Consumer Financial Protection Bureau (CFPB)

Written By ESR News Blog Editor Thomas Ahearn

On November 15, 2019, the Consumer Financial Protection Bureau (CFPB) – the agency enforcing federal consumer financial laws – issued an interpretive rule clarifying screening and training requirements for financial institutions which employ loan originators with temporary authority that will be effective on November 24, 2019.

The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) – which established a national system for licensing and registration of loan originators – contemplates two categories of loan originators, those working for state-licensed mortgage companies and those working for Federally-regulated financial institutions.

Section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) establishes a third category, loan originators with temporary authority to originate loans who may act as a loan originator for a temporary period of time in a state while that state considers their application for a loan originator license.

Under the SAFE Act, states must ensure individuals never had a loan originator license revoked or been convicted of enumerated felonies within specified timeframes, demonstrated financial responsibility, completed pre-licensing education, and passed testing before issuing them a state loan originator license.

Under Regulation Z – which implements the Truth in Lending Act (TILA) – employers must perform substantially the same screening of certain loan originators before permitting them to originate loans. Employers must also ensure certain training for those loan originators.

The interpretive rule clarifies that the employer is not required to conduct the screening and ensure the training of loan originators with temporary authority. The state will perform the screening and training as part of its review of the individual’s application for a state loan originator license. The interpretive rule may be found here.

Employment Screening Resources® (ESR) – a leading global background check provider – undergoes annual SSAE 18 SOC 2® Type II audits to confirm ESR meets high standards for protecting the privacy, security, and confidentiality of consumer information. To learn more about ESR, visit www.esrcheck.com/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

© 2019 Employment Screening Resources® (ESR) – Making copies or using of any part of the ESR News Blog or ESR website for any purpose other than your own personal use is prohibited unless written authorization is first obtained from ESR.