[House Report 114-584]
[From the U.S. Government Publishing Office]
114th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 114-584
======================================================================
ELIMINATING BARRIERS TO JOBS FOR LOAN ORIGINATORS
_______
May 23, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 2121]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2121) to amend the S.A.F.E. Mortgage Licensing
Act of 2008 to provide a temporary license for loan originators
transitioning between employers, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. ELIMINATING BARRIERS TO JOBS FOR LOAN ORIGINATORS.
(a) In General.--The S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.) is amended by adding at the end the following:
``SEC. 1518. EMPLOYMENT TRANSITION OF LOAN ORIGINATORS.
``(a) Temporary Authority to Originate Loans for Loan Originators
Moving From a Depository Institution to a Non-depository Institution.--
``(1) In general.--Upon employment by a State-licensed
mortgage company, an individual who is a registered loan
originator shall be deemed to have temporary authority to act
as a loan originator in an application State for the period
described in paragraph (2) if the individual--
``(A) has not had an application for a loan
originator license denied, or had such a license
revoked or suspended in any governmental jurisdiction;
``(B) has not been subject to or served with a cease
and desist order in any governmental jurisdiction or as
described in section 1514(c);
``(C) has not been convicted of a felony that would
preclude licensure under the law of the application
State;
``(D) has submitted an application to be a State-
licensed loan originator in the application State; and
``(E) was registered in the Nationwide Mortgage
Licensing System and Registry as a loan originator
during the 12-month period preceding the date of
submission of the information required under section
1505(a).
``(2) Period.--The period described in paragraph (1) shall
begin on the date that the individual submits the information
required under section 1505(a) and shall end on the earliest
of--
``(A) the date that the individual withdraws the
application to be a State-licensed loan originator in
the application State;
``(B) the date that the application State denies, or
issues a notice of intent to deny, the application;
``(C) the date that the application State grants a
State license; or
``(D) the date that is 120 days after the date on
which the individual submits the application, if the
application is listed on the Nationwide Mortgage
Licensing System and Registry as incomplete.
``(b) Temporary Authority to Originate Loans for State-licensed Loan
Originators Moving Interstate.--
``(1) In general.--A State-licensed loan originator shall be
deemed to have temporary authority to act as a loan originator
in an application State for the period described in paragraph
(2) if the State-licensed loan originator--
``(A) meets the requirements of subparagraphs (A),
(B), (C), and (D) of subsection (a)(1);
``(B) is employed by a State-licensed mortgage
company in the application State; and
``(C) was licensed in a State that is not the
application State during the 30-day period preceding
the date of submission of the information required
under section 1505(a) in connection with the
application submitted to the application State.
``(2) Period.--The period described in paragraph (1) shall
begin on the date that the State-licensed loan originator
submits the information required under section 1505(a) in
connection with the application submitted to the application
State and end on the earliest of--
``(A) the date that the State-licensed loan
originator withdraws the application to be a State-
licensed loan originator in the application State;
``(B) the date that the application State denies, or
issues a notice of intent to deny, the application;
``(C) the date that the application State grants a
State license; or
``(D) the date that is 120 days after the date on
which the State-licensed loan originator submits the
application, if the application is listed on the
Nationwide Mortgage Licensing System and Registry as
incomplete.
``(c) Applicability.--
``(1) Any person employing an individual who is deemed to
have temporary authority to act as a loan originator in an
application State pursuant to this section shall be subject to
the requirements of this title and to applicable State law to
the same extent as if such individual was a State-licensed loan
originator licensed by the application State.
``(2) Any individual who is deemed to have temporary
authority to act as a loan originator in an application State
pursuant to this section and who engages in residential
mortgage loan origination activities shall be subject to the
requirements of this title and to applicable State law to the
same extent as if such individual was a State-licensed loan
originator licensed by the application State.
``(d) Definitions.--In this section, the following definitions shall
apply:
``(1) State-licensed mortgage company.--The term `State-
licensed mortgage company' means an entity licensed or
registered under the law of any State to engage in residential
mortgage loan origination and processing activities.
``(2) Application state.--The term `application State' means
a State in which a registered loan originator or a State-
licensed loan originator seeks to be licensed.''.
(b) Table of Contents Amendment.--The table of contents in section
1(b) of the Housing and Economic Recovery Act of 2008 (42 U.S.C. 4501
note) is amended by inserting after the item relating to section 1517
the following:
``Sec. 1518. Employment transition of loan originators.''.
