Checklist for Employer Policies and Procedures

Covered financial institutions that have one or more MLO employees must adopt and follow written policies and procedures to carry out their SAFE Act responsibilities. The requirement to adopt and follow policies and procedures applies to all covered financial institutions that employ individual MLOs, where MLOs act within the scope of their employment, and regardless of the application of any de minimis exception to their employees.

The policies and procedures must:

• Establish a process for identifying which employees of covered financial institutions must be registered;
• Require that all employees who are MLOs be informed of the registration requirements of the SAFE Act and SAFE Act regulation and instructed on how to comply;
• Establish procedures to comply with the SAFE Act regulation's unique identifier requirements;
• Establish reasonable procedures for confirming the adequacy and accuracy of MLO employee registrations, including updates and renewals, by comparisons with its own records;
• Establish reasonable procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures;
• Provide for annual independent testing for compliance with the SAFE Act regulation by institution personnel or an outside party;
• Provide for appropriate action if an employee fails to comply with the registration requirements of the SAFE Act regulations or the institution’s related policies and procedures, including prohibiting such employees from acting as MLOs or other appropriate disciplinary actions;
• Establish a process for reviewing employee criminal history background reports received pursuant to the regulation, taking appropriate action consistent with applicable federal law and implementing regulations with respect to the reports, and maintaining records of the reports and actions taken with respect to applicable employees; and
• Establish procedures designed to ensure that any third party with which the institution has arrangements related to mortgage loan origination has policies and procedures to comply with the SAFE Act and SAFE Act regulation, including appropriate licensing and/or registration of individuals acting as MLOs. 

Checklist to Prepare for Examination by CFPB

The following is a checklist for covered institutions to prepare for examination by the Consumer Financial Protection Bureau.

• Has the institution adopted written policies and procedures to assure compliance with the SAFE Act?
• Has the institution conducted annual independent compliance tests to assure compliance with the SAFE Act?
• Has the institution established a process for identifying which employees of the financial institution are required to be registered MLOs?
• Has the institution required that all employees of the financial institution who are MLOs be informed of the registration requirements of the SAFE Act and the SAFE Act regulation and instructed on how to comply with such requirements and procedures?
• Has the institution established procedures to comply with the unique identifier requirements in the SAFE Act regulation?
• Has the institution established reasonable procedures for confirming the adequacy and accuracy of employee registrations, including updates and renewals, by comparisons with its own records?
• Has the institution established procedures and tracking systems for monitoring compliance with registration and renewal requirements and procedures?
• Has the institution provided for independent testing for compliance with the SAFE Act regulation conducted annually by institution personnel or by an outside party?
• Has the institution provided for appropriate action in the case of an employee who fails to comply with the registration requirements of the SAFE Act, the SAFE Act regulation, or the financial institution’s policies and procedures, including prohibiting such employees from acting as an MLO or other appropriate disciplinary actions?
• Has the institution established a process for reviewing employee criminal history background reports received pursuant to applicable federal law, taken appropriate action consistent with applicable federal law, and implemented regulations with respect to these reports, and maintained records of these reports and actions taken with respect to applicable employees?
• Has the institution established procedures designed to ensure that any third party with which the institution has arrangements related to mortgage loan origination has policies and procedures to comply with the SAFE Act, including appropriate licensing and/or registration of individuals acting as MLOs?