Community Lenders Seek More Originator Requirements from CFPB

The Community Home Lenders Association (CHLA) is asking the Consumer Financial Protection Bureau for more required qualifications that would apply to all loan originators. 

In a letter sent to the CFPB this week, the CHLA urges the agency to use its authority to require all mortgage originators to pass the SAFE Act test and undergo an independent background check prior to working with consumers. It also seeks a minimum 8-hour continuing education requirement for originators. 

“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….” CHLA writes. 

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The organization, a national non-profit association of small and mid-sized community-based mortgage lenders, pointed to 1,415 registered mortgage originators who work currently for banks or other depository institutions and have not passed the SAFE Act test. It points to an additional 36,000 to 120,000 registered originators who might fail the SAFE Act test if forced to take it. 

“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,” CHLA writes. 

View the letter

Written by Elizabeth Ecker

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  • While an argument can be made about residential mortgage originators of some specific banks not needing such oversight, it is hardly true of all. BUT it is time we have ONE national licensing system for all residential mortgage originators not two licensing systems for those providing the same basic products depending upon the CATEGORY of employer.

    While bank exemptions covering all states were needed in prior eras, that is no longer the case. If exemptions are needed in places like Alaska or Hawaii, state exemptions should apply but even that is hard to justify in this day and age when it comes to residential mortgage origination.

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