank has not previously met 
these requirements) and (e)(2)(i) of this section is submitted to the 
Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the bank.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become insured state nonmember bank employees as a result of an 
acquisition, merger or reorganization transaction, the bank and 
employees must comply with the requirements of paragraphs (a)(4)(i)(A), 
(C), and (D) of this section within 60 days from the effective date of 
the acquisition, merger, or reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the insured state 
nonmember bank; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception set forth in Sec.  365.101(c)(2), unless the 
individual is no longer engaged in the activity of a mortgage loan 
originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration pursuant to paragraph (a) of this section is effective on 
the date the registrant receives notification from the Registry that 
all information required by paragraphs (d) and (e) of this section has 
been submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) of this section has been submitted and the 
renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, an insured state nonmember 
bank must require each employee who is a mortgage loan originator to 
submit to the Registry, or must submit on behalf of the employee, the 
following categories of information to the extent this information is 
collected by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the bank;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or unsatisfied judgments or liens against the 
employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust;
    (v) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (vi) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a State or Federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;
    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action

[[Page 27411]]

listed in paragraphs (d)(1)(iii) through (ix) of this section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing institution less than three years prior to 
registration and any appropriate identifying information for submission 
to the Federal Bureau of Investigation and any governmental agency or 
entity authorized to receive such information in connection with a 
State and national criminal history background check.
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this subpart must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing bank; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv)-(ix) and (xi) of this section.
    (e) Required bank information. An insured state nonmember bank must 
submit the following information to the Registry.
    (1) Bank record. (i) In connection with the initial registration of 
one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the bank's primary point of contact for the 
Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other bank 
employees, provided this individual and any delegated employee does not 
act as a mortgage loan originator; and
    (G) If a subsidiary of an insured state nonmember bank, indication 
that it is a subsidiary and the name of its parent bank.
    (ii) An insured state nonmember bank must update the information 
required by this paragraph (e) within 30 days of the date that this 
information becomes inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the bank, notification that it no longer employs the 
registrant and the date the registrant ceased being an employee.


Sec.  365.104  Policies and procedures.

    An insured state nonmember bank that employs mortgage loan 
originators must adopt and follow written policies and procedures 
designed to assure compliance with this subpart. These policies and 
procedures must be appropriate to the nature, size, complexity and 
scope of the mortgage lending activities of the bank. At a minimum, 
these policies and procedures must:
    (a) Establish a process for identifying which employees of the bank 
are required to be registered mortgage loan originators;
    (b) Require that all employees of the insured state nonmember bank 
who are mortgage loan originators be informed of the registration 
requirements of the S.A.F.E. Act and this subpart and be instructed on 
how to comply with such requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  365.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this 
subpart to be conducted by bank personnel or by an outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this subpart, or the bank's related policies and procedures, including 
prohibiting such employees from acting as mortgage loan originators or 
other appropriate disciplinary actions; and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
365.103(d)(1)(xii), taking appropriate action consistent with 
applicable law and rules with respect to these reports, and for 
maintaining records of these reports and actions taken with respect to 
applicable employees.


Sec.  365.105  Use of unique identifier.

    (a) An insured state nonmember bank shall make the unique 
identifier(s) of its registered mortgage loan originator(s) available 
to consumers in a manner and method practicable to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any.

Appendix A to Subpart B of Part 365--Examples of Mortgage Loan 
Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of an insured state 
nonmember bank to fall within or outside the definition of mortgage 
loan originator. The examples in this Appendix are not all 
inclusive. They illustrate only the issue described and do not 
illustrate any other issues that may arise under this subpart. For 
the purposes of the examples below, the term ``loan'' refers to a 
residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes or does not take, a loan application.
    (1) Taking an application includes: Receiving information that 
is sufficient to determine whether the consumer qualifies for a 
loan, even if the employee has had no contact with the consumer and 
is not responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of information is necessary for the application 
or otherwise explaining the loan application process in response to 
consumer inquiries.
    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:

[[Page 27412]]

    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a consumer's request for a lower rate or 
lower points on a pending loan application by presenting to the 
consumer a revised loan offer, either verbally or in writing, that 
includes a lower interest rate or lower points than the original 
offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to consumer 
queries regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the insured state 
nonmember bank);
    (ii) In response to a consumer's request, informing a consumer 
of the loan rates that are publicly available such as on the insured 
state nonmember bank's Web site for specific types of loan products 
without communicating to the consumer whether qualifications are met 
for that loan product;
    (iii) Collecting information about a consumer in order to 
provide the consumer with information on loan products for which the 
consumer generally may qualify, without presenting a specific loan 
offer to the consumer for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated; or
    (v) Providing a consumer with information unrelated to loan 
terms, such as the best days of the month for scheduling loan 
closings at the bank.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain.''
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out employment duties, 
even if the employee does not receive a referral fee or commission 
or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the insured 
state nonmember bank.

Office of Thrift Supervision

12 CFR Chapter V

Authority and Issuance

    For the reasons set forth in the preamble, chapter V of title 12 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 563--SAVINGS ASSOCIATIONS--OPERATIONS

    1. The authority citation for part 563 is revised to read as 
follows:

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1820, 1828, 1831o, 3806, 5101 et seq.; 31 U.S.C. 5318; 42 
U.S.C. 4106.

    2. Add Subpart D to part 563 to read as follows:
Subpart D--Registration of Residential Mortgage Loan Originators
Sec.
563.101 Authority, purpose, and scope.
563.102 Definitions.
563.103 Registration of mortgage loan originators.
563.104 Policies and procedures.
563.105 Use of unique identifier.
Appendix A to Subpart D of Part 563--Examples of Mortgage Loan 
Originator Activities.

