House lawmakers move to ease loan officer licensing rules

Register now

WASHINGTON — Congress is moving closer to making it easier for bank loan officers to take a job with nonbank mortgage providers and still comply with state licensing requirements.

The House Financial Services Committee approved a bill Wednesday amending key provisions of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Not a single lawmaker on the panel opposed the measure.

The SAFE Act had required that states establish licensing for mortgage loan originators, although originators at federally regulated banks were exempt. That dual system meant seasoned bank loan originators had to obtain new licenses before moving to a nonbank, delaying the process of switching jobs.

Bank lending officers transferring to an independent mortgage lender have to undergo testing and background checks to obtain a state license, which can take several months.

The bill now moving through the House, the SAFE Transitional License Act, would allow these job seekers to start work immediately, giving them a 120-day window after starting a new job to qualify for a state license. The legislation, which passed the House Financial Services Committee by a vote of 60-0, is sponsored by Rep. Steve Stivers, R-Ohio. It was among a package of regulatory relief bills debated by the House committee this week.

The Senate Banking Committee approved a similar loan officer licensing measure Dec. 5 in the regulatory relief bill approved by the panel.

The House bill “promotes a 'fair and competitive labor market' by eliminating barriers to the ability of non-bank lenders — especially small lenders — to compete for talented staff, and allowing mortgage loan officers to more easily move to the employer that offers them the best chance to succeed," said Bill Killmer, senior vice president for legislative and political affairs for the Mortgage Bankers Association, in a Dec. 12 letter to House Financial Services Committee leaders.

Easing the licensing requirements for officers who make the transition between different institutions has been a legislative priority for the mortgage industry.

"Our members have been lobbying for this for years," said Rob Zimmer, head of external affairs for the Community Mortgage Lenders Association.

Under the current system, a bank loan officer taking a job with a nonbank lender can't originate a mortgage loan until he or she is licensed. "So the lender loses money during the waiting period," Zimmer said in an interview Monday.

Margaret Liu of the Conference of State Bank Supervisors, which oversees the Nationwide Mortgage Licensing System and Registry, said CSBS is "sympathetic to the goal" of allowing loan officers to work where they want.

Liu, the senior vice president for legislation and deputy general counsel for CSBS, said the state regulator group has worked with the MBA to make sure amendments to the SAFE ACT can be incorporated into the mortgage licensing platform.

"If Congress approves the bill, we want to make sure it doesn’t undermine state consumer protection laws and it is consistent with state licensing processes," she said in an interview Monday.

For reprint and licensing requests for this article, click here.
Originations Licenses and charters Policymaking House Financial Services Committee