According to the Conference of State Bank Supervisors (CSBS) [1], 44 state financial agencies, led by the California Department of Financial Protection and Innovation (DFPI) [2], 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, Calif.-based course provider Real Estate Educational Services, is facing administrative enforcement actions for both providing false certificates and taking courses on behalf of MLOs through other education providers in violation of the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) [3].
The irregular education activity was discovered through a gesture-driven authentication tool called BioSig-ID [4], 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 nationwide licensing and registration system for residential MLOs. The SAFE Act also requires that federal registration and state licensing and registration be accomplished through the same online registration system, the Nationwide Mortgage Licensing System and Registry [5].
“State financial regulators do not take these violations lightly,” said CSBS Chair and Montana Commissioner of Banking and Financial Institutions Melanie Hall [6]. “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 education beyond federal and state SAFE Act requirements.
“Mortgage loan originators are responsible for guiding consumers through the single largest financial transaction in their lifetime,” said DFPI Commissioner Clothilde V. Hewlett [7]. “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.”