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LO Qualifixcations -Criminal Background Check

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  • #4171
    springhillbank
    Participant

    We are unclear as to whether or not fingerprinting is required along with the background check for Loan Originators. In our 8-23 session, Jack mentioned fingerprinting requirements but it is not mentioned anywhere else in the materials; however, under the reg 1026.36(f)(3)(i) it states, “the required criminal background report is the same report the institution already obtains under REgulation G after submission of the individual’s fingerprints to the NMLSR (12 CFR 1007.103(d)(1)(ix) and 1007.104(h)). In reviewing the criminal background report, the institution will be required to apply somewhat broader criteria for disqualifying crimes.” Can you please clear this up for us.

    #4179
    rcooper
    Keymaster

    For some reason, I’m not finding the exact language you mentioned above. Can you send me the source where you found it so I can take a look?

    #4309
    springhillbank
    Participant

    The statement to which I referred is taken from the following website:
    https://www.federalregister.gov/articles/2013/02/15/2013-01503/loan-originator-compensation-requirements-under-the-truth-in-lending-act-regulation-z
    Under Table of Contents
    III.C.3
    36(f) Loan Originator Qualification Regulations
    Go to 36(f)(3)
    Then 14th paragraph down

    (This is a large website; this is found almost 2/3’s of the way down)

    NOTE:
    When I went back on this website, I realized that what I copied was in Section III Summary of the Rulemaking Process

    At the top of this page on the website is Section I Summary of the Final Rule

    Under the Final Rule scroll down to Loan Originator Qualification and Identifier Requirements. This is what is said

    “Loan Originator Qualifications and Identifier Requirements. The Dodd-Frank Act imposes a duty on individual loan officers, mortgage brokers, and creditors to be “qualified” and, when applicable, registered or licensed to the extent required under State and Federal law. The final rule imposes duties on loan originator organizations to make sure that their individual loan originators are licensed or registered as applicable under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) and other applicable law. For loan originator employers whose employees are not required to be licensed, including depository institutions and bona fide nonprofits, the rule requires them to: (1) Ensure that their loan originator employees meet character, fitness, and criminal background standards similar to existing SAFE Act licensing standards; and (2) provide training to their loan originator employees that is appropriate and consistent with those loan originators’ origination activities. The final rule contains special provisions with respect to criminal background checks and the circumstances in which a criminal conviction is disqualifying, and with respect to situations in which a credit check on a loan originator is required”

    This final rule states that the unregistered Loan Originators meet criminal background standards similar to existing SAFE Act – so, fingerprinting or not??????

    #4312
    rcooper
    Keymaster

    In order to have a federal criminal background check fingerprints are required as they are used to scan the FBI database. The regulation also states that if you are an institution registered with the NMLS you will be obtaining the background checks through the NMLS (which requires fingerprints). And if you are not you will be obtaining them through law enforcement or a commercial servicer – but they will still need to e similar to the NMLS. So, yes, you will need to do fingerprinting.

    p. 11378
    The Bureau disagrees with some
    commenters’ assertions that the
    provisions would result in significantly
    higher compliance burden compared
    with existing requirements. For
    example, as further discussed below, a
    depository institution will not be
    required to obtain multiple criminal
    background reports or undertake
    multiple reviews of a criminal
    background report. Instead, the required
    criminal background report is the same
    report the institution already obtains
    under Regulation G after submission of
    the individual’s fingerprints to the
    NMLSR (12 CFR 1007.103(d)(1)(ix) and
    1007.104(h)).

    #4319
    rcooper
    Keymaster

    After looking at this again, I want to clarify a few points:
    1) If you have an LO who is an MLO and registered under the SAFE Act you can use that background information. If you have LO who is not an MLO then you’ll need to obtain the criminal background check through local law enforcement or a private provider.

    2) Reg Z does not specifically mandate fingerprinting. You’ll need to check with local law enforcement or your private background check provider to determine if they need back fingerprints in order to run the national background check – I have since heard that some may be able to provide the criminal background check without fingerprinting.

    As you know the waters become muddy when one requirement is referencing another but they are not exactly the same.

    #4493
    elebra
    Participant

    Are we required to get a copy of the background check and have in an employee file or should we note in employee file that background check was obtained via Safe Act Registry?

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