The Mortgage Bankers Association is seeking relief from the dual tracking system under the Secure and Fair Enforcement for Mortgage Licensing Act that sets different qualification requirements for loan originators, depending on where they are employed.
The MBA wants to amend the SAFE Act to allow for a transitional license for originators who want to move from federally regulated institutions to state regulated entities. The association also wants the law changed to allow originators licensed in one state to work in another state pending the completion of the licensing requirements in the second jurisdiction.
Under the 2008 law, which is part of the broader Dodd-Frank Financial Reform legislation, originators employed by state-regulated companies must be both licensed and registered, whereas those who work for federally-regulated banks, credit unions and savings and loans must only be registered because their employers already are subject to Uncle Sam's rules.
Now, the MBA wants to "form a bridge" from the federal system to the state system with a transitional license that would give applicants 120 days in which to complete any and all requirements a particular state would deem appropriate.
Otherwise, said Ken Markison, the group's regulatory counsel, state-regulated brokerage firms and lenders won't hire originators who are only registered or licensed in another state, "no matter how qualified they are," because they won't be able to work until they pass the new state's muster. That means delays of "30 days or considerably longer" before "well-qualified" persons can start originating loans for their new employers.
Markison outlined the MBA's proposal to the American Association of Residential Mortgage Regulators at its annual meeting in San Francisco. He took the MBA's case to AARMR because it is the trade association for state mortgage regulators. The mortgage bankers association also is petitioning the Conference of State Bank Regulators because it operates the NMLS through a subsidiary, the State Regulatory Registry. And the MBA attorney said his group will be meeting soon with the new Consumer Financial Protection Bureau about its proposal.
Without the transitional licenses, Markison maintained, small enterprises and other state-regulated companies "are at a disadvantage in attracting and putting to work" good people from federally-regulated institutions or other states. On the other hand, he pointed out, federal lenders have no problem attracting and hiring originators away from state regulated entities, which can put their new hires to work immediately.
He also told AARMR that "consumers patronizing" the lenders its members oversee will suffer from decreased choices and potentially increased financing costs if a system is not created for temporary licenses.
