ABA Banking Journal - May/June 2015 - (Page 55)

> ABA COMPLIANCE CENTER INBOX MLOs and LOs: same difference? Q: 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 1026.36(a): "...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 Q: 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 aba.com/BankingJournal | ABA BANKING JOURNAL 55 http://www.rid.org/ethics/code/inex.cfm http://www.aba.com/BankingJournal

Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015

CHAIRMAN’S VIEW
UPFRONT
ECONOMIC OUTLOOK
LEGAL BRIEFS
PICTURE THIS
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
INVESTOR PERSPECTIVE
MARKETING/RETAIL
PAYMENTS
ADVOCACY
ABA COMPLIANCE CENTER INBOX
CYBERSECURITY
MORTGAGES
OPERATIONS
BOARD MATTERS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS

ABA Banking Journal - May/June 2015