2nd US Regulators Pass Rules On Mortgage Loan Originators

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WASHINGTON -(Dow Jones)- Mortgage loan originators have to sign up to a central registry to do business, according to rules that grew out of the housing crisis that shook Wall Street.

The rules were issued Wednesday by the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp., Office of Thrift Supervision, Farm Credit Administration, and National Credit Union Administration.

The rules, which take effect Oct. 1, implement a 2008 law requiring originators who are employees of agency-regulated institutions to be registered with the Nationwide Mortgage Licensing System and Registry.

The rules require that each originator obtain a unique identifier through the registry. "This will enable consumers to easily access employment and other background information about registered mortgage loan originators from the registry," the regulators said in a news release.

John Taylor, president of the National Community Reinvestment Coalition, said registration "to ensure mortgage originators are not criminals, and otherwise qualified to originate loans is helpful." But he added that new mortgage rules developed by the Consumer Financial Protection Bureau will go further. "The CFPB will be empowered to ensure compliance by mortgage originators with consumer protections, which will have a much greater effect," Taylor said.

Mortgage brokers came under scrutiny after the start of the financial crisis. Some lawmakers and regulators criticized underwriting standards and practices seen as hurting the housing sector.

The 2008 law is the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, known as SAFE. Bank regulators in the states fought for the law, saying that if they had been better able to track mortgage loan originators, they could have halted some fraudulent practices.

-By Jeff Bater, Dow Jones Newswires; 202-862-9249; jeff.bater@dowjones.com