Supporting Statement
Registration of Mortgage Loan Originators – SAFE Act
OMB No. 3064-0171
A. Justification
Circumstances and Need
The FDIC is requesting a three-year extension, without change in the method or substance of the collection, of OMB's approval of the information collection captioned above.1 The current clearance expires on November 30, 2015. The Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act), which was enacted as Title V of the Housing and Economic Recovery Act of 2008, Pub. L. No.110-289, requires employees of certain financial institutions and their subsidiaries, who engage in the business of a mortgage loan originator (“MLO”) to register with Nationwide Mortgage Licensing System and Registry; a web-based system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage regulators jointly through the State Regulatory Registry LLC. The S.A.F.E. Act also provides that these institutions must require their employees, who act as MLO’s to comply with this Act’s requirements to register and obtain a unique identifier, and must adopt and follow written policies and procedures to assure compliance with these requirements. The FDIC regulation implementing the SAFE Act is codified at 12 CFR Part 365.
Description of the Information Collection and Its Use
The information collected is designed to improve the flow of information to and between regulators; provide accountability and tracking of MLO’s, enhance consumer protections, reduce fraud in the residential mortgage loan origination process and provide consumers with easily accessible information at no charge regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, MLO’s.
3. Use of Technology to Reduce Burden
Federal registration and state licensing and registration must be completed through the Nationwide Mortgage Licensing System and Registry; a web-based system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage regulators jointly through the State Regulatory Registry LLC. The electronic form is stored in a secured, centralized repository.
4. Efforts to Identify Duplication
Substantially all of the information collected is not otherwise available.
5. Minimizing the Burden on Small Entities
Approximately 3,274 FDIC-supervised banks are small entities (defined for purposes of the RFA to include banks with less than $550 million in assets). However, the proposed rule would not apply to approximately 2,430 of those small entities because they originate 25 or fewer residential mortgage loans annually and are exempt from the requirements. Only approximately 844 small entities supervised by the FDIC – about 26% of FDIC-supervised small entities – would be impacted.
6. Consequence of Less Frequent Collections
Compliance with the S.A.F.E. Act requires timely registration, annual registration renewals and maintaining the accuracy of information supplied.
7. Special Circumstances
None.
8. Consultation with Persons Outside the FDIC
The FDIC published a 60-day Federal Register notice on July 10, 2015 (80 FR 39777) seeking public comment on renewal of the information collection. No comments were received.
9. Payment to Respondents
None.
10. Confidentiality
Information will be kept private to the extent allowed by law.
11. Information of a Sensitive Nature
None.
12. Burden Estimate
|
Estimated number of respondents |
Estimated annual frequency |
Estimated average time per response |
Estimated annual burden hours |
Reporting: |
|
|
|
|
MLO Initial Registration Section 365.103(a) |
9,573 |
1 |
2.5 hours |
2,393 |
MLO Annual Renewal |
49,719 |
1 |
0.25 hours |
12,430 |
MLO Annual update Section 365.103(b) |
29,646 |
1 |
0.25 hours |
7,412 |
Institution submission of information to Registry – Section 365.103(e) |
4,014 |
1 |
0.25 hours |
1,004 |
Sub-total Reporting |
|
|
|
23,239 |
Disclosures: |
|
|
|
|
Institution disclosure of unique identifier or MLO employees – Section 365.105(a) |
4,014 |
1 |
25 hours |
100,350 |
MLO disclosure of unique identifier upon request – Section 365.105(b) |
59,292 |
1 |
1 hour |
59,292 |
Sub-total Disclosures |
|
|
|
159,642 |
Recordkeeping: |
|
|
|
|
MLO employee fingerprints Section 365.103(d)(xii) |
4,014 |
1 |
4 hours |
16,056 |
Written policies and procedures -- Section 356.104 |
4,014 |
1 |
20 hours |
80,280 |
Procedures and tracking systems for monitoring registration compliance – Section 356.104 |
4,014 |
1 |
60 hours |
240,840 |
Employee criminal history background reports – Section 356.104 |
4,014 |
1 |
20 hours |
80,280 |
Sub-total Recordkeeping |
|
|
|
417,456 |
|
|
|
|
|
Total |
|
|
|
600,337 |
Section-by-section analysis
MLO Reporting Requirements. Unless the de minimis exception or a different implementation period applies, §365.103(a) requires an employee of a bank who engages in the business of a residential mortgage loan originator to register with the Registry, maintain such registration, and obtain an unique identifier. The FDIC estimates that to comply with the MLO reporting requirements the 9,573 new MLO respondents will take on average 2.50 hours annually for initial registration, for a total estimated burden hours for MLO initial reporting of 2,393.25 hours. Under §365.103 (b), a bank must require each such registration to be renewed annually and updated within 30 days of the occurrence of specified events. The FDIC estimates that 49,719 existing MLO employees will be required to be renewed annually, which will take on average .25 hours, for a total estimated burden for registration renewal of 12,429.75 hours. The total estimate of MLO burden hours for initial registration and renewal of registration is, therefore, 14,823 hours. In addition, the FDIC estimates that 29,646 MLO employees will be required to annually update their registrations upon the occurrence of specified events, which will take 15 minutes on average, for a total estimate of 7,412 burden hours. The total estimated burden hours for MLO registration and updates are 22,235 hours.
