Reg_G_CFPB_SAFE_ACT_12CFR1007_20140729_omb

Supporting Statement for the
Registration of Mortgage Loan Originators
(CFPB Regulation G; OMB No. 7100-0328)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority
from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the Registration of Mortgage Loan Originators (CFPB Regulation G;
OMB No. 7100-0328). The Paperwork Reduction Act (PRA) classifies reporting,
recordkeeping, or disclosure requirements of a regulation as an information collection.1
The PRA requires the Federal Reserve to renew authority for information collections
every three years.
On July 28, 2010, the Federal Reserve amended Regulation H to implement the
Secure and Fair Enforcement for Mortgage Licensing Act (the S.A.F.E. Act) with respect
to its regulated entities, enacted July 30, 2008.2 On July 21, 2011, provisions of the
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act)
transferred certain S.A.F.E. Act responsibilities to the Consumer Financial Protection
Bureau (CFPB), including rulemaking authority for all federal depository institutions and
supervisory authority for S.A.F.E. Act compliance for entities under the CFPB's
jurisdiction. On December 19, 2011, the CFPB published an interim final rule
establishing a new Regulation G,3 S.A.F.E. ACT Mortgage Licensing Act ─ Federal
Registration of Residential Mortgage Loan Originators.4 The CFPB’s rule did not
impose any new substantive obligations on regulated persons or entities. The Federal
Reserve retains supervisory authority for S.A.F.E. Act compliance for most Federal
Reserve-supervised entities with consolidated assets of $10 billion or less.
The CFPB’s Regulation G requires employees of state member banks, certain
subsidiaries of state member banks, branches and agencies of foreign banks that are
regulated by the Federal Reserve, and commercial lending companies of foreign banks
who act as residential mortgage loan originators (MLOs) to register with the Nationwide
Mortgage Licensing System and Registry (the Registry), obtain a unique identifier,
maintain this registration, and disclose to consumers upon request and through the
Registry their unique identifier, and the MLO’s employment history and publicly
adjudicated disciplinary and enforcement actions. The CFPB’s regulation also requires
the institutions employing these MLOs to adopt and follow written policies and
procedures to ensure their employees comply with these requirements and to disclose the
unique identifiers of their MLOs. The Federal Reserve’s total annual burden for this
information collection is estimated to be 109,972 hours.
1

44 U.S.C. § 3501 et seq
75 FR 44656 (July 28, 2010). See also the revised Federal Register preamble at 75 FR 51623 (August 23,
2010).
3
12 CFR 1007.
4
76 FR 78483.
2

Background and Justification
The S.A.F.E. Act required the Federal Reserve Board, Office of the Comptroller
of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), Office of
Thrift Supervision (OTS), National Credit Union Administration (NCUA), and the Farm
Credit Administration (FCA) (collectively, the agencies) to jointly implement rules and
develop and maintain a federal registration system for those MLOs employed by agencyregulated institutions. As noted above, the Dodd-Frank Act subsequently transferred
rulemaking authority and the requirement to maintain a federal registration system to the
CFPB. The Act provides that the objectives of the registry are to aggregate and improve
the flow of information to and between regulators, provide increased accountability and
tracking of MLOs, enhance consumer protections, reduce fraud in the residential
mortgage loan origination process, and provide consumers with easily accessible
information at no charge regarding the employment history of, and publicly adjudicated
disciplinary and enforcement actions against MLOs. There are no other information
collections that require these reporting, recordkeeping, and disclosure requirements for
agency-regulated institutions.
Description of Information Collection
The CFPB’s Regulation G requires MLO employees of federally regulated
depository institutions to register, obtain a unique identifier, and maintain their
registration. The regulation also requires Federal Reserve-supervised entities to ensure
compliance by their MLO employees and establish written policies and procedures.
These requirements are described in 12 CFR sections 1007.103(a),(b),(d) & (e),
1007.104, and 1007.105. Details of the requirements for each section are provided below.
Sections 1007.103(a), (b), (c)(2) and (d) (Registration of mortgage loan
originators) and Section 1007.105 (Use of unique identifier): Generally, sections
1007.103(a) and (b) require an employee of a depository institution who engages in the
business of a MLO to register with the Registry, maintain such registration, and obtain an
unique identifier. Section 1007.103(c)(2) provides that a renewal or update pursuant to
section 1007.103 (b) is effective on the date the Registry transmits notification to the
registrant that the registration has been renewed or updated. Section 1007.103(d)
describes the categories of information that an employee, or the employing depository
institution on the employee’s behalf, must submit to the Registry, with the employee’s
attestation as to the correctness of the information supplied, and his or her authorization
to obtain further information. Section 1007.105 requires a registered MLO to provide his
or her unique identifier to a consumer upon request, before acting as a MLO, and through
the originator’s initial written communication with a consumer, if any.
Depository Institutions - Section 1007.103(e) (Registration of mortgage loan
originators); Section 1007.104 (Policies and procedures); and Section 1007.105 (Use
of unique identifier): Section 1007.103(e) specifies institution and employee
information that a depository institution would submit to the Registry in connection with

