ABA Banking Journal - May/June 2015 - (Page 55)
> ABA COMPLIANCE CENTER INBOX
MLOs and LOs:
Will you please explain the difference
between a Mortgage Loan Originator
(MLO) under the S.A.F.E. Act and a Loan
Originator (LO) under Regulation Z?
A: All MLOs are LOs, but not all LOs are MLOs!!!
Reg Z uses the terminology Loan Originator while the
S.A.F.E. Act (and CFPB Regulations G and H) use
Mortgage Loan Originator. The differences are found in the
definitions and meaning under each separate rule.
Under the S.A.F.E. Act (Regulations G/H), Mortgage Loan
Originator means (12 CFR 1007.102):
(1) An individual who:
(i) Takes a residential mortgage loan application; and
(ii) Offers or negotiates terms of a residential mortgage
loan for compensation or gain.
Under Reg Z, a Loan Originator means: 12 CFR
"...a person who, in expectation of direct or indirect
compensation or other monetary gain or for direct or indirect
compensation or other monetary gain, performs any of the
following activities: takes an application, offers, arranges,
assists a consumer in obtaining or applying to obtain,
negotiates, or otherwise obtains or makes an extension of
consumer credit for another person; or through advertising
or other means of communication represents to the public
that such person can or will perform any of these activities.
The term "loan originator" includes an employee, agent,
or contractor of the creditor or loan originator organization
if the employee, agent, or contractor meets this definition.
The term "loan originator" includes a creditor that engages
in loan origination activities if the creditor does not finance
the transaction at consummation out of the creditor's own
resources, including by drawing on a bona fide warehouse
line of credit or out of deposits held by the creditor. All
creditors that engage in any of the foregoing loan origination
activities are loan originators..."
So, put simply, a person must perform both tasks under
the S.A.F.E. Act rules to be a MLO, while a person need
perform any one of the tasks under Reg Z to be a LO. In
addition, a person who meets the definition of a MLO must
be registered with the NMLIS, while a LO who is not a
MLO under the S.A.F.E. Act need not be registered but still
must undergo specified vetting by the institution such as
credit checks and criminal background checks. (Response
provided February 2015)
Verifying the identity of hearing impaired clients
Our call center team is struggling with verifying
the identity of hearing impaired clients who call
us using a relay service. In addition, because the relay
service representative is not the customer, our staff
is unwilling to give him/her the confidential customer
information necessary to respond to inquiries. Can we
simply decline to discuss confidential information on the
phone with these clients based on privacy concerns and
require hearing impaired individuals to come to the bank
to conduct business in person?
A: You absolutely cannot deny service in this scenario.
Individuals who man these relay services comply with strict
confidentiality requirements that comply with the NADRID Code of Professional Conduct (www.rid.org/ethics/
code/index.cfm). If a bank refuses to assist customers
using relay services (or even those using sign language
interpreters), the bank risks noncompliance with the
Americans with Disabilities Act (and potential allegations of
discrimination under the Fair Housing Act if the call relates
to a mortgage or other housing-related loan products.) The
bank may (and should) provide the same services to deaf
individuals using a relay service that they would provide to
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Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - May/June 2015
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