Freddie Mac comments on the SAFE Act « Loan Modifications

Freddie Mac comments on the SAFE Act

There has been much talk recently about the SAFE Act and if it applys to those negotiating loans. The key to remember is that the act is really intended to apply to loan originators, not those dealing with short term loan modifications. To that end, Freddie Mac and Fannie Mae drafted a response to HUD, an excerpt of this can be found below.

The language of the SAFE Act is consistent with the conclusion that it does not apply to servicers or loss mitigation specialists. The Act requires registration of “loan originators”, defined as individuals who —

(i) take residential mortgage loan applications; and

(ii) offer or negotiate terms of residential mortgage loans for compensation or gain. 12U.S.C. 5102(3)(A).

Loss mitigation specialists do not meet the statutory definition because they do not accept residential mortgage loan applications.

The legislative history confirms that the SAFE Act’s licensing and registration requirements were designed to apply only to “loan originators.” When Senator Feinstein introduced the S.A.F.E. Licensing Act of 2008 (S.2595), which was later incorporated into the Housing and Economic Recovery Act, she stated that the legislation “would create a comprehensive database of all residential mortgage loan originators. This includes mortgage brokers and lenders, as well as loan officers of national banks and their subsidiaries.” Congressional Record-Senate, 734 (February 6, 2008). Similarly, in a floor statement in July 2008, Senator Dodd made clear that the provisions of the bill were intended to cover only “loan originators.” Congressional Record-Senate, S6520 (July 10, 2008). The legislative history does not support an interpretation that covers loss mitigation specialists.