MBA Letter Asks House Support for Transitional Licensing, GSE Reform Bills
Ahead of a House Financial Services Committee vote, the Mortgage Bankers Association sent a letter yesterday offering firm support for legislation that would smooth the path for mortgage loan originators in transition and a bill aimed at jump-starting the GSE reform process.
The Committee began a markup session for a number of bills yesterday as part of its final push before the end of the year and continues through today. The markup sessioni include two bills of interest to the real estate finance industry: H.R. 2948, the SAFE Transitional Licensing Act, which would eliminating barriers by allowing MLOs to more easily move among employers, including across state lines; and H.R. 4560, the GSE Jumpstart Reauthorization Act of 2017, a prototype bill aimed at moving forward secondary housing market reform.
The MBA letter to Committee Chairman Jeb Hensarling, R-Texas, and Ranking Member Maxine Waters, R-Calif., “enthusiastically” supports H.R. 2948. MBA Senior Vice President of Legislative and Political Affairs Bill Killmer noted H.R. 2948 is a bipartisan, narrow solution that would provide “transitional authority” to originate mortgages for individuals who move from a federally insured institution to a non-bank lender while they work to meet the SAFE Act’s licensing and testing requirements.
“H.R. 2948 promotes a ‘fair and competitive labor market’ by eliminating barriers to the ability of non-bank lenders–especially small lenders–to compete for talented staff, and allowing MLOs to more easily move to the employer that offers them the best chance to succeed,” Killmer said.
The letter noted the SAFE Act created two parallel but asymmetrical regimes for MLOs that have resulted in uneven consumer protections and an unlevel playing field for mortgage originators. The SAFE Act requires 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 Nationwide Mortgage Licensing System and Registry. By contrast, MLOs employed by federally-insured depositories or their affiliates must only be registered in the NMLS, and do not have to pass a test or meet specific education requirements.
“The result is a two-tiered system that inhibits job mobility for loan officers and makes it difficult for non-bank lenders to compete for talented employees,” MBA said. “Rather than leaving a job on a Friday and starting a new job on a Monday, an MLO who moves from a bank to a non-bank lender must sit idle for weeks, and sometimes months, unable to engage in loan origination activities while they complete the SAFE Act’s licensing and testing requirements–despite the fact they have already been registered in the NMLS and originating loans. H.R. 2948 promotes a fair and competitive labor market by eliminating barriers to the ability of non-bank lenders (especially small lenders) to compete for talented staff, and allowing MLOs to more easily move to the employer that offers them the best chance to succeed.”
The letter also supports the broader intent of H.R. 4560, the GSE Jumpstart Reauthorization Act of 2017, as introduced by Representative French Hill, R-Ark. MBA noted concern with the mechanism by which certain provisions may be enforced, but offered overall support for the bill.
“As MBA has noted in the past, comprehensive housing finance reform should be formally addressed by Congress rather than through regulatory or other unilateral administrative action,” the letter said
MBA also offered support for H.R. 4545, the Financial Institutions Examination Fairness and Reform Act. This bipartisan legislation addresses concerns about the manner in which lenders are examined, including improving the timeliness of examinations, ensuring examiners adhere to their agencies’ standards and creating a new, more independent examination appeals process.
“MBA believes that by including both depository and non-depository lenders in the definition of ‘financial institution’, the Committee ensures that similar standards and protections will be applied broadly under this legislation which will provide a comparable examination environment for all institutions,” Killmer said.
The markup session continues through Wednesday on the following bills:
–HR 435, the “Credit Access and Inclusion Act of 2017”
–HR 1457, the “Making Online Banking Initiation Legal and Easy Act of 2017”
–HR 2219, the “End Banking for Human Traffickers Act of 2017”
–HR 2319, the “Consumer Financial Choice and Capital Markets Protection Act of 2017”
–HR 2948, To amend the S.A.F.E. Mortgage Licensing Act of 2008 to provide a temporary license for loan originators transitioning between employers
–HR 3179, the “Transparency and Accountability for Business Standards Act”
–HR 3864, the “Native American Housing Assistance and Self-Determination Reauthorization Act of 2017”
–HR 4464, the “Common Sense Credit Union Capital Relief Act of 2017”
–HR 4519, To amend the Securities Exchange Act of 1934 to repeal certain disclosure requirements related to resource extraction
–HR 4529, the “Accelerating Access to Capital Act of 2017”
–HR 4537, the “International Insurance Standards Act of 2017”
–HR 4545, the “Financial Institutions Examination Fairness and Reform Act”
–HR 4546, the “National Securities Exchange Regulatory Parity Act”
–HR 4560, the “GSE Jumpstart Reauthorization Act of 2017”
–HR 4566, the “Alleviating Stress Test Burdens to Help Investors Act”
The markup session continues at 10:00 a.m. ET in 2128 Rayburn House Office Building and can be accessed online at https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=402782.