Subpart D--Registration of Residential Mortgage Loan Originators


Sec.  563.101  Authority, purpose, and scope.

    (a) Authority. This subpart is issued pursuant to the Secure and 
Fair Enforcement for Mortgage Licensing Act of 2008, title V of the 
Housing and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-
289, 122 Stat. 2654, 12 U.S.C. 5101 et seq.).
    (b) Purpose. This subpart implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of mortgage 
loan originators; enhancing consumer protections; reducing fraud in the 
residential mortgage loan origination process; and providing consumers 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This subpart applies to savings 
associations and their operating subsidiaries (collectively referred to 
in this subpart as savings associations), and their employees who act 
as mortgage loan originators.
    (2) Exception. (i) This subpart and the requirements of section 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of a savings association if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The savings association does not employ mortgage loan 
originators who, while excepted from registration pursuant to paragraph 
(c)(2)(i)(A) of this section, in the aggregate, acted as a mortgage 
loan originator in connection with more than 25 residential mortgage 
loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, a 
savings association employee must register with the Registry pursuant 
to this subpart.


Sec.  563.102  Definitions.

    For purposes of this subpart D, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------

    \1\ The Appendix to this subpart provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable State law, unless the individual is compensated by a lender, 
a mortgage broker, or other mortgage loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator in paragraph (b)(1) of 
this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
consumer to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to section 1507 of the S.A.F.E. Act.

[[Page 27413]]

    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of a savings association; and
    (2) Is registered pursuant to this subpart with, and maintains a 
unique identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act) or 
residential real estate upon which is constructed or intended to be 
constructed a dwelling, and includes refinancings, reverse mortgages, 
home equity lines of credit and other first and second lien loans that 
meet the qualifications listed in this definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.


Sec.  563.103   Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of a savings association who acts as a mortgage loan 
originator must register with the Registry, obtain a unique identifier, 
and maintain this registration in accordance with the requirements of 
this subpart. Any such employee who is not in compliance with the 
registration and unique identifier requirements set forth in this 
subpart is in violation of the S.A.F.E. Act and this subpart.
    (2) Savings association requirement--(i) In general. A savings 
association that employs one or more individuals who act as a 
residential mortgage loan originator must require each employee who is 
a mortgage loan originator to register with the Registry, maintain this 
registration, and obtain a unique identifier in accordance with the 
requirements of this subpart.
    (ii) Prohibition. A savings association must not permit an employee 
of the association who is subject to the registration requirements of 
this subpart to act as a mortgage loan originator unless such employee 
is registered with the Registry pursuant to this subpart.
    (3) Implementation period for initial registration. An employee of 
a savings association who is a mortgage loan originator must complete 
an initial registration with the Registry pursuant to this subpart 
within 180 days from the date that the OTS provides public notice that 
the Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of a savings association was 
registered or licensed through, and obtained a unique identifier from, 
the Registry prior to becoming an employee of the association and has 
maintained this registration or license, the registration requirements 
of the S.A.F.E. Act and this subpart are deemed to be met, provided 
that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii);
    (C) The savings association information required in paragraphs 
(e)(1)(i) (to the extent the association has not previously met these 
requirements) and (e)(2)(i) of this section is submitted to the 
Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the association.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become savings association employees as a result of an acquisition, 
merger or reorganization transaction, the association and employees 
must comply with the requirements of paragraphs (a)(4)(i)(A), (C), and 
(D) of this section within 60 days from the effective date of the 
acquisition, merger, or reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the savings 
association; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception set forth in Sec.  563.101(c)(2), unless the 
individual is no longer engaged in the activity of a mortgage loan 
originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration pursuant to paragraph (a) of this section is effective on 
the date the registrant receives notification from the Registry that 
all information required by paragraphs (d) and (e) of this section has 
been submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) and of this section has been submitted and 
the renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, a savings association must 
require each employee who is a mortgage loan originator to submit to 
the Registry, or must submit on behalf of the employee, the following 
categories of information to the extent this information is collected 
by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the association;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or

[[Page 27414]]

unsatisfied judgments or liens against the employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust;
    (v) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (vi) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a State or Federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;
    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action listed in paragraphs (d)(1)(iii) through (ix) of this 
section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing savings association less than three years 
prior to registration and any appropriate identifying information for 
submission to the Federal Bureau of Investigation and any governmental 
agency or entity authorized to receive such information in connection 
with a State and national criminal history background check;
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this subpart must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing savings association; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv), (v), (vi), (vii), (viii), (ix), and (xi) of this section.
    (e) Required savings association information. A savings association 
must submit the following information to the Registry.
    (1) Savings association record. (i) In connection with the initial 
registration of one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the savings association's primary point of contact 
for the Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other savings 
association employees, provided this individual and any delegated 
employee does not act as a mortgage loan originator;
    (G) If an operating subsidiary of a savings association, indication 
that it is a subsidiary and the name of its parent savings association.
    (ii) A savings association must update the information required by 
this paragraph (e) within 30 days of the date that this information 
becomes inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the savings association, notification that it no longer 
employs the registrant and the date the registrant ceased being an 
employee.


Sec.  563.104   Policies and procedures.

