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Bill Seeks to Help Bank Lending Officers Work for Nonbanks

By Brian Collins, National Mortgage News

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Washington, April 30, 2015 | comments
WASHINGTON — Rep. Steve Stivers, R-Ohio, has introduced a bill that would make it easier for mortgage loan officers at banks to jump ship and take a job with a nonbank lender.
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WASHINGTON — Rep. Steve Stivers, R-Ohio, has introduced a bill that would make it easier for mortgage loan officers at banks to jump ship and take a job with a nonbank lender.

Called the SAFE Transitional License Act, the bill would allow bank lending officers to work at an independent mortgage bank or brokerage firm for 120 days while they complete the testing and background checks required to obtain a state license.

Currently, bank lending officers must be registered in the National Mortgage Licensing System and Registry but they do not have to obtain a state license.

"The SAFE Act inhibits job mobility and puts independent mortgage lenders at a considerable disadvantage in recruiting talented individuals," Stivers said in press release Thursday.

Congress passed the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act in 2008 to ensure all lending officers could be tracked and held accountable. Under pressure from the banking industry, lawmakers exempted bank lending officers from the testing and licensing requirements of the SAFE Act.

Over the past few years, some large banks have tightened their mortgage lending operations due to large settlements with Justice Department and other government agencies and repurchase demands by Fannie Mae, Freddie Mac and the Federal Housing Administration. This has prompted a mitigation of bank officers to nonbank lenders.

Stivers noted that a loan officer who moves from a federally-insured institution to a nonbank lender must sit on their hands for weeks, even months while they meet the SAFE Act's licensing and testing requirement.

"This is despite the fact that they have already been employed and registered as a loan officer. This is simply unfair," the House Financial Services Committee member said in a press release.

Industry groups like the Mortgage Bankers Association, Community Home Lenders Association and the National Association of Independent Housing Professionals support Stivers' bill.

After the SAFE Act was passed, a lot of broker lending officers went to work for the banks, according to NAIHP president Marc Savitt. The Stivers' bill will make it easier for lending officers to return to the brokerage business.

"We will welcome them back to the brokerage side," Savitt said in an interview.

The MBA is making the bill one of its top legislative priorities.

"In today's dynamic mortgage marketplace, this bill addresses the need for true labor force mobility across state lines and between institutions. It also offers no new regulatory burdens, and is well within the guardrails of current oversight by state regulators and the Consumer Financial Protection Bureau," MBA Chairman Bill Cosgrove said in a statement Thursday.

The Community Home Lenders Association also supports the Stivers bill, according to Scott Olson, its executive director.

Separately, the group is urging the Consumer Financial Protection Bureau to require consumer disclosures regarding a lenders adherence to the SAFE Act. These disclosures would show if lending officers are licensed and meet all the requirements of the SAFE Act, including an independent background check and continuing education courses.

Consumers are not generally aware of the "almost unique exemption bank loan originators enjoy from basic licensing, testing and continuing education requirements," the CHLA says in letter to the CFPB.
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