Mortgage loan originators would have more flexibility when it comes to meeting qualification requirements of the Housing and Economic Recovery Act (HERA) under legislation reintroduced by U.S. Rep. Steve Stivers (R-OH) on Tuesday.
The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, which was included in HERA in 2008, established separate qualification requirements for mortgage loan originators (MLOs) that work for state-licensed non-depository entities and federally-regulated entities. Stivers’ bill, the SAFE Transitional License Act, would simplify those qualification requirements for MLOs when they change jobs.
“An unintentional consequence of the current law is inhibiting job mobility and putting independent mortgage lenders at a considerable disadvantage in recruiting talented individuals,” Stivers said.
“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,” Stivers added.
Under current regulations, MLOs working for non-bank lending institutions must become licensed. That entails pre-licensing requirements, annual continuing education, passing a comprehensive test, a criminal and financial background check, and registering with the National Mortgage Licensing System and Registry (NMLS). Meanwhile, MLOs working for federally-insured lenders are only required to register with NMLS.
The Safe Transitional License Act, H.R. 2121, would stipulate that those who have worked as an MLO for the previous 12 months can continue to originate loans when switching from a federally-insured lender to a non-bank lender for up to 120 days while navigating the licensing process. Additionally, a 120-day grace period would be established for MLOs who move from one state to another.
Stivers, when first introducing the bill last year, said the issue was about jobs and reducing red tape without compromising important consumer protections.