The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) have submitted a joint comment letter to the U.S. Department of Housing and Urban Development (HUD) in response to a proposal to implement the SAFE Mortgage Licensing Act.
In the letter, the state regulators highlight that the SAFE Act sets minimum federal requirements for mortgage licensing standards, while permitting states to set higher standards. The CSBS and AARMR say the state-federal partnership has "significantly improved" uniformity in mortgage licensing, while permitting states to use their knowledge of local market conditions to tailor regulation to their communities.
In the letter, CSBS and AARMR address several specific policy points of HUD's proposed rule, including the following:
- CSBS and AARMR encourage HUD to ensure states retain flexibility to make licensing determinations based on an assessment of the individual's scope of activities and the context in which they are performed. The need for state flexibility is important in assessing licensure requirements for individuals working for nonprofit organizations and for individuals performing loan processor or underwriting functions, the regulators say.
- The regulators, while noting frustration with the pace of loss mitigation efforts, say the "pressing and immediate need for servicers to increase staffing" make the requirement for licensure of loss mitigation employees counterproductive in the near term.
- Individuals working for third-party loan modification companies should be licensed as loan originators and regulated to the same degree as employees working for a broker or lender.
CSBS and AARMR also provided a progress report on the actions taken by state authorities to implement the requirements of the SAFE Act. Within one year of the SAFE Act's passage, 49 states, the District of Columbia and the U.S. Virgin Islands had enacted legislation to meet the requirements of the SAFE Act. The few remaining state jurisdictions have developed legislative proposals that will be considered during the 2010 legislative sessions.
In addition to mandating state laws and regulations, the SAFE Act contained seven specific mandates for the Nationwide Mortgage Licensing System and Registry. In a little over 18 months since the passage of the SAFE Act, more than 43,000 tests have been administered through a network of more than 500 professional test sites.