Inside Mortgage Finance 12/10/14 – CHLA Wants Depository Parity on LO Testing, More

December 10, 2014

Nonbank Trade Group Wants Depository Parity on Loan Officer Testing, More

By Paul Muolo

The Community Home Lenders Association on Wednesday sent a letter to the Director of the Consumer Financial Protection Bureau, pleading that mortgage loan officers who work at federally insured depositories should meet the same testing and education requirements as LOs at nonbanks.

As part of its argument to CFPB Director Richard Cordray, the CHLA said that as of this spring, 1,415 individuals working as mortgage originators at banks had failed the SAFE Act test or never took it. SAFE stands for Secure and Fair Enforcement for Mortgage Licensing Act of 2008.

In 2013, rules were implemented giving depository mortgage loan officers an exemption on testing and professional education requirements – plus background checks – while requiring them to register as LOs with the Nationwide Mortgage Licensing System.

In the past, bank mortgage managers have argued that their institutions are already heavily regulated and subject to federal exams and internal background checks.

The new plea from the CHLA comes at a time when depositories are losing origination market share to fast-growing nonbanks like Freedom Mortgage, United Wholesale Mortgage and others.

CHLA in the News