The U.S. House of Representatives unanimously passed the SAFE Transitional Licensing Act by voice vote. The bill could alter the way that mortgage loan officers at a federally-insured institution move to nonbank lenders.
The bill, H.R. 2121 SAFE Transitional License Act of 2015, would provide transitional licensing authority to originate mortgages for individuals who move from a federally-insured institution to a nonbank lender or from one state to another while they work to complete the SAFE Act's licensing and testing requirements.
The bill was introduced by Rep. Steve Stivers (R-Ohio) in April 2015 and is scheduled to receive a House vote this afternoon and will require a two-third majority vote. The bill was approved by the House Financial Services Committee at the first legislative markup this year in March.
Bank lending officers would be allowed 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, according to Stivers. As of now, mortgage lenders must be registered in the National Mortgage Licensing System and Registry but they do not have to obtain a state license.
"This is despite the fact that they have already been employed and registered as a loan officer. This is simply unfair."
Rep. Steve Stivers, R-Ohio
Stivers stated in April, "The SAFE Act inhibits job mobility and puts independent mortgage lenders at a considerable disadvantage in recruiting talented individuals."
In 2008, Congress passed the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act. Its purpose was to ensure all lending officers could be tracked and held accountable, but pressure from the banking industry prompted lawmakers to exempt lending officers from SAFE Act requirements.
Stivers noted that when a loan officer transitions from a federally-insured institution to a nonbank lender, they are stagnant for weeks, or 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," Stivers noted.
National Association of Independent Housing Professionals (NAIHP) President Marc Savitt said in last year in an interview that the Stivers' bill will make it easier for lending officers to return to the brokerage business and that the organization welcome[s] them back to the brokerage side.
One group that opposes the SAFE Act changes is the The Association of Mortgage Professionals (NAMB). This group believes state law and regulations are already in place for consumer protection and should not be bypassed by those not properly educated and tested. "HR 2121 and any Senate companion bill will dilute the rights of all states to protect consumers," NAMB stated in a press release.
“One of the touchstones of the Dodd-Frank Act was to permit states to go beyond federal law to protect consumers in their state,” said Valerie Saunders, NAMB Government Affairs Committee Chair. “HR 2121 completely nullifies state consumer protections.”