SEC. 2. AMENDMENT TO CIVIL LIABILITY OF THE BUREAU AND OTHER OFFICIALS.
Section 1513 of the S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5112) is amended by striking ``are loan originators or are
applying for licensing or registration as loan originators'' and
inserting ``are applying for licensing or registration using the
Nationwide Mortgage Licensing System and Registry''.
SEC. 3. EFFECTIVE DATE.
This Act and the amendments made by this Act shall take effect on the
date that is 18 months after the date of the enactment of this Act.
Purpose and Summary
Introduced by Representative Stivers on April 29, 2015,
H.R. 2121 amends the S.A.F.E. Mortgage Licensing Act of 2008 to
provide temporary loan-origination authority for registered
loan originators: (1) moving from a financial institution to a
state-licensed non-bank originator, or (2) moving interstate to
a state-licensed loan originator in another state. Section 2 of
H.R. 2121 includes a technical change to Section 1513 of the
S.A.F.E. Act intended to update the Act's existing civil
liability protections to ensure that those protections continue
to apply where state regulators use the National Mortgage
Licensing System and Registry (NMLS) as a licensing system for
financial services providers other than loan originators.
Background and Need for Legislation
Congress enacted the Secure and Fair Enforcement (SAFE)
Mortgage Licensing Act of 2008 as part of the Housing and
Economic Recovery Act (HERA). The SAFE Act created state
licensing or registration requirements for mortgage loan
originators (MLOs). MLOs working as loan officers in federally-
regulated depository institutions were required to register
with the NMLS. MLOs working for non-depository mortgage
companies were required to become licensed at the state level,
complete annual continuing education, and pass criminal
background checks.
Because bank loan officers are not state-licensed MLOs, a
problem arises when an individual wishes to leave a bank and
instead work for a non-bank mortgage company: he or she must
wait until completing the SAFE Act's state licensure
requirements--a process that can take weeks or months,
depending upon the state--in order to originate loans for the
mortgage company, notwithstanding his or her prior experience
as a registered bank loan officer. Under current law, the SAFE
Act allows for a 60-day grace period for changes in employment
due to acquisitions, mergers, and reorganizations, but does not
provide for a grace period or other transitional accommodation
for bank loan officers seeking to work for non-bank mortgage
companies.
H.R. 2121 makes it easier for a registered bank MLO to
transition to a non-bank mortgage company, or for a state-
licensed MLO to move to another state. The bill grants such
persons temporary authority to originate loans for up to 120
days after submitting their application for licensure.
H.R. 2121 also establishes eligibility requirements for
MLOs seeking transitional loan origination authority. For
instance, registered MLOs seeking to move to a non-depository
mortgage company must have been a registered as an MLO in the
NMLS for the 12 months immediately prior to seeking the
transitional authority. Additionally, the registered MLO must:
Not have had an application for an MLO
license revoked or suspended in any governmental
jurisdiction;
Not have been subject to a cease and desist
order;
Not have been convicted of a felony that
would make the individual ineligible for licensure; and
Have submitted an application to be a state-
licensed MLO through the NMLS.
H.R. 2121 establishes similar transitional authority for a
state-licensed MLO to originate mortgages in a different state,
provided that the person is employed by the mortgage company in
the state where licensure is sought and has:
Not had an application for an MLO license
revoked or suspended in any governmental jurisdiction;
Not been subject to a cease and desist
order;
Not been convicted of a felony that would
make the individual ineligible for licensure;
Submitted an application to be a state-
licensed MLO through the NMLS; and
Maintained licensure in the first state for
the 30-day period preceding the date of application
submission.
H.R. 2121 provides that both the MLO and the company hiring
the MLO are subject to the SAFE Act and applicable state law as
if the MLO were duly licensed, thus enabling state regulators
to fulfill their obligations as regulators of mortgage
companies and individual MLOs under the SAFE Act and state
financial and consumer protection laws. Finally, H.R. 2121
includes a technical change to Section 1513 of the SAFE Act
intended to update the SAFE Act's existing civil liability
protections to ensure that those protections continue to apply
where state regulators use the NMLS as a licensing system for
financial services providers other than loan originators.
Hearings
The Committee on Financial Services' Subcommittee on
Financial Institutions and Consumer Credit held a hearing
examining matters relating to H.R. 2121 on October 21, 2015.
