CMLA member, Julie Piepho, represented the mortgage industry in Washington during a "fly-in" with the Mortgage Bankers Association (MBA)'s SAFE Act Task Force. The task force is urging regulators and legislators to make key changes to loan officer testing standards requirements.

Original Article from the MBA

Sorohan, Mike--July 24, 2014
The Mortgage Bankers Association this week held a “fly-in” to Washington, with members of its SAFE Act Task Force urging regulators and legislators to make key changes to loan officer testing standards requirements.

More than a dozen MBA members, including members of the Task Force, visited with the Consumer Financial Protection Bureau, the Conference of State Bank Supervisors and members of Congress to urge changes to the Secure and Fair Enforcement of Licensing Act and other regulations that would provide uniform testing standards for all mortgage loan officers.

The SAFE Act, enacted in 2008, creates two parallel but asymmetrical regimes for loan officers. Loan officers employed by nonbank lenders are required to be licensed, which includes testing, pre-licensing and continuing education requirements, as well as extensive criminal and financial background reviews by state regulators; they are also registered through the National Mortgage Licensing System.

By contrast, loan officers employed by banks or bank affiliates must only be registered with the NMLS and undergo criminal and background reviews, conducted by their employer.

MBA said the absence of a national testing requirement deprives consumers of assurance that they are served in all cases by loan officers who have met minimum, verified standards for education and testing. Additionally, the current system gives bank and bank affiliate members an advantage over nonbank lenders because they avoid education and testing requirements. MBA believes Congress should amend the SAFE Act to provide testing standards for all loan originators--a national test with Uniform State Content, also known as the Uniform State Test.

“We self-regulate; it’s all about best practices for the consumer,” said Rich Bennion, executive vice president and residential lending director of HomeStreet Bank, Seattle, and co-chair of the Task Force. “We want to help promote a higher level of professionalism on the part of loan officers, which benefits consumers. A uniform standard across the industry would help ensure that no matter where the consumer goes, there is a minimum level of loan originator competency on laws, regulations and ethics.”

Larry Moss, president of Augusta Mortgage, Augusta, Ga., and co-chair of the Task Force (and chair of the MBA Residential Loan Production Committee) said having a uniform standard would result in better industry performance and consumer confidence in the mortgage lending process.

“As an independent mortgage banker, we were not required to be licensed or even tested until 2008,” Moss said. “I’ve operated my company for 38 years; I was initially opposed to the new requirements. But then all of my loan officers went through it and as a result we are a much better company and I worry less about risk. It’s a great thing for us, and we’d like it to be applied across the spectrum.”

In addition to amending the SAFE Act to ensure uniform testing, MBA wants an amendment that would require that states grant within seven days a license to a bank or bank-affiliated loan officer who has passed the test and meets the state’s criminal and financial background requirements but wants to change employment to a nonbank lender.

MBA is currently meeting with members of Congress to educate them on this issue and generate possible interest in introducing free-standing legislation.

View the MBA SAFE Act Amendments FAQs