The SAFE Act requires that each registered Mortgage Loan Officer (MLO) provide their unique identifier (NMLS #) to applicants according to certain requirements. For example, the NMLS number must be provided to the customer upon request, before acting as a mortgage loan originator, and through the MLO’s initial written communication with a consumer. For this reason, most financial institutions have established procedures to include the NMLS number on welcome letters to customers, email signatures, websites, and even applications. Furthermore, Regulation Z requires that the NMLS number be included on certain documents such as the application, Loan Estimate, Closing Disclosure, mortgage, and promissory note.
As the rules don’t clearly address this, one question I have received is this: Does the NMLS number need to be included on an Adverse Action Notice?
Disclosure Requirements for Adverse Action Notices
Disclosure requirements can often be a bit tricky when a mortgage loan is denied within the first three days of application. Many loan officers incorrectly believe that the Adverse Action Notice is the only disclosure required when a loan is denied within the first 3 business days after application. That is certainly not the case. For example, while TRID disclosures are not required for loans denied in the first three days of application, Regulation B still requires the delivery of an appraisal notice and certain situations still require the delivery of the FCRA credit score exception notice (https://www.compliancecohort.com/blog/credit-score-exception-notice-for-denied-applications).
So, what about the NMLS Number?
NMLS Number on the Adverse Action Notice
While the NMLS number is often provided to an applicant prior to the delivery of the Adverse Action Notice, there are some cases where the NMLS number will not have been previously provided. For example, if a mortgage application is taken by phone and the application is denied within the first three business days after application, the applicant may not have been previously provided with any written communication.
Specifcially, SAFE Act rules require the delivery of an MLO’s unique identifier (NMLS #) to a consumer in three cases:
Upon request
Before acting as an MLO
Through the originator’s initial written communication with a consumer, if any, whether on paper or electronically
Therefore, in cases where the Adverse Action Notice is the first written communication to an applicant, an MLO’s unique identifier (NMLS #) must be provided with the Adverse Action Notice.
Best Practices for Including the NMLS on Adverse Action Notices
As there are a few unique, but highly likely scenarios where an Adverse Action Notice could be the first written communication with a customer, the best practice is to include the NMLS number on every adverse action notice. While this conservative approach to compliance certainly isn’t required, it is a management technique that can ensure that the MLO unique identifier is delivered in those rare instances where it needs to be provided with the Adverse Action Notice.
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