SAFE laws

Did you know mortgage originators are subject to the SAFE Mortgage Licensing Act?  This is good news for people wanting to obtain loans to purchase property.  It means background checks, licensing standards, accountability and other good things to keep the process and people involved on the straight and narrow.

There are however, provisions that owners and the real estate agents who work with them will need to be aware of.  It’s not your best day when you find you’ve violated Federal law inadvertently.

If a seller is offering owner financing, unless he/she is the resident owner of the property, he/she falls under the SAFE MLA and is subject to the same requirements as any mortgage originator.

If Maw and Paw own their home outright and would like to have the income which comes from selling their domicile and living off the monthly proceeds, no problem.  If Maw and Paw have passed on and Jr./Jr-ette acquire the home through bequeath and attempt to sell it owner financing, big problem.

Is this wrong?  On some planes no, on some planes yes.  The intent of the act is to prevent or at least lessen the possibility of mortgage fraud.  It is possible for a variety of crimes to be committed either by individual or institutionalized lenders, and yes, we should always be diligent at routing out problems, but this is a baby with the bathwater solution.

Investors have saved great swaths of major cities where foreclosure has gone rampant.  They have put their money and time on the line and now are unable to provide benefit to the people who need it most — those whose credit was ruined in the downswing, but who are putting their lives back together and would like to be homeowners.  In Detroit, homes were being bought in batches of 100’s by investors.  Those rehabbed properties can only be purchased now if a bank is willing to take on the loan applicant.  That’s a darned shame. 

When our government (and all parties and office holders are complicit) fails to produce the recovery, the last thing which should happen is a blight on the individual initiative to accomplish the same thing.

SAFE Mortgage Licensing Act of 2008 

Title V of P.L. 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008.  The new federal law gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS).  The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan. Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. All other mortgage loan originators are licensed by the states.The SAFE Act requires state-licensed MLOs to pass a written qualified test, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check; and state-licensed MLOs to provide authorization for NMLS to obtain an independent credit report.

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