    A savings association that employs mortgage loan originators must 
adopt and follow written policies and procedures designed to assure 
compliance with this subpart. These policies and procedures must be 
appropriate to the nature, size, complexity and scope of the mortgage 
lending activities of the savings association. At a minimum, these 
policies and procedures must:
    (a) Establish a process for identifying which employees of the 
savings association are required to be registered mortgage loan 
originators;
    (b) Require that all employees of the savings association who are 
mortgage loan originators be informed of the registration requirements 
of the S.A.F.E. Act and this subpart and be instructed on how to comply 
with such requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  563.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this 
subpart to be conducted by savings association personnel or by an 
outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this subpart, or the savings association's related policies and 
procedures,

[[Page 27415]]

including prohibiting such employees from acting as mortgage loan 
originators or other appropriate disciplinary actions; and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
563.103(d)(1)(xii) of this section, taking appropriate action 
consistent with applicable law and rules with respect to these reports, 
and for maintaining records of these reports and actions taken with 
respect to applicable employees.


Sec.  563.105  Use of unique identifier.

    (a) The savings association shall make the unique identifier(s) of 
its registered mortgage loan originator(s) available to consumers in a 
manner and method practicable to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any.

Appendix A to Subpart D of Part 563--Examples of Mortgage Loan 
Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of a savings association to 
fall within or outside the definition of mortgage loan originator. 
The examples in this Appendix are not all inclusive. They illustrate 
only the issue described and do not illustrate any other issues that 
may arise under this subpart. For the purposes of the examples 
below, the term ``loan'' refers to a residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes or does not take, a loan application.
    (1) Taking an application includes: receiving information that 
is sufficient to determine whether the consumer qualifies for a 
loan, even if the employee has had no contact with the consumer and 
is not responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of information is necessary for the application 
or otherwise explaining the loan application process in response to 
consumer inquiries.
    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a consumer's request for a lower rate or 
lower points on a pending loan application by presenting to the 
consumer a revised loan offer, either verbally or in writing, that 
includes a lower interest rate or lower points than the original 
offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to consumer 
queries regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the savings 
association);
    (ii) In response to a consumer's request, informing a consumer 
of the loan rates that are publicly available such as on the savings 
association's Web site for specific types of loan products without 
communicating to the consumer whether qualifications are met for 
that loan product;
    (iii) Collecting information about a consumer in order to 
provide the consumer with information on loan products for which the 
consumer generally may qualify, without presenting a specific loan 
offer to the consumer for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated; or
    (v) Providing a consumer with information unrelated to loan 
terms, such as the best days of the month for scheduling loan 
closings at the savings association.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain.''
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out employment duties, 
even if the employee does not receive a referral fee or commission 
or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the savings 
association.

Farm Credit Administration

12 CFR Chapter VI

Authority and Issuance

    For the reasons set forth in the preamble, chapter VI of title 12 
of the Code of Federal Regulations is proposed to be amended by adding 
new part 610 to chapter VI to read as follows:

PART 610--REGISTRATION OF MORTGAGE LOAN ORIGINATORS

Sec.
610.101 Authority, purpose, and scope.
610.102 Definitions.
610.103 Registration of mortgage loan originators.
610.104 Policies and procedures.
610.105 Use of unique identifier.
Appendix A to Part 610--Examples of Mortgage Loan Originator 
Activities

    Authority:  Secs. 1.5, 1.7, 1.9, 1.10, 1.11, 1.13, 2.2, 2.4, 
2.12, 5.9, 5.17, 7.2, 7.6, 7.8 of the Farm Credit Act (12 U.S.C. 
2013, 2015, 2017, 2018, 2019, 2021, 2073, 2075, 2093, 2243, 2252, 
2279a-2, 2279b, 2279c-10); and Secs. 1501 et seq. of the S.A.F.E. 
Act (12 U.S.C. 5101 et seq.)


Sec.  610.101  Authority, purpose, and scope.

    (a) Authority. This part is issued pursuant to the Secure and Fair 
Enforcement for Mortgage Licensing Act of 2008, title V of the Housing 
and Economic Recovery Act of 2008 (S.A.F.E. Act) (Pub. L. 110-289, 122 
Stat. 2654 (2008), 12 U.S.C. 5101 et seq.).
    (b) Purpose. This part implements the S.A.F.E. Act's Federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of mortgage 
loan originators; enhancing consumer protections; reducing fraud in the 
residential mortgage loan origination process; and providing consumers 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, mortgage loan originators.
    (c) Scope--(1) In general. This part applies to any Farm Credit 
System lending institution that actually originates residential 
mortgage loans pursuant to its authority under sections 1.9(3), 1.11, 
or 2.4(a) and (b) of the Farm Credit Act of 1971, as amended, and their 
employees who act as mortgage loan originators.
    (2) Exception. (i) This part and the requirements of sections 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of a Farm Credit System institution if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The Farm Credit System institution employs mortgage loan 
originators who, while excepted from registration pursuant to paragraph 
(c)(2)(i)(A) of this section, in the

[[Page 27416]]

aggregate, acted as a mortgage loan originator in connection with 25 or 
fewer residential mortgage loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, a Farm 
Credit System institution employee must register with the Registry 
pursuant to this part.


Sec.  610.102  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------

    \1\ The Appendix to this part provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable State law, unless the individual is compensated by a lender, 
a mortgage broker, or other mortgage loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator in paragraph (b)(1) of 
this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
consumer to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the State licensing and registration of State-licensed 
mortgage loan originators and the registration of mortgage loan 
originators pursuant to section 1507 of the S.A.F.E. Act.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is an 
employee of a Farm Credit System institution; and
    (2) Is registered pursuant to this part with, and maintains a 
unique identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act, 15 
U.S.C. 1602(v)) or residential real estate upon which is constructed or 
intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
second lien loans that meet the qualifications listed in this 
definition. This definition does not amend or supersede Sec.  
613.3030(c) of this chapter.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those set forth under 
the S.A.F.E. Act.