2

the initial registration of one or more MLOs and thereafter to update. Section 1007.104
requires that an agency-regulated institution employing MLOs adopt and follow written
policies and procedures, at a minimum addressing certain specified areas, but otherwise
appropriate to the nature, size, complexity, and scope of their mortgage lending activities.
Section 1007.105 requires a depository institution to make the unique identifier(s) of its
registered MLOs available to consumers in a manner and method practicable to the
institution.
Time Schedule for Information Collection
This information collection contains reporting, recordkeeping, and disclosure
requirements, as described above. The Registry must be updated at least annually, but on
occasion within 30 days if there are certain changes. The disclosures to consumers are on
occasion.
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as
defined by OMB guidelines.
Consultation Outside the Agency
All of the CFPB’s rulemaking activities under its Regulation G are subject to the
notice and comment requirements of the Administrative Procedure Act. 5 U.S.C. 551 et
seq. On April 18, 2014 the Federal Reserve published a notice in the Federal Register
(79 FR 21926) requesting public comment for 60 days on this proposal. The comment
period for this notice expired on June 17, 2014. The Federal Reserve did not receive any
comments. A final notice was published in the Federal Register on July 18, 2014 (79 FR
42010).
Legal Status
The Board's Legal Division has determined that Section 1507 of the S.A.F.E. Act,
(12 U.S.C. § 5106), requires that the CFPB develop and maintain a system for registering
individual MLOs of covered financial institutions supervised directly by the CFPB or
regulated by a federal banking agency with the Nationwide Mortgage Licensing System
and Registry. Section 1504 of the S.A.F.E. Act, (12 U.S.C. § 5103), requires that an
individual desiring to engage in the business of a loan originator maintain an annual
federal registration (or be licensed by an equivalent state regulatory scheme) and appear
on the Registry with a unique identifier. Section 1007.103 of Regulation G implements
this registration scheme on behalf of the Bureau, and Section 1007.105 of Regulation G
requires that covered financial institutions provide the unique identifiers of MLOs to
consumers. (12 C.F.R. §§ 1007.103, -.105). This information collection is mandatory.
The unique identifier of MLOs must be made public and is not considered
confidential. In addition, most of the information that MLOs submit in order to register

3

with the Nationwide Mortgage Licensing System and Registry will be publicly available.
However, certain identifying data on individuals who act as MLOs are entitled to
confidential treatment under (b)(6) of the Freedom of Information Act (FOIA), which
protects from disclosure information that “would constitute a clearly unwarranted
invasion of personal privacy.” (5 U.S.C. § 552(b)(6)).
With respect to the information collection requirements imposed on depository
institutions, because the requirements are that depository institutions retain their own
records and make certain disclosures to customers, the FOIA would only be implicated if
the Federal Reserve examiners obtained a copy of these records as part of the
examination or supervision process of a financial institution. However, records obtained
in this manner are exempt from disclosure under FOIA exemption (b)(8), regarding
examination-related materials. (5 U.S.C. § 552(b)(8)).
Estimate of Respondent Burden
The total annual burden for this information collection is estimated to be 109, 972
hours, as shown in the table below. The Federal Reserve estimates that there are 19,124
MLOs for Federal Reserve-regulated entities and on average would take 0.85 hours to
maintain their registrations annually. In addition, the Federal Reserve estimates that
growth in the number of MLOs employed by these entities may increase by
approximately 268 and would take, on average, 3.5 hours to register initially and disclose
their unique identifier to consumers. The Federal Reserve also estimates that 9,562, half
of existing MLOs, would need to update their registration each year and would take, on
average, 15 minutes to provide these updates. Finally, the Federal Reserve estimates that
766 regulated institutions would take on average 118 hours to maintain policies and
procedures, monitor tracking and compliance systems, and maintain reporting, filing, and
information dissemination systems. This burden represents less than 1 percent of the
total Federal Reserve System paperwork burden.

4

Number
of
respondents

Estimated
annual
frequency

Estimated
hours per
response

Estimated
annual
burden
hours

Section - .103(a)
MLOs (new)
Initial set up and disclosure

268

1

3.50

938

Section - .103(b)
MLOs (existing)
Maintenance and disclosure

19,124

1

.85

16,255

9,562

1

.25

2,391

7665

1

118

90,388

Section - .103(c)(2)
MLOs (existing)
Updates for changes

Sections: .103(e), .104, .105
Depository Institutions, and
subsidiaries

109,972

Total

The current annual cost to the public of this information collection is estimated to be
$4,965,236.6
Estimate of Cost to the Federal Reserve System
Federal Reserve System supervision area would review the information as part of
their normal work assignments and there would be no additional costs.

5

Of these respondents, 580 are small entities as defined by the Small Business Administration (i.e., entities
with less than $500 million in total assets)
www.sba.gov/contractingopportunities/officials/size/table/index.html.

6

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by
annual burden hours, multiplied by hourly rates (40% Office & Administrative Support at $18, 50%
Financial Managers at $61, 5% Lawyers at $63, and 5% Chief Executives at $86). Hourly rate for each
occupational group are the (rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS),
Occupational Employment and Wages 2013, www.bls.gov/news.release/ocwage.nr0.htm Occupations are
defined using the BLS Occupational Classification System, www.bls.gov/soc/

5