Should it become law, the new bill would let bank loan officers work at a mortgage banking or brokerage firm for up to 120 days while completing the requirements for a state license. The grace period would allow originators to “immediately begin working for their new employer and not put their lives on hold,” Rep. Andy Barr (R-Ky.) said during debate last week.
Bank loan officers don’t have to obtain state licenses or meet the educational requirements that brokers do. That makes it hard for bank loan officers to accept jobs at nonbank mortgage firms. And licensed loan officers run into their own problems; each state has different testing and education requirements, so loan officers moving to a new state can’t approve loans until they’ve met that state’s standards.
These restrictions come by way of the SAFE Act, passed in 2008 to make sure loan officers were accountable. However, pressure from banks resulted in bank loan officers being exempt from many of the act’s provisions. And many loan officers have found the act’s requirements onerous.
According to Rep. Terri Sewell (D.-Ala.), the new bill “helps facilitate a loan originator’s job mobility while ensuring state regulators continue to have the ability to protect consumers and market.”
The House Financial Services Committee has approved a bill that would make it easier for originators who move across state lines or from a bank to a nonbank.