Sec.  610.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
employee of a Farm Credit System institution who acts as a mortgage 
loan originator must register with the Registry, obtain a unique 
identifier, and maintain this registration in accordance with the 
requirements of this part. Any such employee who is not in compliance 
with the registration and unique identifier requirements set forth in 
this part is in violation of the S.A.F.E. Act and this part.
    (2) Farm Credit System institution requirement--(i) In general. A 
Farm Credit System institution that employs one or more individuals who 
act as a residential mortgage loan originator must require each 
employee who is a mortgage loan originator to register with the 
Registry, maintain this registration, and obtain a unique identifier in 
accordance with the requirements of this part.
    (ii) Prohibition. A Farm Credit System institution must not permit 
an employee who is subject to the registration requirements of this 
part to act as a mortgage loan originator unless such employee is 
registered with the Registry pursuant to this part.
    (3) Implementation period for initial registration. An employee of 
a Farm Credit System institution who is a mortgage loan originator must 
complete an initial registration with the Registry pursuant to this 
part within 180 days from the date that the Farm Credit Administration 
provides public notice that the Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If an employee of a Farm Credit System 
institution was registered or licensed through, and obtained a unique 
identifier from, the Registry prior to becoming an employee of the Farm 
Credit System institution and has maintained this registration or 
license, the registration requirements of the S.A.F.E. Act and this 
part are deemed to be met, provided that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii) of this 
section;
    (C) The Farm Credit System institution information required in 
paragraphs (e)(1)(i) (to the extent the Farm Credit System institution 
has not previously met these requirements) and (e)(2)(i) of this 
section is submitted to the Registry; and
    (D) The registration is maintained pursuant to paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the Farm Credit System institution.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become employees of another Farm Credit System institution as a result 
of a consolidation, merger or reorganization transaction, the Farm 
Credit System institution and employee must comply with the 
requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this section 
within 60 days from the effective date of the consolidation, merger, or 
reorganization.

[[Page 27417]]

    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry pursuant to paragraph (a) of this section 
must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be an employee of the Farm Credit 
System institution; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out-of-date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception set forth in Sec.  610.101(c)(2), unless the 
individual is no longer engaged in the activity of a mortgage loan 
originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration pursuant to paragraph (a) of this section is effective on 
the date the registrant receives notification from the Registry that 
all information required by paragraphs (d) and (e) of this section has 
been submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update pursuant to paragraph 
(b) of this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) of this section has been submitted and the 
renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, a Farm Credit System 
institution must require each employee who is a mortgage loan 
originator to submit to the Registry, or must submit on behalf of the 
employee, the following categories of information to the extent this 
information is collected by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became an employee of the Farm Credit System institution;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or unsatisfied judgments or liens against the 
employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust; (v) Civil judicial actions against the 
employee in connection with financial services-related activities, 
dismissals with settlements, judicial findings that the employee 
violated financial services-related statutes or regulations, except for 
actions dismissed without a settlement agreement;
    (vi) Actions or orders by a State or Federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a State or Federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or State or Federal contractor;
    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action listed in paragraphs (d)(1)(iii) through (ix) of this 
section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing institution less than three years prior to 
registration and any appropriate identifying information for submission 
to the Federal Bureau of Investigation and any governmental agency or 
entity authorized to receive such information in connection with a 
State and national criminal history background check.
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this part must:
    (i) Authorize the Registry and the employing institution to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing Farm Credit System institution; 
and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv)-(ix) and (xi) of this section.
    (e) Required information. A Farm Credit System institution must 
submit the following information to the Registry.
    (1) Farm Credit System institution record. (i) In connection with 
the initial registration of one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of its primary Federal regulator;

[[Page 27418]]

    (E) Name(s) and contact information of the individual(s) with 
authority to act as the Farm Credit System institution's primary point 
of contact for the Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other employees of 
the Farm Credit System institution, provided this individual and any 
delegated employee does not act as a mortgage loan originator; and
    (G) If an operating subsidiary of an agricultural credit 
association, indication that it is a subsidiary and the name of its 
parent agricultural credit association.
    (ii) A Farm Credit System institution must update the information 
required by this paragraph (e) within 30 days of the date that this 
information becomes inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be an 
employee of the Farm Credit System institution, notification that it no 
longer employs the registrant and the date the registrant ceased being 
an employee.


Sec.  610.104  Policies and procedures.

    A Farm Credit System institution that employs mortgage loan 
originators must adopt and follow written policies and procedures 
designed to assure compliance with this part. These policies and 
procedures must be appropriate to the nature, size, complexity and 
scope of the mortgage lending activities of the Farm Credit System 
institution. At a minimum, these policies and procedures must:
    (a) Establish a process for identifying which employees of the Farm 
Credit System institution are required to be registered mortgage loan 
originators;
    (b) Require that all employees of the Farm Credit System 
institution who are mortgage loan originators be informed of the 
registration requirements of the S.A.F.E. Act and this part and be 
instructed on how to comply with such requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  610.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this part 
to be conducted by Farm Credit System institution personnel or by an 
outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this part, or the Farm Credit System institution's related policies and 
procedures, including prohibiting such employees from acting as 
mortgage loan originators or other appropriate disciplinary actions; 
and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
610.103(d)(1)(xii), taking appropriate action consistent with 
applicable law and rules with respect to these reports, and for 
maintaining records of these reports and actions taken with respect to 
applicable employees.


Sec.  610.105  Use of unique identifier.

    (a) The Farm Credit System institution shall make the unique 
identifier(s) of its registered mortgage loan originator(s) available 
to consumers in a manner and method practicable to the institution.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a consumer:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
consumer, if any.

