MBA Asks Appeals Court to Overturn Loan Officer Overtime Rule

After losing in a U.S. District Court, the Mortgage Bankers Association has decided to appeal and take its case to block overtime pay for loan officers to a higher court.

The MBA’s attorney at Morgan Lewis & Bockius filed a notice of appeal with the U.S. Circuit Court of Appeals for the District of Columbia last week.

In June, the U.S. District Court ruled that loan officers are entitled to overtime pay if their primary duty involves selling mortgages and upheld a 2010 interpretation by the Department of Labor.

The MBA had asked the District Court to overturn the 2010 interpretation and reinstate a previous DOL ruling that classified LOs as administrative employees who are not entitled to overtime.

“We disagree with the verdict,” said MBA president and chief executive David Stevens. “While it is an uphill climb, we think there is an opportunity to get a better verdict in a higher court.”

In its appeal, the MBA will seek again to overturn the 2010 interpretation and re-instate a 2006 regulation issued by the DOL issued during the Bush administration.  The 2006 regulation classified LOs as administrative workers who are not entitled to overtime pay.

In the U.S. District Court, DOL attorneys successfully argued that most loan officers are engaged in sales since their compensation is based on commissions.

“The court finds DOL’s argument persuasive,” judge Reggie Walton said in the June 6 MBA v. Department of Labor Secretary Nancy Solis decision.

The trade group also claimed the Labor Department abused its discretion in modifying the 2006 regulation.

But the District Court said the 2006 regulation was based on a “misleading assumption” that LOs engaged mostly in administrative activities and thus were not entitled to overtime pay. MBA officials seemed wary of engaging in a costly appeals process but in the end it decided their case has merit and to pursue an appeal.

After extensive discussions on the risks and rewards of filing an appeal, “our Board of Residential Governors made the decision to move forward,” Stevens told National Mortgage News.

One outside attorney told NMN that recent court decisions involving rulemakings and administrative actions might help MBA’s appeal.