Should loan officers be exempt from wage and hour laws?

by Rachel.Norvell08 Oct 2014
The U.S. Supreme Court returned for its October term on Monday and on the docket are two cases that will decide whether mortgage loan officers are exempt from minimum wage and overtime pay regulations.

Perez v. Mortgage Bankers Association and Nickols v. Mortgage Bankers Association follow a 2010 decision by the U.S. Labor Department to begin applying overtime and minimum wage rules to mortgage loan officers.

That 2010 ruling reversed a 2004 finding made during the administration of President George W. Bush that had concluded mortgage loan officers were exempt from the regulations. 

That prompted the MBA to file its case, and in July 2013, the Court of Appeals for the Washington, D.C., Circuit vacated the 2010 decision declaring that mortgage loan officers did not qualify under the “administrative exemption” to overtime pay.

Now the U.S. Supreme Court will decide is whether a federal agency is required to put out a formal notice and take public comment before changing its interpretation of regulations. The decision could affect the 2013 ruling.

In 2010, the Obama administration did not put out a formal notice or take public comment on the change — arguing that the Administrative Procedure Act doesn’t require those measures for regulatory interpretations, according to The Hill.

The MBA argues that the government was required to conduct a formal rule making process, which would have allowed interested parties to submit comments, according to Reuters.

The association previously stated the lending industry has relied on a 2006 Department of Labor opinion letter to the MBA, which underlies regulations indicating that a loan officer can qualify for the administrative exemption under the Fair Labor Standards Act.  MBA claims that the abrupt reversal of this ruling subjects mortgage lenders to unnecessary litigation.

“This abrupt reversal by the department not only opens lenders up to lawsuits for past actions, but also could require them to make costly changes to their internal operations and compensation structure, costs that will ultimately be borne by the consumer,” John Courson, who was president and CEO of MBA between 2009 and 2011, said.

Courson said requiring loan officers to be paid overtime would not increase their compensation and asking them to now track and report their hours will deprive them of their flexible schedules.

Perez v. Mortgage Bankers Association is Supreme Court, No. 13-1041 and Nickols v. Mortgage Bankers Association is No. 13-1052.

What do you think?  Should loan officers receive overtime? Sound off in the comments below.


  • by Drago | 10/8/2014 10:39:12 AM

    The amount of overtime required just to do the job right cannot be accurately measured , but be assured many people are working a lot more hours for free then ever before. And it is happening due to all the new regulations dumped on the banks. You can't do in 40 hours what you could do prior.
    So unless a lot of these regulations can be rolled back, it's only going to continue to get worse.
    Then your mortgage officer will be originator, processor, and part underwriter, every mortgage will take much longer to do.

    No question compensation will have to change if the industry is to survive and keep knowledgeable people who can get mortgages closed.

    Otherwise we are in for another mortgage mess not to far down the road.

  • by Gordon Schlicke | 10/8/2014 12:29:26 PM

    A congressman/senator must call for a hearing on "unfairness in mortgage regulation." The hearing will bring in experts who demonstrate by actual case example what happens in the field. Two or more of the pols decide to write and promote legislation correcting this and create a level playing field. It must go to several committees before being voted upon. Within two or three years a vote may be taken. But this is America. In order to get this done someone must come up with several million dollars so those who vote on the issue can be re-elected. It doesn't stop there because you aren't going to get into the right offices. Lobbyists do that. These are people who used to work in congress but retired. Yes, this sounds cynical. But it is precisely what banks do to escape the clutches of regulators. This is America and it doesn't look like it's going to change soon.

  • by HR | 10/15/2014 6:50:02 AM

    Drago...working for "free"? really? What about all the stuff employees get that employers don't have to give them? Paid time off? breaks? subsidized insurance premiums? and the list goes on. That costs employers dollars... not to mention the employees that spend oodles of time on the Internet while at work, or talking to their kids about football practice that night.... and THAT list goes on. We are talking a bank here....not a 24/7 operation that works it's employees to death.


Should CFPB have more supervision over credit agencies?