On November 15, 2019, the Consumer Financial Protection Bureau (“CFPB”) issued an interpretive rule to provide clarification on screening and training requirements for mortgage loan originator organizations that employ individual loan originators with temporary authority.
Section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (“EGRRCPA”), which is effective November 24, 2019, amends the Secure and Fair Enforcement for Mortgage Lending Act of 2008 (the “SAFE Act”) to provide individual loan originators with temporary authority to originate loans in a state while that state considers their application for a loan originator license. To view DocMagic’s recent article regarding the enactment of this section, click here.
Regulation Z, which implements the Truth in Lending Act (“TILA”), requires a mortgage loan originator organization that employs an individual loan originator who is not licensed and is not required to be licensed to perform specific screening of the individual and to meet certain training requirements. However, Regulation Z is ambiguous as to whether its screening and training requirements apply to a loan originator organization employing an individual loan originator acting under temporary authority as described in the SAFE Act.
The CFPB’s interpretive rule concludes that if a loan originator employee has temporary authority in a particulate state, the loan originator organization does not need to satisfy Regulation Z’s screening and training requirements. The CFPB further clarifies that it is up to the state to “perform the screening and training as part of its review of the individual’s application for a state loan originator license.”