MLO Disclosure Requirement. Section 365.105 (b) requires the MLO to provide the unique identifier to a consumer upon request. The FDIC estimates that to comply with the MLO disclosure requirements, the 59,292 MLO respondents will take on average one hour annually for a total estimated burden of 59,292 hours for MLO disclosure.
Financial Institution Reporting Requirements. Section 365.103(e) specifies institution and employee information that a bank must submit to the Registry in connection with the initial registration of one or more MLO’s, and thereafter to update. The FDIC estimates that to comply with the bank disclosure requirements, the 4,014 bank respondents will take on average 15 minutes annually for a total estimated burden of 1,004 hours for MLO disclosure.
Financial Institution Disclosure Requirements. Section 365.105 (a) requires the bank to make the unique identifier of MLO employees available to consumers in a manner and method practicable to the institution. The FDIC estimates that to comply with the bank disclosure requirements, the 4,014 bank respondents will take on average 25 hours to make the required disclosures for a total estimated burden of 100,350 hours for bank disclosures.
Financial Institution Recordkeeping Requirements.
Section 365.103(d)(xii) requires the collection of MLO employee fingerprints. The FDIC estimates that to comply with this bank recordkeeping requirement, the 4,014 bank respondents will take on average 4 hours maintaining fingerprint records for a total estimated burden of 16,056 hours.
Section 365.104 requires that a bank employing MLO’s:
● Adopt and follow written policies and procedures, at a minimum addressing certain specified areas, but otherwise appropriate to the nature, size and complexity of their mortgage lending activities. The FDIC estimates that annual review and adjustment as necessary of already established policies and procedures by the 4,014 bank respondents will take on average 20 hours, for a total estimated annual burden of 80,280 hours.
● Establish reasonable procedures and tracking systems for monitoring registration compliance. The FDIC estimates that annual review and adjustment as necessary of already established procedures and tracking systems to monitor registration compliance by the 4,014 bank respondents will take on average 60, for a total estimated burden hours of 240,840 hours.
● Establish a process for, and maintain records related to, employee criminal history background reports and actions taken with respect thereto. The FDIC estimates that to comply with this bank recordkeeping requirement, the 4,014 bank respondents will take on average 20 hours per year, for a total estimated annual burden of 80,280 hours.
The FDIC estimates the recordkeeping cost burden to respondent banks as follows:
Bank - Implement Policies and Procedures, Maintain Criminal Report Records and Tracking Systems for Compliance
Support Staff 40% x (417,456) = 166,982@ $25 = $ 4,174,550
Professional Staff 50% x (417,456) = 208,728@$55 = $11,480,040
Senior Management 5% x (417,456) = 20,873@$100 = $ 2,087,280
Legal Counsel 5% x (417,456) = 20,873@$144 = $ 3,005,683
$20,747,553
Mortgage Loan Originator - Registration/Update
22,235@$20= $ 444,700
Total: $21,192,253*
13. Capital, Start-Up and Maintenance Costs
None
14. Estimated Annual Cost to the Federal Government
None
15. Reason for Change in Burden
The change in burden hours reflects a decrease in the number of respondent institutions.
16. Publication
The public will have access to information in the Registry about a MLO’s employment history and publicly-adjudicated enforcement actions.
17. Display of Expiration Dates
Not applicable.
18. Exceptions to Certification
None.
B. Statistical Methods
Not applicable.
*Hourly rates for occupational groups are averages using data from the BLS Occupational Classification System, and the average consumer cost of $20 is estimated from the BLS Economic News Release (Table B-3. Average hourly and weekly earnings of production and non-supervisory workers (1) on private non-farm payrolls by industry sector and selected industry detail).
1 The change in burden hours is due solely to a decrease in the number of FDIC-supervised respondent institutions.
| File Type | application/msword |
| Author | Kenton Fox |
| Last Modified By | Kuiper, Gary |
| File Modified | 2015-11-27 |
| File Created | 2015-11-27 |