Credit unions frequently ask CUNA’s compliance team about the mandatory training requirements that federal law and regulations impose on credit union employees.
One area that still seems to generate some confusion are the obligatory education demands imposed upon mortgage loan originators (MLOs). To gain a better understanding, it’s helpful to review the various rules related to MLOs.
Congress passed the Secure and Fair Enforcement for Mortgage Lending Act (SAFE Act) in 2008 to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud in the mortgage lending industry. Section 5103 of the SAFE Act requires that MLOs either register under federal law or under state law.
For purposes of the SAFE Act, an MLO is an individual who:
The Nationwide Mortgage Licensing System and Registry (NMLSR) administers registration of MLOs under federal law. MLOs employed by a federally insured depository institution or credit union must be uniquely identified by an NMLS number. Registration with the NMLSR must be renewed annually. The federal registration process has no pre-registration or continuing education requirements.
MLOs not employed by a federally insured depository institution must be licensed under state law. Each state has its own jurisdictional framework for implementing this requirement, which in some cases requires upwards of 20 hours of educational content that covers federal law, state law, ethics, and non-traditional mortgage lending.
Remember, these licensing and education requirements apply only to MLOs not employed by federally insured depository institutions, including credit unions. Does this mean the MLOs in your credit union have no education or training requirements? Not exactly.
Truth in Lending Act
Section 1026.36 of the Truth in Lending Act (Regulation Z) requires periodic training for those loan officers that originate consumer credit transactions secured by a dwelling.
The training must cover federal and state law requirements that apply to the individual loan originator’s loan origination activities.
Unfortunately, the regulatory text doesn’t provide specifics as to what the training must consist of or how often it must occur.
But the commentary to this section of the regulation provides some insight. It says that if the loan originator participates in training that the NMLSR has approved for purposes of satisfying the licensed loan originator continuing education requirement under the SAFE Act, that training will also satisfy the Reg Z training requirement.
So, while the MLOs in your credit union aren’t required to participate in NMLSR-approved training, by doing so they will have satisfied their Reg Z training requirement.
To help credit union MLOs satisfy their Reg Z training requirement, CUNA has developed an NMLSR-approved training curriculum (NMLS Course Provider #1405021).
The course, “8 Hour SAFE Comprehensive 2017 MLO Course #6833,” examines the various compliance responsibilities applicable to your credit union’s MLOs. Visit cuna.org/mlo for more information.
MICHAEL R. CHRISTIANS is CUNA’s senior federal compliance counsel. Contact CUNA’s compliance team at firstname.lastname@example.org.