Appendix A to Part 610--Examples of Mortgage Loan Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause an employee of a Farm Credit System 
institution to fall within or outside the definition of mortgage 
loan originator. The examples in this Appendix are not all 
inclusive. They illustrate only the issue described and do not 
illustrate any other issues that may arise under this part. For the 
purposes of the examples below, the term ``loan'' refers to a 
residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes or does not take, a loan application.
    (1) Taking an application includes: receiving information that 
is sufficient to determine whether the consumer qualifies for a 
loan, even if the employee has had no contact with the consumer and 
is not responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a consumer to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a consumer who is filling out an application by 
clarifying what type of information is necessary for the application 
or otherwise explaining the loan application process in response to 
consumer inquiries.
    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a consumer for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a consumer's request for a lower rate or 
lower points on a pending loan application by presenting to the 
consumer a revised loan offer, either verbally or in writing, that 
includes a lower interest rate or lower points than the original 
offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to consumer 
queries regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the Farm Credit 
System institution);
    (ii) In response to a consumer's request, informing a consumer 
of the loan rates that are publicly available such as on the Farm 
Credit System institution's Web site for specific types of loan 
products without communicating to the consumer whether 
qualifications are met for that loan product;
    (iii) Collecting information about a consumer in order to 
provide the consumer with information on loan products for which the 
consumer generally may qualify, without presenting a specific loan 
offer to the consumer for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a consumer about those 
arrangements, provided that communication with the consumer only 
verifies loan terms already offered or negotiated; or
    (v) Providing a consumer with information unrelated to loan 
terms, such as the best days of the month for scheduling loan 
closings at the Farm Credit System institution.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain.''
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out

[[Page 27419]]

employment duties, even if the employee does not receive a referral 
fee or commission or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the Farm 
Credit System institution.

National Credit Union Administration

12 CFR Chapter VII

Authority and Issuance

    For the reasons stated in the preamble, the National Credit Union 
Administration proposes to amend chapter VII of title 12 of the Code of 
Federal Regulations to add a new part 761 as follows:

PART 761--REGISTRATION OF RESIDENTIAL MORTGAGE LOAN ORIGINATORS

Sec.
761.101 Authority, purpose, and scope.
761.102 Definitions.
761.103 Registration of mortgage loan originators.
761.104 Policies and procedures.
761.105 Use of unique identifier.
Appendix A to Part 761--Examples of Mortgage Loan Originator 
Activities.

    Authority: 12 U.S.C. 1751 et seq. and 5101 et seq.


Sec.  761.101  Authority, purpose, and scope.

    (a) Authority. The National Credit Union Administration is issuing 
part 761 under the Secure and Fair Enforcement for Mortgage Licensing 
Act of 2008, title V of the Housing and Economic Recovery Act of 2008 
(S.A.F.E. Act) (Pub. L. 110-289, 122 Stat. 2654, 12 U.S.C. 5101 et 
seq.).
    (b) Purpose. This part implements the S.A.F.E. Act's federal 
registration requirement for mortgage loan originators. The S.A.F.E. 
Act provides that the objectives of this registration include 
aggregating and improving the flow of information to and between 
regulators; providing increased accountability and tracking of loan 
originators; enhancing member protections; reducing fraud in the 
residential mortgage loan origination process; and providing members 
with easily accessible information at no charge regarding the 
employment history of, and publicly adjudicated disciplinary and 
enforcement actions against, loan originators.
    (c) Scope--(1) In general. This part applies to federally insured 
credit unions and their employees who act as mortgage loan originators.
    (2) Exception. (i) This part and the requirements of section 
1504(a)(1)(A) and (2) of the S.A.F.E. Act do not apply to any employee 
of a federally insured credit union if during the past 12 months:
    (A) The employee acted as a mortgage loan originator for 5 or fewer 
residential mortgage loans; and
    (B) The credit union employs mortgage loan originators who, while 
excepted from registration under paragraph (c)(2)(i)(A) of this 
section, in the aggregate, acted as a mortgage loan originator in 
connection with 25 or fewer residential mortgage loans.
    (ii) Prior to engaging in mortgage loan origination activity that 
exceeds either the individual or the aggregate exception limit, a 
credit union employee must register with the Registry under this part.


Sec.  761.102  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Annual renewal period means November 1 through December 31 of 
each year.
    (b)(1) Mortgage loan originator \1\ means an individual who:
---------------------------------------------------------------------------

    \1\ The Appendix to this part provides examples of activities 
that would, and would not, cause an employee to fall within this 
section's definition of mortgage loan originator.
---------------------------------------------------------------------------

