Front-line staff at small credit unions wear many different hats. As a result, those of you who are tellers and new-account representatives might wonder which activities would make you a loan originator. And if you meet the definition of loan originator, what additional responsibilities do you bear?
Regulation G (the SAFE Act) and Regulation Z (the Truth in Lending Act) contain slightly different definitions and requirements. The SAFE Act applies specifically to a mortgage loan originator, defined as an individual who:
Most front-line staff won’t meet this very specific, two-pronged definition. As a result, you likely won’t need to concern yourself with the additional regulatory requirements the SAFE Act imposes. If your day-to-day responsibilities involve both of these activities, talk to the compliance officer or loan manager at your credit union for additional information.
The Regulation Z definition of loan originator is broader. That regulation defines a loan originator as a person who, in expectation of compensation or other monetary gain, performs any of the following four activities for loans secured by a dwelling:
Points one, two, or four could be problematic for front-line staff.
For example, a teller very likely could assist a member with filling out an application for a closed-end home equity loan. Or a new-account representative might take an application from a member for a home equity line of credit.
Either of these activities would classify the employee as a loan originator under Regulation Z and subject them to additional regulatory requirements. They would be:
It’s important that you conduct an inventory of your daily activities to determine whether you meet either of the loan originator definitions. If you do, you’ll be subject to additional requirements and responsibilities under federal law.
For more information, visit CUNA’s E-Guide to Federal Law and Regulations at cuna.org/compliance.
MICHAEL CHRISTIANS is a senior federal compliance counsel with CUNA. Contact him at firstname.lastname@example.org. Contact the CUNA compliance team at email@example.com.
This article initially appeared in Credit Union Front Line newsletter, the monthly sales and service newsletter for branch staff and their managers. Subscribe now to the print edition or PDF version.