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The Comm

unity

Banker

8

M E S S A G E

By Jerri D. Cowan, Esq., Human Resources Consultants

A

What’s A Banker To Do?

Where Private Employee Bankruptcy Protection

and the New Mortgage Rules Collide

s bankers, we have been here before: that place

where compliance with one law or regulation could

result in violation of another. As mortgage providers

across the country have scrambled to comply with

the new mortgage rules, they have discovered that

covered employees, (who may or may not already

be licensed or registered under the SAFE Act), who

are considered “loan originators” must meet and

maintain specific personal characteristics. Gener-

ally, under the recent revisions to Truth in Lending

(Regulation Z), the background record of the ap-

plicant/employee must demonstrate that(1) during

the past seven years, h/she has not been convicted

of, pleaded guilty or nolo contendere to a felony in a domes-

tic or military court; (2) has never been convicted of, pleaded

guilty or nolo contendere to a felony involving an act of fraud,

dishonesty, breach of trust or money laundering; and (3) has

demonstrated financial responsibility, character, and general

fitness that would lead you to determine the applicant/em-

ployee will operate honestly, fairly and efficiently.

1

In general, Section 19 of the Federal Deposit

Insurance Act,

2

prohibits, without prior written

consent of the FDIC, a person convicted of

any criminal offense involving dishonesty

or breach of trust or money laundering

from participating directly or indi-

rectly in the conduct of the affairs of an

insured institution. Therefore, prudent

managers of FDIC insured institutions

routinely obtain criminal background

reports on new hires. Additionally,

bonding and insurance requirements

make such reports necessary. The SAFE Act’s

prohibitions against employment of covered MLOs

convicted of certain criminal offenses, and/or civil violations

are also familiar to most bankers.

Legally Obtaining and Using Credit

Criminal Background Reports

When a Consumer Reporting Agency is used to obtain such

background information, the employer must comply with

F E A T U R E