MBA: Universal LO Licensing Test Levels Playing Field

The Mortgage Bankers Association has stated its support of a uniform state test (UST) that would apply to all state licensed mortgage loan originators, as an alternative to Secure and Fair Enforcement for Mortgage Licensing Act requirements. Whether multi-state lenders agree this is a good thing remains to be seen.

Last week, MBA President and CEO David Stevens sent a letter to Conference of State Bank Supervisors (CSBS) CEO John Ryan, expressing support for the uniform exam idea, first announced by the CSBS earlier this year.

The letter noted that the SAFE Act has hindered industry activity by restricting practices of loan officers across multiple states.

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“The Secure and Fair Enforcement for Mortgage Licensing Act has restricted many state licensed mortgage loan officers and their employers (independent mortgage banks and other non-bank mortgage originators) from being able to do business in other states, including neighboring states, without significant compliance costs,” noted Stevens.

The support comes nine months after the CSBS and State Regulatory Registry began work toward uniform content, which included research on the feasibility of developing a UST for originators.

The SAFE mortgage loan originator test included two parts: a national component and a state component, where officers seeking licenses in multiple states were required to take separate state components for each exam.

The implementation of a uniform test would inevitably change the landscape for many originators looking to expand nationally. Whether or not this would enhance or diminish the industry’s integrity is up for debate.

“A uniform test would make it easier for consumers to benefit and would increase competition among lenders,” says David Cesario, National Sales and Production Manager of Reverse Mortgage Lending for MSI Reverse who believes the idea overall is good for consumers.

A subsidiary of First State Bank, MSI Reverse has loan officers subject to registration under Nationwide Mortgage Licensing System and Registry (NMLS).

“The licensing aspect is an unfortunate aspect of our industry,” said Dave Bancroft, a reverse division manager with Greenlight Financial Services. “It is a money grab for the states and in actuality does little for education.”

But a uniform test is just another step in providing a more level playing field, MBA’s letter argues, as independent mortgage bankers and their loan officers will be able to more easily comply with consumer protection aspects of the SAFE Act. Some reverse mortgage lenders agree it is a good idea overall.

“Overall, what they’re trying to achieve is uniformity,” said Mike Gruley, president of 1st Financial Reverse Mortgage on MBA’s approval. “Any time we can universally license people, it not only creates liquidity for borrowers, but also creates a standard by which everyone has to perform.”

“It creates more choice for borrowers and better opportunities for lenders. It’s a win-win,” added Gruley.

View the MBA’s letter.

*Correction: A previous version of this article incorrectly stated MSI Reverse was a division of First-Mid Illinois Bank, when it is actually a division of First State Bank. Also, it was stated that MSI Reverse fell out of the net of regulations mandated by NMLS, when the bank does have loan originators who need to be registered and in good standing with NMLS. Cesario’s comments have been updated to more accurately reflect his point of view. RMD regrets the errors that were included in the original post.

Written by Jason Oliva

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  • Yet this would not be a universal qualifying originator exam but merely an all states qualifying exam.  The two are entirely different.

    A universal qualification exam means all originators including exempt bank employees would have to take it.  Right now they are exempt from state exams anyway.  Mandating such an exam for all originators is the only way to level the playing field.

    What an all states qualifying exam does is rather than taking multiple state exams, all state exams would be bundled into a new exam.  If it is truly an all states exam, imagine the variables on the same issue which would have to be examined.  If all of the states want a piece of the test fees for the all states exam to help defray their administrative costs related to its administration what would be the cost for that exam?

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