As fallout continues from the 2007-09 financial housing crisis, according to final rules issued on Wednesday by the Federal Reserve and other regulators, mortgage loan originators will now be under some tough new laws and as a result they will have to be fingerprinted and will also be required to sign up to a central registry to continue to do business in future.
These new changes are a result of the rules from the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act, specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry and will take effect on October 1st. It's anticipated that the registry may start accepting registrations as early as January 2011.
The rules were put together and issued by the Federal Reserve, the Comptroller of the Currency, Federal Deposit Insurance Corp., Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration.
This process was started from a large amount criticism of the underwriting standards and practices that were used in the housing industry which created the worst economic disaster since the great depression of the 1930's.
To date thousands of brokers have already gone through mandatory education, credit checks as well as state and federal testing in order to retain the right to handle mortgage originations and as a result it has greatly reduced the number of brokers still doing business. Also, with current testing showing a 30 percent fail rate those numbers may get even smaller.