Trade Groups Sound Off On SAFE Act Proposal

Posted by Orb Staff on March 09, 2010 No Comments
Categories : Mortgage Servicing

Last week, the Mortgage Bankers Association (MBA), American Bankers Association (ABA), American Financial Services Association (AFSA) and 11 state and local mortgage lending groups filed a comment letter to the U.S. Department of Housing and Urban Development (HUD) expressing serious concerns about several proposed regulations under the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act).

The letter expresses concern that HUD is proposing to exceed its statutory authority under the SAFE Act, establishing a backup system and determining whether state laws meet the SAFE Act's minimum requirements. HUD indicates it may require states to treat servicer employees engaged in loan modifications as originators for the purposes of the act.Â

If the regulation is finalized as proposed, HUD risks significantly curtailing the ability of servicers to complete loan modifications until their employees are registered or licensed, the trade groups say.

Last week, the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, also in a comment letter to HUD, called the licensure of loss mitigation employees "counterproductive in the near term," given the need for servicers to increase staffing.

The MBA letter suggests that HUD "can and should do considerably more to achieve SAFE's central objective of establishing uniform standards for loan originators of state-regulated lenders throughout the nation." As an example, the letter suggests that HUD should clearly indicate that the SAFE law does not preclude and should, in fact, encourage the recognition of out-of-state licenses and provisional licensing of federally registered and other originators pending licensure. Â

Joining MBA, ABA and AFSA in signing the letter were state and local mortgage lending organizations representing California; Colorado; Indiana; Michigan; Missouri; the Carolinas; Florida; Greater Washington, D.C.; Ohio; Texas and Virginia.

SOURCE: Mortgage Bankers Association

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