Mortgage loan officers are eligible for overtime pay, the Supreme Court has determined in a ruling that mortgage industry stakeholders say could impose challenging requirements on lenders.
The Supreme Court’s decision does apply to loan officers who deal with reverse mortgages, a Mortgage Bankers Association (MBA) spokesman confirms to RMD.
The ruling may not have a dramatic impact on reverse mortgage lenders for a variety of reasons, however, including that they must already be adhering to local and state labor laws that set minimum wages.
Still, the decision issued Monday settles a long-running issue that pitted some mortgage industry interests against the U.S. Department of Labor.
In 2010, the DOL reversed an earlier decision that loan officers have “exempt status” under the Fair Labor Standards Act. The MBA fought the change, arguing that it would expose lenders to litigation for relying on the DOL’s previous decision, and that it would impose burdensome costs and operational demands on lenders.
The MBA’s legal fight against the Labor Department rested largely on an argument that the federal agency needed to provide notice and a chance for the public to comment before changing the rule over exempt status.
The MBA scored a victory in the U.S. Court of Appeals in 2013, but the ruling left it up in the air as to whether loan officers are exempt from overtime pay rules.
The Supreme Court justices have settled that question in their unanimous ruling, with a consensus opinion penned by Justice Sonia Sotomayor. The DOL was not obligated to go through the notice-and-comment period to change the rule, the opinion states.
The court’s conservative wing, including Justices Samuel Alito, Antonin Scalia and Clarence Thomas, wrote concurrences supporting the legal reasoning behind the decision to back the DOL, but registering discontent with the scope of federal agency power.
While disappointed in the ruling, the MBA intends to help its members adhere to the overtime pay rule without passing on related costs to borrowers, an association spokesman told RMD in an emailed statement.
Written by Tim Mullaney