Briefing: Safe Act
On July 31, Gov. Deval Patrick signed the SAFE Act legislation, which ensured that the state retains oversight of mortgage loan originators and also maintains funding to provide grants to regional foreclosure prevention centers located throughout Massachusetts.
What is the basis for the act?
The act was a part of the federal Housing and Economic Recovery Act of 2008, which was designed to assist with the recovery and revitalization of the American housing market. The SAFE Act aims to raise minimum standards across the country, and it gave states until July 31, 2009 to pass laws licensing loan originators and to utilize a system of coordinated state supervision called the Nationwide Mortgage Licensing System (NMLS).
What does the NMLS do?
The system helps regulators to determine if companies and individuals have the character and fitness to conduct business with consumers. It also establishes a system of professional testing and education. It assigns a unique identifier for nationwide accountability, and it provides an enforcement history and license status for mortgage loan originators.
What does the SAFE Act do?
It was created to enhance consumer protection through a number of policies. Most notably, it encourages states to provide uniform license applications and report requirements for state licensed-loan originators; to provide comprehensive licensing databases; to provide increased accountability and loan originator tracking; and to improve the flow of information to and between regulators.
Where does Massachusetts stand compared to the rest of the country?
Massachusetts set the bar for mortgage lending regulation, when Gov. Patrick signed a multi-faceted foreclosure prevention law in November 2007. In January 2008, Massachusetts and six other states became the first to manage their mortgage brokers, lenders, and loan originators through the NMLS. Currently, 32 states are using NMLS, and it is projected that by January 2010, that number will increase to 43.
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