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Illinois Adopts National SAFE MLO Test
On June 1, the Conference of State Bank Supervisors announced that the Illinois Department of Financial and Professional Regulation (IDFPR) will now use the National SAFE Mortgage Loan Originator (MLO) Test with Uniform State Content, making it the 52nd state agency to adopt the test. Under the new process, Illinois licensees who pass the SAFE MLO Test with Uniform State Content no longer need to take an additional, state-specific test. IDFPR Secretary Bryan Schneider commented on the streamlined test process saying, “[b]y providing a more effective regulatory experience, we foster the creation of a regulatory environment conducive to strong economic growth and opportunity.”
U.S. House Passes SAFE Transitional Licensing Act to Give Greater Job Mobility to Mortgage Loan Originators
On May 23, the U.S. House of Representatives unanimously passed by voice vote H.R. 2121, the SAFE Transitional Licensing Act of 2015. Congressman Steve Stivers (R-OH) introduced H.R. 2121 in April 2015 with the purpose of “providing regulatory relief for loan originators in an effort to make a smooth employment transition between bank and non-bank entities.” As passed, H.R. 2121 would amend the SAFE Mortgage Licensing Act of 2008 to give eligible mortgage loan originators (MLOs) the ability to continue originating loans while awaiting a decision on their application for a state originator license. This temporary authority would apply when MLOs switch jobs (i) from a depository institution, where a state originator license is not required, to a state-licensed non-bank lender, where such a license is required; or (ii) from a state-licensed lender in one state to a state-licensed lender in another state, where a new state originator license is required. In both cases, this temporary authority would expire upon the grant, denial, or withdrawal of the license application, or, if an application is deemed incomplete, 120 days after the application was submitted.
Thirty-Five State Agencies Now Using Uniform Mortgage Test
On October 1, the Conference of State Bank Supervisors announced that five additional state agencies have implemented the new national SAFE MLO test, bringing the total number of participating state agencies to 35. The new test, which was announced in January and launched in April, includes a uniform state component to replace the state-specific component in adopting states.
CFPB Bulletin Supports Uniform State Test for Mortgage Loan Originators
On May 20, the CFPB issued Bulletin 2013-05, which clarifies that the Uniform State Test (UST) developed by the NMLS may constitute a qualified written test under the federal SAFE Act for state-licensed mortgage loan originators if the UST covers all required areas, including state laws and regulations. The Bulletin further explains that a separate test for each state covering the particular laws and regulations of that state plus a National Test Component developed by the NMLS may also meet the qualified written test requirement under the SAFE Act.
State Law Update: Idaho Amends Mortgage Licensing Provisions
On March 13, Idaho enacted HB 10, a bill to amend the licensing provisions of the Idaho Residential Mortgage Practices Act. The bill (i) provides a license exemption for individuals who originate mortgages on behalf of federal, state, or local government housing agencies, (ii) removes language inconsistent with federal interpretation of the SAFE Act relating to an exclusion from the definition of "mortgage loan originator," and (iii) makes it a prohibited practice for a person to violate license-related testing or education procedures. The bill also authorizes the director to subpoena records related to unlicensed activity by any person and also clarifies licensing exemptions for Idaho attorneys and accountants. By state rule, the law is set to take effect on July 1, 2013.
State Law Update: Virginia Amends Mortgage Originator Licensing Statute
On February 20, Virginia enacted HB 1803, which conforms Virginia law to federal SAFE Act regulations, as recommended by the Virginia Housing Commission. The bill (i) expands the definition of a mortgage loan originator to include an individual who represents to the public that he can or will take an application for, or offer or negotiate the terms of, a residential mortgage loan, (ii) exempts from licensing requirements any individual acting as a loan originator in financing the sale of his or her own residence, (iii) specifies conditions under which an attorney engaged in mortgage loan origination activities is exempt from licensing requirements, (iv) removes the definition of "federal banking agencies", and (v) defines the term "employee."