Regulation H (Federal Reserve - 12 CFR Part 208 & CFPB - 12 CFR Part 1008)

Updated 2026-05-17

The designation "Regulation H" refers to two distinct federal regulations, each issued by a different agency and codified under a different part of the Code of Federal Regulations (CFR). It is crucial to distinguish between them:

1. 12 CFR Part 208 (Federal Reserve Board): This Regulation H establishes requirements for state-chartered banks to become and remain members of the Federal Reserve System.
2. 12 CFR Part 1008 (Consumer Financial Protection Bureau - CFPB): This Regulation H implements the Nationwide Mortgage Licensing System Registry (NMLS) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008), setting minimum standards for state licensing and registration of mortgage loan originators (MLOs).

Regulation H: 12 CFR Part 208 (Federal Reserve Board)

This Regulation H, codified as 12 CFR Part 208, is a federal regulation issued by the Federal Reserve Board. It establishes the requirements and conditions for state-chartered banks to become and remain members of the Federal Reserve System.

Key Provisions of 12 CFR Part 208

Regulation H (12 CFR Part 208) covers several critical aspects for state member banks:

• Membership Requirements: It outlines the procedures for state banks to apply for and obtain approval for membership in the Federal Reserve System, as well as for voluntarily withdrawing from membership.
• Conditions of Membership: The regulation describes the privileges and conditions imposed on state member banks, ensuring they adhere to federal standards.
• Financial Statements and Capital: It provides guidelines for registering and filing financial statements and sets out procedures for addressing banks that are less than adequately capitalized.
• Real Estate Lending Standards: Regulation H establishes specific standards that state member banks must follow when engaging in Real Estate Lending Standards. This is particularly relevant to mortgage loan originators (MLOs) as it impacts the practices of banking institutions involved in real estate finance.
• Branching Requirements: Subpart A of Regulation H addresses general membership and branching requirements, including rules for establishing and maintaining branches and prohibiting the use of interstate branches primarily for deposit production.
• Investments and Loans: Subpart B details regulations concerning investments and loans made by state member banks.

Regulation H: 12 CFR Part 1008 (CFPB - SAFE Act State Licensing)

This Regulation H, codified as 12 CFR Part 1008, implements the Nationwide Mortgage Licensing System Registry (NMLS) (Secure and Fair Enforcement for Mortgage Licensing Act of 2008). It establishes the minimum standards for state licensing and registration of mortgage loan originators (MLOs) and outlines the requirements for the Nationwide Mortgage Licensing System Registry (NMLS).

Regulation H (12 CFR Part 1008) ensures a consistent regulatory framework across the country by requiring states to enact legislation that aligns with these federal minimum standards. It is crucial for understanding the licensing framework for the majority of MLOs and is a core topic for the NMLS SAFE MLO National Test.

Key Provisions and Requirements of 12 CFR Part 1008

Regulation H (12 CFR Part 1008) primarily governs the licensing and registration of MLOs, distinguishing between state-licensed and federally registered individuals:

State Licensing Requirements (Non-Depository MLOs)

For MLOs not employed by federally regulated institutions (e.g., those working for non-depository mortgage lenders and brokers), Regulation H sets forth the minimum standards that states must adopt for licensing and regulation. These MLOs must obtain and maintain a state license through the Nationwide Mortgage Licensing System Registry (NMLS). Key requirements include:

• Pre-licensing Education: Completion of a minimum number of hours of NMLS-approved pre-licensing education.
• Written Examination: Passing a qualified written examination, which includes both national and uniform-state-test-ust components.
• Continuing Education: Completion of annual NMLS-approved continuing education.
• Background Checks: Submission to a criminal background check and a credit report.
• Surety Bond/Net Worth: Meeting state-specific surety bond or net worth requirements.

Federal Registration Requirements (Federally Regulated MLOs)

Employees of federally regulated institutions (such as banks) are not required to obtain a state license but must register as a Mortgage Loan Originator (MLO) with the NMLSR and obtain a unique identifier. Regulation H (12 CFR Part 1008) sets forth requirements for:

• Registration of MLOs with the Nationwide Mortgage Licensing System Registry (NMLS).
• Obtaining and maintaining a unique identifier.
• Employer responsibilities, including adopting written policies and procedures to ensure compliance with the SAFE Act and performing annual independent testing.
• Security controls for accessing NMLS accounts.

Other Key Provisions of 12 CFR Part 1008

• Licensing Requirement: Generally, Regulation H requires individuals to obtain and maintain a state license to engage in the business of a loan originator with respect to any dwelling or residential real estate in the state, unless an exception applies (e.g., employees of federally regulated institutions). This is outlined in 12 CFR § 1008.103(a).
• State Reciprocity: Regulation H permits states to consider findings made by another state when determining an individual's eligibility for a loan originator license, allowing for state reciprocity in certain transitional licensing scenarios (12 CFR § 1008.105).

Impact of EGRRCPA on Transitional Licensing

Prior to the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), Regulation H (12 CFR Part 1008) was interpreted by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to:

• Permit states to offer Nationwide Mortgage Licensing System Registry (NMLS) for MLOs moving from one state to another, relying on the previous state's findings (CFPB Bulletin 2012-05).
• Prohibit states from offering transitional licensing for registered MLOs leaving federally regulated institutions to become state-licensed MLOs (CFPB Bulletin 2012-05).

Section 106 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), effective November 24, 2019, amended the SAFE Act to provide temporary authority for loan originators in specific circumstances. These changes directly impact the provisions related to transitional licensing, particularly for registered MLOs moving to state-licensed entities, and largely supersede the earlier interpretations found in CFPB Bulletin 2012-05.

Regulation H (12 CFR Part 1008), alongside Regulation G, ensures that all MLOs, whether state-licensed or federally registered, adhere to the standards established by the SAFE Act, thereby enhancing consumer protection and accountability in the mortgage industry.