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Are you confused between the SAFE Act’s definition of a loan originator and the Truth in Lending Act definition of a loan originator? I am, or at least I was at one point. Hi there. This is Jerod Moyer with Banker’s Compliance Consulting. I want to try to ease some of that pain here and be real simple about this. When we’re talking about a mortgage loan originator under the SAFE Act, it’s a two-part criteria, if you will. Somebody has to take the application and then make offers and negotiate based on that application that they took. So it’s a two-part criteria. If you don’t satisfy either one of those, so if all I do is take the application, all I do is make offers and negotiate and I don’t do both, then I’m not a loan originator under the SAFE Act.
Now, how does that intersect with Truth in Lending Act’s mortgage loan originator definition? Well, the SAFE Act is a narrower definition, has that two-part criteria. Whereas the Truth in Lending Act says, “Well, we’re going to be very broad here. What we’re going to basically say is anyone who helps anyone get a mortgage loan, that could be in a referral, that could be taking the application, offering, negotiating, it could be anything, but anyone who helps anyone get a mortgage loan and they get something of value in return for helping someone get a mortgage loan is a mortgage loan originator under the Truth in Lending Act requirements.”
Now, why does that matter? Well, there’s some restrictions on loan originator compensation that your HR department, that your mortgage loan origination departments, they all need to be aware of. So there’s a difference between the SAFE Act loan originator and the Truth in Lending Act loan originator. SAFE Act, narrow; Truth in Lending Act, very broad in their definitions. And they don’t necessarily map over to one another.
If you’re looking for solutions in either of those areas, we have training solutions in our library. Go to bankerscompliance.com, navigate to the Training section to seek those out. Or better yet, pick up the phone, give us a call. We’d love to talk to you about how we can partner to help you meet your compliance obligations as it relates to these items. Thanks.