Is my mortgage safe? When an individual or a business is pursuing a new mortgage, they don’t want to question the safety and legitimacy of their mortgage. During the mortgage meltdown of 2008, there was a lot of financial uncertainty. The SAFE ACT was the federal government’s response, and it can have an impact on your mortgage bonds.
What is the SAFE Act?
In 2008, the mortgage industry suffered from huge insecurity. This nationwide crisis coincided with the US recession and involved failing home prices. As prices declined, consumers experienced foreclosures and delinquencies and foreclosures. Housing securities became devalued. In response, the federal government developed the SAFE Act, which was designed to create stability during a time of unrest. This Act ensures licensing, solvency, and compliance for the mortgage industry. By doing this, the federal government has tried to ensure that consumers feel safe participating in this industry.
How Does the SAFE Act Relate to Mortgage Originators?
When you’re a mortgage loan originator, the SAFE Act applies to you. The Act sets standards for the licensing and registration of state-licensed mortgage loan originators. State-licensed mortgage loan originators must pass a written qualified test, complete pre-licensure education courses, and take annual continuing education courses. The SAFE Act also requires all mortgage license originators to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS)
for submission to the FBI for a criminal background check. State-licensed mortgage loan originators must provide authorization for NMLS to obtain an independent credit report.
Who is a Licensed Mortgage Originator?
Mortgage loan originators who work for an institution that is regulated by the Farm Credit Administration
or who work for an insured depository or a subsidiary that is regulated by a federal banking agency are registered mortgage loan originators. Other mortgage loan originators are licensed by their respective states and are considered to be state-licensed originators.
How Did the SAFE Act Change Mortgage Bonds?
From the bond standpoint, the SAFE Act clarified at the federal level that every mortgage loan originator must be licensed and covered under a surety bond or recovery fund obligation. It also clarified that all mortgage companies need to have financial responsibility built into the state licensing program. It created some changes to the bond requirements and made more tiered bonding requirements. Today, the larger the volume of the mortgage company, the larger the bond you need to post. Surety bonds are currently moving toward the NMLS system, and electronic bonding may be a possibility in the future.
When you’re looking for a mortgage bond, contact Surety Solutions. Our experience will help you get the bond you need, and with our OneClick Solution, we’ll find you multiple quotes so that you can find the best possible bond price. Contact Surety Solutions today for more information.