Questions Surround Requirements For Government's New Mortgage Registry

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LAS VEGAS-All residential mortgage originators at credit unions and banks are required to register with the Nationwide Mortgage Licensing System (NMLS) by July 29.

That much is known. Less well known is how various pieces of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) will work, or how NCUA and perhaps state regulators will oversee the list of registrants.

Bob Dorsa, CEO of the American Credit Union Mortgage Association (ACUMA), said the first step every credit union must take is to identify who is going to be registered-which is not as easy as it sounds.

"The requirement is loosely defined as people who participate in more than five transactions and speak with consumers regarding mortgage rates and terms," he noted. "That could even mean people in the call center would need to get fingerprints and signature cards. Does that mean branch managers and CEOs need to be registered?"

Dorsa knows of at least two credit unions that have registered 100 people from their staffs, and he added as an aside, "I cannot imagine how many people Navy Federal is going to have to register."

The going is even stickier for CUSOs. Dorsa pointed to the example of Fairfax, Va.-based CUMA (Credit Union Mortgage Association), which is owned by 46 credit unions and which services Washington, D.C., Maryland and Virginia. All seven of CUMA's loan officers are required to be fully-licensed in each of those areas because it is a CUSO.

CUMA absorbed the expense for licensing, but then reviewed its policies and procedures for hiring new loan officers. Dorsa said the CUSO fears the hiring process will become "more cumbersome, time consuming and expensive," and there may be an impact in both the process of licensing and production for new loan officers entering the CUSO's system.

Meriwest Mortgage, a wholly owned CUSO of San Jose, Calif.-based Meriwest FCU, which serves members throughout California, has 11 fully-licensed loan originators, and the CUSO is estimating the cost associated with licensing and continued education for each of the loan officers will be approximately $1,000 each annually. Meriwest Mortgage reported the new requirement will force it to reevaluate employment policies and procedures for loan originators, along with other associated employment requirements and standards.

Even More Questions

Registration for the NMLS began Jan. 31. Credit unions are aware of the looming compliance date, Dorsa said, but the questions far outnumber the answers. While NCUA will have responsibility for oversight, many details remain uncertain.

"Who is going to verify that everyone who closes a deal is duly licensed?" Dorsa wondered. "There are so many little things we won't know until credit unions get through an exam or two."

One somewhat humorous development in the wake of the new requirement: an ACUMA member pointed out fully licensed loan officers are acting as if those who are "merely registered" are less qualified.

The stakes are big, Dorsa reminded. Projected mortgage originations for 2011 are declining as the year goes along. Originally, the forecasted number was close to $1 trillion. The latest projection is $825 billion to $942 billion.

"The biggest cut is in re-fi volume, which is credit unions' bread-and-butter," Dorsa said. "If re-fis are down, and total originations are down, credit unions need to make sure they are getting their share of the mortgage marketplace."

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