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56 | TH E 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 Enforcement Actions Taken Against 400 MLOs Over SAFE Act Violations State regulators have reached a settlement with 400 mortgage loan originators who falsely claimed to have completed their SAFE Act-mandated education requirements. A ccording to the Con- ference of State Bank Supervisors (CSBS), 44 state financial agencies, led by the California Depart- ment of Financial Protection and Innovation (DFPI), have reached settlements with more than 400 mortgage loan originators who claimed to have completed their annual continuing education as required under state and federal law. Danny Yen, owner of Carlsbad, California-based course provider Real Estate Educational Services, is facing administrative enforce- ment actions for both provid- ing false certificates and taking courses on behalf of MLOs through other education provid- ers in violation of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The irregular education activ- ity was discovered through a gesture-driven authentication tool called BioSig-ID, a tool the CSBS uses to monitor all online courses approved under its SAFE Act mandate. The SAFE Act was enacted on July 30, 2008, and mandates a na- tionwide licensing and registration system for residential MLOs. The SAFE Act also requires that fed- eral registration and state licensing and registration be accomplished through the same online regis- tration system, the Nationwide Mortgage Licensing System and Registry. "State financial regulators do not take these violations lightly," CSBS Chair and Montana Commissioner of Banking and Financial Institutions Melanie Hall said. "Through states' collective action, consumers can be assured that their mortgages are being handled by loan originators who follow the law and are up to date in their education requirements." Through the settlements, the MLOs have agreed to surrender their licenses for a period of three months, pay a fine of $1,000 for each state in which they hold a license, and take continuing edu- cation beyond federal and state SAFE Act requirements. "Mortgage loan originators are responsible for guiding consumers through the single largest financial transaction in their lifetime," DFPI Commissioner Clothilde V. Hewlett said. "California will continue to lead on efforts that protect consumers and ensure fairness and resilience in our markets. I am proud of the Department and the historic 44 state-agency effort that, with these actions, remind the mortgage industry of their obligations to be ethical, honest, and forthright." FHFA to Increase GSE Pricing Framework Beginning April 1, Fannie Mae and Freddie Mac will add upfront fees to both high-balance loans and second home loans. T he Federal Housing Fi- nance Agency (FHFA) has announced targeted increases to Fannie Mae and Freddie Mac's upfront fees for certain high balance loans and second home loans. The FHFA classifies "high bal- ance loans" as mortgages origi- nated in certain designated areas above the baseline conforming loan limit. The FHFA's new fees will go into effect for deliveries and acquisitions beginning Friday, April 1, 2022, to minimize market and pipeline disruption. "These targeted pricing changes will allow the Enterprises [Fannie Mae and Freddie Mac] to better achieve their mission of facilitat- ing equitable and sustainable access to homeownership, while improving their regulatory capital position over time," FHFA Acting Director Sandra L. Thompson said. "Today's action represents another step FHFA is taking to strengthen the Enterprises' safety and soundness and to ensure ac- cess to credit for first-time home buyers and low- and moderate- income borrowers." The FHFA has ensured that the GSEs will continue to support affordable housing initiatives, as the existing beneficial pricing treatment of certain programs— such as HomeReady, Home Possible, HFA Preferred, and HFA Advantage—will not be impacted by these new fees. In addition, loans to first-time home buyers in high-cost areas with incomes at or below 100% of area median income (AMI) will have no specific high-balance upfront fees. As proposed by the FHFA, in April, upfront fees for high- balance loans will increase between 0.25% and 0.75%, tiered by loan-to-value ratio (LTV). The GSEs classify these mortgages as high-balance loans and super conforming loans, respectively. For second home loans, upfront fees will increase between 1.125% and 3.875%, again, tiered by LTV ratio. Late last year, the FHFA set the nation's conforming loan limits (CLLs) for mortgages to be acquired by the GSEs in 2022 as $647,200 for one-unit proper- ties, an increase of $98,950 from $548,250 in 2021. The FHFA set forth objectives in its 2022 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions for the Enterprises to update the current pricing framework to increase support for core mission bor- rowers, while fostering capital accumulation, achieving returns, and ensuring a level playing field for small and large sellers.