REQUIRED TRAINING FOR LOAN ORIGNATORS

On January 20, 2013 the Consumer Financial Protection Bureau (CFPB) published final rules to revise the Truth in Lending Act (TILA) to require creditors to establish and maintain loan originator qualification requirements. One of the qualification requirements mandates that the creditor provide adequate training for loan originators. The final rules were effective on January 1, 2014.

Failure to provide periodic training for loan originators is a double violation of the Truth in Lending Act and Regulation Z.

  • 1026.36(f) requires loan originator training; and
  • 1026.36(j) requires financial institutions to establish and maintain written policies and procedures to ensure and monitor the compliance with the training requirement.

The training requirement is vague, but the periodic training must:

  • Be sufficient in frequency, timing, duration, and content to ensure that the individual loan originator has the knowledge of State and Federal legal requirements that apply to the individual loan originator’s loan origination activities.
  • Take into consideration the particular responsibilities of the individual loan originator and the nature and complexity of the mortgage loans with which the individual loan originator works.

Have you conducted periodic training for your loan originators since January 1, 2014? Can you document that the training was sufficient in frequency, timing, duration, and content to ensure that each individual loan originator has the knowledge of State and Federal legal requirements that apply to the individual loan originator’s loan origination activities?

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