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Stivers Introduces SAFE Transitional License Act

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Washington, April 30, 2015 | comments
WASHINGTON – Congressman Steve Stivers (R – OH) yesterday introduced H.R. 2121—the SAFE Transitional License Act. This bill changes the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) by providing regulatory relief for loan originators in an effort to make a smooth employment transition between bank and non-bank entities.
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WASHINGTON – Congressman Steve Stivers (R – OH) yesterday introduced H.R. 2121—the SAFE Transitional License Act.  This bill changes the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE) by providing regulatory relief for loan originators in an effort to make a smooth employment transition between bank and non-bank entities. 

“The SAFE Act inhibits job mobility and puts independent mortgage lenders at a considerable disadvantage in recruiting talented individuals,” said Stivers. “Rather than leaving a job on a Friday and starting a new job on a Monday, as most of us do, a loan officer who moves from a federally-insured institution to a non-bank lender must sit on their hands for weeks, even months, while they meet the SAFE Act’s licensing and testing requirements.  This is despite the fact that they have already been employed and registered as a loan officer.  This is simply unfair.”

Currently, the SAFE Act requires mortgage loan originators (MLOs) employed by non-bank lenders to be licensed, which includes pre-licensing and annual continuing education requirements, passage of a comprehensive test and criminal and financial background reviews conducted by state regulators. These MLOs are also registered in the National Mortgage Licensing System and Registry (NMLS).  By contrast, MLOs employed by federally-insured depositories or their affiliates must only be registered in the NMLS and do not have to meet testing and specific education requirements.

Stivers’ legislation would make a minor change to the SAFE Act to require states to issue transitional licenses to individuals who were employed by a financial institution and are a registered loan originator.  These individuals would be able to continue originating loans for 120 days after being employed by a state-licensed non-depository entity.  Similarly, a state-licensed loan originator in one state who takes a similar position in another state would have a 120-day grace period to obtain a license in the new state.

This bill is a simple solution that would allow these individuals to continue working and underwriting loans, while in no way weakening the important consumer protections of the SAFE Act.

Representatives Terri Sewell (D-AL), Joyce Beatty (D-OH), Lynn Westmoreland (R-GA), Kyrsten Sinema (D-AZ) and Luke Messer (R-IN) are the bill’s lead co-sponsors.

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