CHLA: Bank Mortgage Originators Should Meet Basic Testing, Continuing Education Requirements
Letter to CFPB Cites Thousands of Unqualified Bank Mortgage Originators
Contact: Scott Olson For Immediate Release
(571) 527-2601 December 10, 2014
The Community Home Lenders Association (CHLA) today sent a letter to CFPB Director Richard Cordray, urging the CFPB to use its authority under which all mortgage originators must be “qualified”, to require all bank mortgage originators to pass the SAFE Act test and undergo an independent background check prior to working with consumers, and to require them to complete 8 hours of continuing education each year. Currently, these requirements apply to all non-bank mortgage originators, but not to individuals working at depository institutions. The letter also asked the CFPB to explore the cost and impact of licensing bank mortgage originators.
The letter states, “We believe that it is important – both for the integrity of the profession of mortgage originators and for the consumers that they serve – to have high uniform standards that apply to all mortgage originators, regardless of whom they work for . . . .”
The CHLA letter points out that there are 1,415 registered mortgage originators working at banks and other depository institutions that failed (and never passed) the basic SAFE Act mortgage competency test – and that the consumers they do business with don’t even know they failed the test. The letter asks the basic question how these individuals that failed the test can meet the statutory standard of being “qualified.” The CHLA letter also points out that an extrapolation of certain SAFE Act pass/fail rates would result in a range of between 36,000 and 120,000 registered bank mortgage originators that might fail the SAFE Act test if forced to take it.
The letter also points out the inconsistency of requiring individuals at banks that sell securities or insurance to be licensed, tested and subject to continuing education – while exempting individuals that do mortgage origination from these basic requirements. The letter also points out that most all individuals involved in real estate and mortgage transitions- including real estate brokers, appraisers, home inspectors, and nonbank mortgage originators – are subject to licensing, testing and continuing education – making this de facto exemption for banks almost unique.
The CHLA letter concludes, “At a minimum, bank and other depository institution mortgage originators should be required to pass the SAFE Act mortgage competency test and an independent background check prior to doing business with a consumer, and further to complete 8 hours of annual continuing education commensurate with the SAFE Act.”