While the SAFE Act does not require that such an employee be terminated upon discovery of such on his or her criminal background check, the employee cannot act as a loan originator without obtaining registration, a license, and a unique identifier. 12 USC 5103(a). Section 5104 of the SAFE Act sets out minimum standards for loan originators, who cannot have been convicted of a felony within the last seven years or convicted of a felony involving fraud, dishonesty, or a breach of trust, or money laundering at any time. 12 USC 5104(b)(2). Otherwise, it is up to the bank. We would recommend calling your primary regulator, alerting them to the fact that a loan originator has a criminal history that does not fall into the SAFE Act prohibitions, to see if that regulator has any objections.

Note that the FDIC regulations require banks employing more than one loan originator to establish written policies and procedures “for reviewing employee criminal history background reports . . . , taking appropriate action . . . , and maintaining records of these reports and actions taken with respect to applicable employees.” 12 CFR 365.104(h).

To answer your last question, the SAFE Act requirements apply only to loan originators working with consumer residential mortgage loans. See 12 USC 5103. The SAFE Act applies to individuals engaging in the business of a “loan originator,” which is defined as an individual who takes “residential mortgage loan” applications and negotiates loan terms for compensation.  12 USC 5102(3). A “residential mortgage loan” is one for “personal, family, or household use.” 12 USC 5102(9).