Committee Consideration
The Committee on Financial Services met in open session on
March 2, 2016, and ordered H.R. 2121 to be reported favorably
to the House as amended by a recorded vote of 56 yeas to 0 nays
(recorded vote no. FC-96), a quorum being present. Before the
motion to report was offered, the Committee adopted an
amendment in the nature of a substitute offered by Mr. Stivers
by voice vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House as amended. The motion
was agreed to by a recorded vote of 56 yeas to 0 nays (Record
vote no. FC-96), a quorum being present.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 2121
will reduce regulatory burden and facilitate mortgage lending
by providing temporary loan-origination authority for loan
officers (1) moving from a financial institution to a state-
licensed non-bank originator, or (2) moving interstate to a
state-licensed loan originator in another state.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, April 11, 2016.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2121, the SAFE
Transitional Licensing Act of 2015.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall.
Enclosure.
H.R. 2121--SAFE Transitional Licensing Act of 2015
H.R. 2121 would provide temporary authority for licensed
mortgage originators to work in a new state or under a new
employer--if the new employer is a state-licensed mortgage
company--until a new license is issued. Because enacting H.R.
2121 would affect direct spending and revenues, pay-as-you-go
procedures apply. However, on the basis of information from the
Department of Housing and Urban Development (HUD) and the
Nationwide Mortgage Licensing System and Registry (NMLS), CBO
estimates that enacting the bill would have no significant net
effect on direct spending or revenues.
The NMLS was established by a consortium of states pursuant
to requirements under the Housing and Economic Recovery Act of
2008 that mandated the creation of such a system. The purpose
of the NMLS is to track mortgage providers across state lines
and through changes in employment to ensure that the provider
meets certain qualifications and cannot evade pending
regulatory action by moving to a new state or changing
employers. The bill aims to ease mortgage originators' ability
to move between jobs and between states by allowing them to
originate mortgages under temporary authority for up to 120
days or until a new license is issued. Licensed originators
with certain active or previous regulatory violations would not
be eligible to obtain this new temporary status.
On the basis of information from HUD and the NMLS, CBO
estimates that enacting H.R. 2121 would have no significant net
effect on the federal budget because any change in either the
amount or timing of the licensing fees (which are considered to
be revenues) paid by applicants and subsequently spent by the
NMLS for its operations would be insignificant.
CBO also estimates that enacting the bill would not
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2027.
H.R. 2121 would impose an intergovernmental mandate as
defined in the Unfunded Mandates Reform Act (UMRA) by
preempting state licensing laws. The bill would grant a
temporary license for some loan originators who become employed
by a state-licensed mortgage company. Because the preemption
would impose no duty on state governments that would result in
additional spending or a loss of revenues, CBO estimates that
the cost of the intergovernmental mandate would fall well below
the UMRA threshold ($77 million in 2016, adjusted annually for
inflation).
H.R. 2121 contains no private-sector mandates as defined in
the UMRA.
The CBO staff contacts for this estimate are Stephen Rabent
and Aurora Swanson. The estimate was approved by H. Samuel
Papenfuss, Deputy Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 2121 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Duplication of Federal Programs
Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015),
the Committee states that no provision of H.R. 2121 establishes
or reauthorizes a program of the Federal Government known to be
duplicative of another Federal program, a program that was
included in any report from the Government Accountability
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most
recent Catalog of Federal Domestic Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, 114th Cong. (2015),
the Committee states that H.R. 2121 contains no directed
rulemaking.
Section-by-Section Analysis of the Legislation
Section 1. Eliminating barriers to jobs for loan originators
This section provides temporary loan-origination authority
to registered loan originators: (1) moving from a financial
institution to a state-licensed non-bank originator, or (2)
moving interstate to a state-licensed loan originator in
another state. This section further provides that both the
mortgage loan originator and the company hiring the MLO are
subject to the SAFE Act and applicable state law as if the MLO
were duly licensed.
Section 2. Amendment to civil liability of the Bureau and other
officials
This section updates the SAFE Act's existing civil
liability protections to ensure that those protections continue
to apply where state regulators use the NMLS as a licensing
system for financial services providers other than loan
originators.
Section 3. Effective date
This section provides that the Act shall take effect 18
months after enactment.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
SEC. 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Housing and
Economic Recovery Act of 2008''.
(b) Table of Content.--The table of contents for this Act is
as follows:
* * * * * * *
DIVISION A--HOUSING FINANCE REFORM
* * * * * * *
TITLE V--S.A.F.E. MORTGAGE LICENSING ACT
* * * * * * *
Sec. 1518. Employment transition of loan originators.
* * * * * * *
DIVISION A--HOUSING FINANCE REFORM
* * * * * * *
TITLE V--S.A.F.E. MORTGAGE LICENSING ACT
SEC. 1501. SHORT TITLE.
