WASHINGTON (6/28/10)--National Credit Union Administration (NCUA) attorney Regina Metz updated credit unions on the status of implementing the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act during a recent Credit Union National Association (CUNA) audio conference. During the conference, Metz explained that there are two steps that have yet to be completed: Finalizing SAFE regulations and creating the national registration procedures. The NCUA and all of the federal banking agencies except the Office of Thrift Supervision (OTS) have approved the interagency SAFE regulations. The NCUA Board approved the regulations in April, and once the Office of Management and Budget approves the OTS rule, the agencies will publish a final rule in the Federal Register
. The rule will be come effective the first date of the calendar quarter 60 days after publication. Metz, who represents NCUA on the interagency SAFE working group, indicated that the agencies hope to publish a final rule by the end of July, which would mean an October 1 effective date; otherwise, the rules are expected to become effective Jan. 1. However, as Metz explained, credit union employees still can’t actually register until the Nationwide Mortgage Licensing System and Registry is structured to accept registrations from bank and credit union employees. The NCUA and the federal banking agencies are working with the Conference of State Bank Supervisors on the registry, which they hope to have ready early next year. Employees will have 180 days after the agencies provide a public notice announcing that the registry is accepting initial registrations. Metz indicated that once the first round of registrations is completed, the agencies envision annual renewals would occur between Nov. 1 and Dec. 31 of each year. The SAFE regulations will require that credit unions adopt policies to assure that their employees who originate residential mortgages provide the required information (such as fingerprints and employment history), obtain a unique identifying number, and register. A key question is who will be required to register. Metz discussed the information found in the regulation’s Appendix A, which provides examples of which employees are considered to originate mortgage loans and therefore will need to register, once the system is up and running. Only bank and credit union employees are subject to the registration procedures, Metz said. Others engaged in residential mortgage lending, including employees of credit union service organization (CUSOs), as Metz explained, are subject to more extensive state licensing procedures that include not only registration and having a unique identifier number, but also periodic testing. In response to an audience question, Metz noted that the cost of registration has yet to be determined. “The regulation’s expected fall ‘effective date’ would only mean that credit unions have to start developing their written polices and procedures to ensure compliance with the new rule and can start identifying which employees will be subject to SAFE registration,” explained Valerie Moss, CUNA’s Director of Compliance Information. “Based on what we’re hearing, credit unions should assume that registration will occur the first half of 2011. And remember, employees engaged in home equity lending and refinancings are covered by SAFE,” she added. Moss also noted that participants in CUNA’s audio-conference raised some practical issues that CUNA will pursue with NCUA, such as how to report if more than one registered person is involved in a mortgage loan decision. “As credit unions review the regulatory requirements, please continue to feed us your operational questions so we can raise them with NCUA,” said Moss. In addition to the SAFE Act update, CUNA staff covered other areas that currently require special attention by credit unions, including:
* Last minutes details credit unions should be sure to take care of before the Regulation Z open-end rules go into effect on July 1; * A brief overview of the new Regulation Z Credit Card Act rules that go into effect on Aug. 22; * A quick rundown of the Federal Reserve Board's clarifications to the Regulations E overdraft rules that are effective July 1 (Aug.15 for accounts opened prior to July 1); * A reminder for credit unions to get ready to start receiving direct disputes from members regarding information in their consumer reports on July 1; * A heads up regarding available information that credit union mortgage lenders should consider during lapses in the National Flood Insurance program (NFIP); * A brief overview of what the garnishment of federal benefit payments requirements might look like; and * An update on the provisions in the financial reform bill that are of interest to credit unions.
For an archived version of the audio conference, use the resource link.