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Leah TenBieg

The SAFE Act: How it protects consumers

Friday, October 6, 2017 - Article by: Leah TenBieg - Prospect Financial Group, Inc. - Message

To many, it might be difficult to trust someone with the refinancing of their property due to important documents needed and large amounts of money involved. The Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) makes it so licensed loan officers have the same knowledge and training before helping out borrowers. This law was passed on July 30th 2008 under Title V of the Housing and Economic Recovery Act (HERA). The HERA is a crucial housing law with duties to oversee; the modernization of the Federal Housing Administration, consumer protection, and the prevention of foreclosure. Read below to get a better understanding of the SAFE Act and see how it helps to keep consumers protected.

What's the purpose?

The SAFE Act was created to protect borrowers. It enforces safe and regulated mortgage licensing. The SAFE Act implemented pre-licensing, nationwide testing, and annual continuing education and requires a mortgage loan originator to be licensed under the Nationwide Mortgage Licensing System and Registry (NMLS). It allows licensees to be monitored by regulators which can prevent any unfair practices in the mortgage industry. Monitoring can prevent unfair practices and can help grow the mortgage industry.

How the testing works

To obtain a license, a loan officer must pass a national exam, with a score of 75% or better. Also, a 20 hour course of pre-licensing is required before the final exam. The course goes through different loan programs that are available, laws, and ethical practices. All loan officers must pass a credit and criminal background check, and it is impossible for a loan officer to get their license if they have committed any financial crimes.

With nationwide licensing and registration system, the mortgage industry will continue to grow by protecting consumers with the SAFE Act.

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