    (i) Takes a residential mortgage loan application; and
    (ii) Offers or negotiates terms of a residential mortgage loan for 
compensation or gain.
    (2) The term mortgage loan originator does not include:
    (i) An individual who performs purely administrative or clerical 
tasks on behalf of an individual who is described in paragraph (b)(1) 
of this section;
    (ii) An individual who only performs real estate brokerage 
activities (as defined in section 1503(3)(D) of the S.A.F.E. Act) and 
is licensed or registered as a real estate broker in accordance with 
applicable state law, unless the individual is compensated by a lender, 
a mortgage broker, or other mortgage loan originator or by any agent of 
such lender, mortgage broker, or other mortgage loan originator, and 
meets the definition of mortgage loan originator in paragraph (b)(1) of 
this section; or
    (iii) An individual or entity solely involved in extensions of 
credit related to timeshare plans, as that term is defined in 11 U.S.C. 
101(53D).
    (3) Administrative or clerical tasks means the receipt, collection, 
and distribution of information common for the processing or 
underwriting of a residential mortgage loan and communication with a 
member to obtain information necessary for the processing or 
underwriting of a residential mortgage loan.
    (c) Nationwide Mortgage Licensing System and Registry or Registry 
means the system developed and maintained by the Conference of State 
Bank Supervisors and the American Association of Residential Mortgage 
Regulators for the state licensing and registration of state-licensed 
mortgage loan originators and the registration of mortgage loan 
originators under section 1507 of the S.A.F.E. Act.
    (d) Registered mortgage loan originator or registrant means any 
individual who:
    (1) Meets the definition of mortgage loan originator and is a 
credit union employee; and
    (2) Is registered under this part with, and maintains a unique 
identifier through, the Registry.
    (e) Residential mortgage loan means any loan primarily for 
personal, family, or household use that is secured by a mortgage, deed 
of trust, or other equivalent consensual security interest on a 
dwelling (as defined in section 103(v) of the Truth in Lending Act (15 
U.S.C. 1602(v))) or residential real estate upon which is constructed 
or intended to be constructed a dwelling, and includes refinancings, 
reverse mortgages, home equity lines of credit and other first and 
second lien loans that meet the qualifications listed in this 
definition.
    (f) Unique identifier means a number or other identifier that:
    (1) Permanently identifies a registered mortgage loan originator;
    (2) Is assigned by protocols established by the Nationwide Mortgage 
Licensing System and Registry, the Federal banking agencies, and the 
Farm Credit Administration to facilitate:
    (i) Electronic tracking of mortgage loan originators; and
    (ii) Uniform identification of, and public access to, the 
employment history of and the publicly adjudicated disciplinary and 
enforcement actions against mortgage loan originators; and
    (3) Must not be used for purposes other than those under the 
S.A.F.E. Act.


Sec.  761.103  Registration of mortgage loan originators.

    (a) Registration requirement--(1) Employee registration. Each 
credit union employee who acts as a mortgage loan originator must 
register with the Registry, obtain a unique identifier, and maintain 
this registration in accordance with the requirements of this part. Any 
such employee who is not in compliance with the registration and unique 
identifier requirements in this part is in violation of the S.A.F.E. 
Act and this part.

[[Page 27420]]

    (2) Credit union requirement--(i) In general. A credit union that 
employs one or more individuals who act as a residential mortgage loan 
originator must require each employee who is a mortgage loan originator 
to register with the Registry, maintain this registration, and obtain a 
unique identifier in accordance with the requirements of this part.
    (ii) Prohibition. A credit union must not permit its employee who 
is subject to this part's registration requirements to act as a 
mortgage loan originator unless such employee is registered with the 
Registry under this part.
    (3) Implementation period for initial registration. A credit union 
employee who is a mortgage loan originator must complete an initial 
registration with the Registry under this part within 180 days from the 
date that the National Credit Union Administration provides public 
notice that the Registry is accepting registrations.
    (4) Employees previously registered or licensed through the 
Registry--(i) In general. If a credit union employee was registered or 
licensed through, and obtained a unique identifier from, the Registry 
prior to becoming a credit union employee and has maintained this 
registration or license, the registration requirements of the S.A.F.E. 
Act and this part are deemed to be met, provided that:
    (A) The employment information in paragraphs (d)(1)(i)(C) and 
(d)(1)(ii) of this section is updated and the requirements of paragraph 
(d)(2) of this section are met;
    (B) New fingerprints of the employee are submitted to the Registry 
for a background check, as required by paragraph (d)(1)(xii) of this 
section;
    (C) The credit union information required in paragraphs (e)(1)(i) 
(to the extent the credit union has not previously met these 
requirements) and (e)(2)(i) of this section is submitted to the 
Registry; and
    (D) The registration is maintained under paragraphs (b) and 
(e)(1)(ii) of this section, as of the date that the employee is 
employed by the credit union.
    (ii) Implementation period for certain acquisitions, mergers or 
reorganizations. When registered or licensed mortgage loan originators 
become credit union employees as a result of an acquisition, merger or 
reorganization transaction, the credit union and employee must comply 
with the requirements of paragraphs (a)(4)(i)(A), (C), and (D) of this 
section within 60 days from the effective date of the acquisition, 
merger, or reorganization.
    (b) Maintaining registration. (1) A mortgage loan originator who is 
registered with the Registry under paragraph (a) of this section must:
    (i) Renew the registration during the annual renewal period, 
confirming the responses set forth in paragraphs (d)(1)(i) through (xi) 
of this section remain accurate and complete, and updating this 
information, as appropriate; and
    (ii) Update the registration within 30 days of any of the following 
events:
    (A) A change in the name of the registrant;
    (B) The registrant ceases to be a credit union employee; or
    (C) The information required under paragraphs (d)(1)(iii) through 
(xi) of this section becomes inaccurate, incomplete, or out of date.
    (2) A registered mortgage loan originator must maintain his or her 
registration, notwithstanding the originator's subsequent qualification 
for the exception in Sec.  761.101(c)(2), unless the individual is no 
longer engaged in the activity of a mortgage loan originator.
    (c) Effective dates--(1) Initial registration. An initial 
registration under paragraph (a) of this section is effective on the 
date the registrant receives notification from the Registry that all 
information required by paragraphs (d) and (e) of this section has been 
submitted and the registration is complete.
    (2) Renewals or updates. A renewal or update under paragraph (b) of 
this section is effective on the date the registrant receives 
notification from the Registry that all applicable information required 
by paragraphs (b) and (e) of this section has been submitted and the 
renewal or update is complete.
    (d) Required employee information--(1) In general. For purposes of 
the registration required by this section, a credit union must require 
each employee who is a mortgage loan originator to submit to the 
Registry, or must submit on behalf of the employee, the following 
categories of information to the extent this information is collected 
by the Registry:
    (i) Identifying information, including the employee's:
    (A) Name and any other names used;
    (B) Home address;
    (C) Address of the employee's principal business location and 
business contact information;
    (D) Social security number;
    (E) Gender; and
    (F) Date and place of birth;
    (ii) Financial services-related employment history for the 10 years 
prior to the date of registration or renewal, including the date the 
employee became a credit union employee;
    (iii) Financial information for the 10 years prior to the date of 
registration or renewal constituting a history of any personal 
bankruptcy; business bankruptcy based upon events that occurred while 
the employee exercised control over an organization; denied, paid out, 
or revoked bonds; or unsatisfied judgments or liens against the 
employee;
    (iv) Felony convictions or other final criminal actions involving a 
felony against the employee or organizations controlled by the 
employee; or misdemeanor convictions or other final misdemeanor actions 
against the employee or organizations controlled by the employee 
involving financial services, a financial services-related business, 
dishonesty, or breach of trust;
    (v) Civil judicial actions against the employee in connection with 
financial services-related activities, dismissals with settlements, 
judicial findings that the employee violated financial services-related 
statutes or regulations, except for actions dismissed without a 
settlement agreement;
    (vi) Actions or orders by a state or federal regulatory agency or 
foreign financial regulatory authority that:
    (A) Found the employee to have made a false statement or omission 
or been dishonest, unfair or unethical; to have been involved in a 
violation of a financial services-related regulation or statute; or to 
have been a cause of a financial services-related business having its 
authorization to do business denied, suspended, revoked or restricted;
    (B) Are entered against the employee in connection with a financial 
services-related activity;
    (C) Denied, suspended, or revoked the employee's registration or 
license to engage in a financial services-related activity; disciplined 
the employee or otherwise by order prevented the employee from 
associating with a financial services-related business or restricted 
the employee's activities; or
    (D) Barred the employee from association with an entity regulated 
by the agency or authority or from engaging in a financial services-
related business;
    (vii) Final orders issued by a state or federal regulatory agency 
or foreign financial regulatory authority based on violations of any 
law or regulation that prohibits fraudulent, manipulative or deceptive 
conduct;
    (viii) Revocation or suspension of the employee's authorization to 
act as an attorney, accountant, or state or federal contractor;

