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56 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT CFPB Clarifies Ruling on Loan Originators The changes impact the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. T he Consumer Finan- cial Protection Bureau issued a rule clarifying screening and training requirements for financial institu- tions that employ loan originators with temporary authority. The Bureau's rule went into effect on November 24. The Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act of 2008 established a national system for licensing and registration of loan originators. The rule looks at two categories for loan originators: those working for state-licensed mortgage companies and those working for Federally- regulated financial institutions. Section 106 of the Economic Growth, Regulatory Relief, and Consumer Protection Act creates a third category—loan origina- tors with temporary authority to originate loans. The CFPB states loan origina- tors with temporary authority may act as a loan originator for a "temporary period of time," as specified in the statute, in a state while it considers their applica- tions for a loan originator license. Under the SAFE Act, states must ensure that the individual has never had a loan origina- tor license revoked, has not been convicted of felonies, demonstrated financial responsibility, character, and fitness, completed 20 hours of pre-licensing education, and passed state-specific testing requirements. Regulation Z, which imple- ments the Truth in Lending Act, states employers must perform the same screening of certain loan originators before allowing them to originate loans. Employers must also ensure certain training for those loan originators. "The interpretive rule clarifies that the employer is not required to conduct the screening and ensure the training of loan origi- nators with temporary authority," the CFPB states. "The state will perform the screening and train- ing as part of its review of the individual's application for a state loan originator license. The structure of the CFPB is currently being challenged, as 11 state attorneys general combined to file a brief with the U.S. Supreme Court. The brief argues that the leadership structure of the CFPB is unconstitutional, stating that its structure encroaches on the states' own abilities to enforce its own consumer protection laws. The coalition of states includes Texas, Arkansas, Indiana, Kansas, Louisiana, Nebraska, Ohio, Oklahoma, South Carolina, Utah, and West Virginia.