The Secure and Fair Enforcement for Mortgage Licensing Act 2008 (SAFE Act) was passed last year and is now in force effective April 2, 2010. The purpose of the law was to enhance consumer protection, minimize fraud, and establish a national licensing system and registry for licensed loan officers. An individual in the State of Texas may not act as a Residential Mortgage Loan Originator (RMLO) unless licensed by the state and the national registry system.
The SAFE definition of a loan originator includes an individual who takes a residential mortgage loan application; offers or negotiates terms of a residential mortgage loan(s) for compensation or gain; and who performs purely administrative or clerical tasks on behalf of a person who is described as such. Texas is the only state in the US that also requires applicants to pass both the national RMLO exam and the Texas state exam.
A residential mortgage loan means any loan for personal, family, or household use that is secured by a mortgage, deed of trust or other security interest. Seller financing of any kind such as a contract for deed, assumption of deed, or a lease purchase transaction are all considered mortgage transactions. The Act does not apply to loans made for business purposes. If the seller negotiates a seller financing transaction for an owner occupied transaction (buyer will be using home as primary residence), he or she should engage the services of a RMLO to be in compliance with the new law. The seller may hire a RMLO to determine the buyer’s creditworthiness and offer terms acceptable on behalf of the owner.
Real estate brokers and agents should limit their actions in negotiating terms of a seller financing program. Brokers and agents are not allowed to receive compensation from the lender other than a normal real estate commission. For more information, you can visit the Texas Savings and Loan website at:
www.sml.state.tx.us/ResidentialMortgageLoanOriginator/rmlo_statutes_rules.html
This site has detailed information and links to the national registry.
Our office does have an in house mortgage company. Chris Warren has been licensed in the State of Texas as a loan officer since 2002 and recently passed the national RMLO exam required under the new SAFE Act.
If you have any questions, please call us at 512-257-9836. Our office provides sales, leasing, property management, and mortgage services.