[[Page 27421]]

    (ix) Customer-initiated financial services-related arbitration or 
civil action against the employee that required action, including 
settlements;
    (x) Disclosure of any voluntary or involuntary employment 
terminations resulting from allegations accusing the employee of 
violating a statute, regulation, or industry standard of conduct; 
fraud; dishonesty; theft; or the wrongful taking of property;
    (xi) Any pending actions against the employee that could result in 
an action listed in paragraphs (d)(1)(iii) through (ix) of this 
section; and
    (xii) Fingerprints of the employee, in digital form if practicable, 
collected by the employing credit union less than three years prior to 
registration and any appropriate identifying information for submission 
to the Federal Bureau of Investigation and any governmental agency or 
entity authorized to receive such information in connection with a 
state and national criminal history background check;
    (2) Employee authorization and attestation. An employee registering 
as a mortgage loan originator or renewing his or her registration under 
this part must:
    (i) Authorize the Registry and the employing credit union to obtain 
information related to any administrative, civil or criminal findings, 
to which the employee is a party, made by any governmental 
jurisdiction;
    (ii) Attest to the correctness of all information required by 
paragraph (d) of this section, whether submitted by the employee or on 
behalf of the employee by the employing credit union; and
    (iii) Authorize the Registry to make available to the public 
information required by paragraphs (d)(1)(i)(A) and (C), (d)(1)(ii), 
(iv)-(ix) and (xi) of this section.
    (e) Required credit union information. A credit union must submit 
the following information to the Registry:
    (1) Credit union record. (i) In connection with the initial 
registration of one or more mortgage loan originators:
    (A) Name and main office address;
    (B) Internal Revenue Service Employer Tax Identification Number 
(EIN);
    (C) Research Statistics Supervision and Discount (RSSD) number, as 
issued by the Board of Governors of the Federal Reserve System;
    (D) Identification of the National Credit Union Administration as 
its primary Federal regulator;
    (E) Name(s) and contact information of the individual(s) with 
authority to act as the credit union's primary point of contact for the 
Registry;
    (F) Name(s) and contact information of the individual(s) with 
authority to enter data required in paragraph (e) of this section on 
the Registry and who may delegate this authority to other credit union 
employees, provided this individual and any delegated employee does not 
act as a mortgage loan originator.
    (ii) A credit union must update the information required by this 
paragraph (e) within 30 days of the date that this information becomes 
inaccurate.
    (2) Employee information. In connection with the registration of 
each employee who acts as a mortgage loan originator:
    (i) After the information required by paragraph (d) of this section 
has been submitted to the Registry, confirmation that it employs the 
registrant; and
    (ii) Within 30 days of the date the registrant ceases to be a 
credit union employee, notification that it no longer employs the 
registrant and the date the registrant ceased being an employee.


Sec.  761.104   Policies and procedures.

