CFPB’s Level Playing for LOs Does Not Include Testing

The Consumer Financial Protection Bureau wants to create a “level playing field” when it comes to the screening and training of bank and nonbank mortgage loan officers.

Some mortgage brokers were hoping this would subject bank LOs to the same tests that their state-licensed LOs are required to pass.

But the bureau’s LO compensation proposal does not level the playing field when it comes to testing.

Currently nonbank LOs must complete 20 hours of instruction and pass state and national tests to become a state-licensed loan officer. Bank LOs are exempt from the education and testing requirements mandated by the Secure and Fair Enforcement for Mortgage Licensing Act that Congress passed in 2008.

The CFPB is proposing to subject all loan originators to the same education and training standards. But the bureau sees no reason to subject bank LOs to testing.

“The bureau is not proposing to apply to employees of depository institutions and bona fide nonprofit organizations the more detailed requirements to pass a standardized test,” according to the proposed rule that has been issued for public comment.

The comment period on the proposed rule ends Oct. 16.