Good Evening
Good Evening

New state and national rules vary for mortgage officers

Mike McHugh

Mike McHugh

At the minimum, every loan officer in the nation is expected to register on the Nationwide Mortgage Licensing System database by some time next year, get a unique ID number so consumers can check their records by name or number and also have their backgrounds checked.

New York state has licensing requirements that kicked in this month and goes somewhat beyond registrations, as Newsday reports.

What now irks several Long Island industry veterans are differences in state and federal requirements, a setup that defeats the goal of protecting consumers and creates a “competitive disadvantage,” they complained.

For example, New York state law covers employees of mortgage bankers, mortgage brokers and non-bank lenders. It requires them to take courses, pass tests and register in the national database, and fees for all this add up.

But those in banks, their affiliates and federally-chartered institutions, including federal credit unions, are governed by another law, the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. This law requires loan officers to register in the national database but not to take training and tests. The assumption is banks and other firms train and vet their employees under other federal regulations.

“You have to be licensed to cut hair and do other things,” said Mike McHugh, head of the Empire State Mortgage Bankers Association, a trade group dominated by Long Island lenders. “Why not to discuss financial situations on the biggest transaction in someone’s life? There should not be loopholes. People who are not passing the test . . . or do not want to get licensed go work for federal banks. What kind of quality do you think we’re ending up with?”

The association plans to raise the issue with state and federal regulators.

Read more of Inside Long Island Business


More news