    A credit union that employs mortgage loan originators must adopt 
and follow written policies and procedures designed to assure 
compliance with this part. These policies and procedures must be 
appropriate to the nature, size, complexity and scope of the mortgage 
lending activities of the credit union. At a minimum, these policies 
and procedures must:
    (a) Establish a process for identifying which credit union 
employees are required to be registered mortgage loan originators;
    (b) Require that all credit union employees who are mortgage loan 
originators be informed of the registration requirements of the 
S.A.F.E. Act and this part and be instructed on how to comply with such 
requirements and procedures;
    (c) Establish procedures to comply with the unique identifier 
requirements in Sec.  761.105;
    (d) Establish reasonable procedures for confirming the adequacy and 
accuracy of employee registrations, including updates and renewals, by 
comparisons with its own records;
    (e) Establish reasonable procedures and tracking systems for 
monitoring compliance with registration and renewal requirements and 
procedures;
    (f) Provide for independent testing for compliance with this part 
to be conducted by credit union personnel or by an outside party;
    (g) Provide for appropriate action in the case of any employee who 
fails to comply with the registration requirements of the S.A.F.E. Act, 
this part, or the credit union's related policies and procedures, 
including prohibiting such employees from acting as mortgage loan 
originators or other appropriate disciplinary actions; and
    (h) Establish a process for reviewing employee criminal history 
background reports received from the Registry in connection with Sec.  
761.103(d)(1)(xii), taking appropriate action consistent with 
applicable law and rules with respect to these reports, and for 
maintaining records of these reports and actions taken with respect to 
applicable employees.


Sec.  761.105   Use of unique identifier.

    (a) The credit union shall make the unique identifier(s) of its 
registered mortgage loan originator(s) available to members in a manner 
and method practicable to the credit union.
    (b) A registered mortgage loan originator shall provide his or her 
unique identifier to a member:
    (1) Upon request;
    (2) Before acting as a mortgage loan originator; and
    (3) Through the originator's initial written communication with a 
member, if any.

Appendix A to Part 761--Examples of Mortgage Loan Originator Activities

    This Appendix provides examples to aid in the understanding of 
activities that would cause a credit union employee to fall within 
or outside the definition of mortgage loan originator. The examples 
in this Appendix are not all inclusive. They illustrate only the 
issue described and do not illustrate any other issues that may 
arise under this part. For the purposes of the examples below, the 
term ``loan'' refers to a residential mortgage loan.
    (a) Taking a loan application: The following examples illustrate 
when an employee takes or does not take, a loan application.
    (1) Taking an application includes: receiving information that 
is sufficient to determine whether the member qualifies for a loan, 
even if the employee has had no contact with the member and is not 
responsible for further verification of information.
    (2) Taking an application does not include any of the following 
activities performed solely or in combination:
    (i) Contacting a member to verify the information in the loan 
application by obtaining documentation, such as tax returns or 
payroll receipts;
    (ii) Receiving a loan application through the mail and 
forwarding it, without review, to loan approval personnel; or
    (iii) Assisting a member who is filling out an application by 
clarifying what type of information is necessary for the application 
or otherwise explaining the loan application process in response to 
member inquiries.

[[Page 27422]]

    (b) Offering or negotiating terms of a loan: The following 
examples are designed to illustrate when an employee offers or 
negotiates terms of a loan, and conversely, what does not constitute 
offering or negotiating terms of a loan.
    (1) Offering or negotiating the terms of a loan includes:
    (i) Presenting a loan offer to a member for acceptance, either 
verbally or in writing, even if further verification of information 
is necessary and the offer is conditional; or
    (ii) Responding to a member's request for a lower rate or lower 
points on a pending loan application by presenting to the member a 
revised loan offer, either verbally or in writing, that includes a 
lower interest rate or lower points than the original offer.
    (2) Offering or negotiating terms of a loan does not include 
solely or in combination:
    (i) Providing general explanations in response to member queries 
regarding qualification for a specific loan product, such as 
explaining loan terminology (i.e., debt-to-income ratio) or lending 
policies (i.e., the loan-to-value ratio policy of the credit union);
    (ii) In response to a member's request, informing a member of 
the loan rates that are publicly available such as on the credit 
union's Web site for specific types of loan products without 
communicating to the member whether qualifications are met for that 
loan product;
    (iii) Collecting information about a member in order to provide 
the member with information on loan products for which the member 
generally may qualify, without presenting a specific loan offer to 
the member for acceptance, either verbally or in writing;
    (iv) Arranging the loan closing or other aspects of the loan 
process, including communicating with a member about those 
arrangements, provided that communication with the member only 
verifies loan terms already offered or negotiated; or
    (v) Providing a member with information unrelated to loan terms, 
such as the best days of the month for scheduling loan closings at 
the credit union.
    (c) The following examples illustrate when an employee does or 
does not offer or negotiate terms of a loan ``for compensation or 
gain'':
    (1) Offering or negotiating terms of a loan for compensation or 
gain includes engaging in any of the activities in paragraph (b)(1) 
of this Appendix in the course of carrying out employment duties, 
even if the employee does not receive a referral fee or commission 
or other special compensation for the loan.
    (2) Offering or negotiating terms of a loan for compensation or 
gain does not include engaging in a seller-financed transaction for 
the employee's personal property that does not involve the credit 
union.

    Dated: May 27, 2009.
John C. Dugan,
Comptroller of the Currency.

    By the order of the Board of Governors of the Federal Reserve 
System, May 28, 2009.
Robert deV. Frierson,
Deputy Secretary of the Board.

    By order of the Board of Directors.

    Dated at Washington, DC, the 29th day of May 2009.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.

    Dated: May 28, 2009.

    By the Office of Thrift Supervision,
John E. Bowman,
Acting Director.

    Dated: May 28, 2009.
Roland E. Smith,
Secretary, Farm Credit Administration Board.

    By the National Credit Union Administration Board on May 26, 
2009.
Mary Rupp,
Secretary of the Board.
[FR Doc. E9-13058 Filed 6-8-09; 8:45 am]
BILLING CODE 4810-33-P, 6210-01-P; 6714-01-P; 6720-01-P; 6705-01-P; 
7535-01-P