WASHINGTON — The House Financial Services Committee approved a bill this week that would increase the mobility of mortgage originators who take a new job across state lines or move from a federally regulated bank to a nonbank.
The bill would allow bank lending officers to work at an independent mortgage banking or brokerage firm for up to 120 days while they complete the testing and background checks required to obtain a state license.
The transition period allows loan officers to "immediately begin working for their new employer and not put their lives on hold," said Rep. Andy Barr, R-Ky., during debate on the bill on Wednesday.
Bank lending officers must be registered in the National Mortgage Licensing System and Registry, but they do not have to obtain a state license or meet the educational and testing requirements of the Secure and Fair Enforcement (SAFE) Mortgage Licensing Act.
These exemptions from the SAFE Act make it difficult for bank loan officers to accept a job at nonbank mortgage banking firms. Meanwhile, state licensed loan officers run into similar problems when they take a job in another state. They can't approve loans until they complete new state's education and testing requirements.
Congress passed the SAFE Act in 2008 to ensure all lending officers could be tracked and held accountable. Under pressure from the banking industry, lawmakers exempted bank lending officers from state testing and licensing requirements of the SAFE Act.
Congress has been working on ways to eliminate job barriers for loan originators for several years, according to Rep. Terri Sewell, D-Ala. The 120-day transition period "helps facilitate a loan originator's job mobility while ensuring state regulators continue to the have ability to protect consumers and market," Sewell said Wednesday during debate on the bill.
The Senate Banking Committee passed similar SAFE Act amendments last summer as part of a regulatory reform bill. The bill has yet to reach the Senate floor.