This title may be cited as the ``Secure and Fair Enforcement
for Mortgage Licensing Act of 2008'' or ``S.A.F.E. Mortgage
Licensing Act of 2008''.
* * * * * * *
SEC. 1513. LIABILITY PROVISIONS.
The Bureau, any State official or agency, or any organization
serving as the administrator of the Nationwide Mortgage
Licensing System and Registry or a system established by the
Director under section 1509, or any officer or employee of any
such entity, shall not be subject to any civil action or
proceeding for monetary damages by reason of the good faith
action or omission of any officer or employee of any such
entity, while acting within the scope of office or employment,
relating to the collection, furnishing, or dissemination of
information concerning persons who [are loan originators or are
applying for licensing or registration as loan originators] are
applying for licensing or registration using the Nationwide
Mortgage Licensing System and Registry.
* * * * * * *
SEC. 1518. EMPLOYMENT TRANSITION OF LOAN ORIGINATORS.
(a) Temporary Authority to Originate Loans for Loan
Originators Moving From a Depository Institution to a Non-
depository Institution.--
(1) In general.--Upon employment by a State-licensed
mortgage company, an individual who is a registered
loan originator shall be deemed to have temporary
authority to act as a loan originator in an application
State for the period described in paragraph (2) if the
individual--
(A) has not had an application for a loan
originator license denied, or had such a
license revoked or suspended in any
governmental jurisdiction;
(B) has not been subject to or served with a
cease and desist order in any governmental
jurisdiction or as described in section
1514(c);
(C) has not been convicted of a felony that
would preclude licensure under the law of the
application State;
(D) has submitted an application to be a
State-licensed loan originator in the
application State; and
(E) was registered in the Nationwide Mortgage
Licensing System and Registry as a loan
originator during the 12-month period preceding
the date of submission of the information
required under section 1505(a).
(2) Period.--The period described in paragraph (1)
shall begin on the date that the individual submits the
information required under section 1505(a) and shall
end on the earliest of--
(A) the date that the individual withdraws
the application to be a State-licensed loan
originator in the application State;
(B) the date that the application State
denies, or issues a notice of intent to deny,
the application;
(C) the date that the application State
grants a State license; or
(D) the date that is 120 days after the date
on which the individual submits the
application, if the application is listed on
the Nationwide Mortgage Licensing System and
Registry as incomplete.
(b) Temporary Authority to Originate Loans for State-licensed
Loan Originators Moving Interstate.--
(1) In general.--A State-licensed loan originator
shall be deemed to have temporary authority to act as a
loan originator in an application State for the period
described in paragraph (2) if the State-licensed loan
originator--
(A) meets the requirements of subparagraphs
(A), (B), (C), and (D) of subsection (a)(1);
(B) is employed by a State-licensed mortgage
company in the application State; and
(C) was licensed in a State that is not the
application State during the 30-day period
preceding the date of submission of the
information required under section 1505(a) in
connection with the application submitted to
the application State.
(2) Period.--The period described in paragraph (1)
shall begin on the date that the State-licensed loan
originator submits the information required under
section 1505(a) in connection with the application
submitted to the application State and end on the
earliest of--
(A) the date that the State-licensed loan
originator withdraws the application to be a
State-licensed loan originator in the
application State;
(B) the date that the application State
denies, or issues a notice of intent to deny,
the application;
(C) the date that the application State
grants a State license; or
(D) the date that is 120 days after the date
on which the State-licensed loan originator
submits the application, if the application is
listed on the Nationwide Mortgage Licensing
System and Registry as incomplete.
(c) Applicability.--
(1) Any person employing an individual who is deemed
to have temporary authority to act as a loan originator
in an application State pursuant to this section shall
be subject to the requirements of this title and to
applicable State law to the same extent as if such
individual was a State-licensed loan originator
licensed by the application State.
(2) Any individual who is deemed to have temporary
authority to act as a loan originator in an application
State pursuant to this section and who engages in
residential mortgage loan origination activities shall
be subject to the requirements of this title and to
applicable State law to the same extent as if such
individual was a State-licensed loan originator
licensed by the application State.
(d) Definitions.--In this section, the following definitions
shall apply:
(1) State-licensed mortgage company.--The term
``State-licensed mortgage company'' means an entity
licensed or registered under the law of any State to
engage in residential mortgage loan origination and
processing activities.
(2) Application state.--The term ``application
State'' means a State in which a registered loan
originator or a State-licensed loan originator seeks to
be licensed.