Credit Unions Are Not Rushing to Get Loan Officers Registered
BALTIMORE -- Credit unions aren't lining up to have their mortgage lending staff get licensed or registered. The former isn't required, and the means for doing so for the latter isn't yet available. But some in the industry think that CUs would do well to examine whether licensing requirements should be applied to the CU industry.
BECU said in a statement to Credit Union Times, "No, current ruling does not require our originators to be state-licensed or registered. We understand the SAFE Act has been approved by Congress and will require all loan originators to be federally registered by late 2009 or 2010. Currently state guidelines require only mortgage broker loan originators to be state licensed. The final guidelines are not complete, so we are not sure what the stipulations will be for credit unions."
SAFE, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, is part of the Housing and Economic Recovery Act of 2008, the massive bill signed into law on July 30. SAFE requires loan originators to be licensed or registered in a nationwide mortgage licensing system and then to receive a permanent "unique identifier" number.
According to the Pennsylvania Credit Union Association, the law calls for the federal banking agencies and the NCUA through the Federal Financial Institutions Examination Council to develop and maintain a system for registering bank and credit union employees. That registry would be a publicly accessible database of employment and disciplinary history concerning loan originators. PCUA said the program is expected to be in place in August 2009.
Navy Federal Credit Union also said it has no plans to license its mortgage professionals nor does it have any loan officers who are licensed.
Barbara Sheehan, assistant vice president of mortgage products at Navy Federal, also explained that there is an issue of the definition of "loan officer" or the term "mortgage originator," both of which are sometimes called "mortgage counselors."
"Most credit unions do not have the same retail model that banks have traditionally used. This may even be a contributing factor as to why we are not in as much trouble as the banks. Navy Federal Credit Union has a large call center that receives many calls directly from members. They input the application into a system. They do some upfront counseling about our products and have knowledge about qualifying members, but they do not verify any information. The loan is then handed off to the loan officer and processing team that review and advise if changes are needed. "Licensing of anyone that takes an application would include a lot of people if it is not well thought out," Sheehan said.
The NCUA explained in a recent opinion letter that whether an individual meets the definition of loan originator is based on the individual's duties, not job title.
"The distinction is between an individual assisting a consumer in applying for a mortgage, for example, by discussing rates and terms, including different substantive options that might be available, or an individual engaged simply in completing administrative or clerical tasks necessary for the processing of the loan. If an individual has authority to negotiate terms, discuss and counsel about available options, and provide and explain legally required disclosures, the individual is fulfilling loan originator duties.
If, on the other hand, an individual is merely receiving calls and referring the caller to a loan officer who will actually accept the application, or making calls to obtain information necessary for loan processing or underwriting, without engaging in a discussion of available rates or terms, the individual is not an originator," Associate General Counsel Sheila Albin wrote in the NCUA letter.
A spokesman for the $630 million DuPont Community Credit Union in Virginia said that none of its mortgage staff is licensed or registered and that is has no plans to do so at the present time.
But the lack of the professional credentials is an issue of some concern to people like Bob Dorsa, ACUMA president, who believes that being exempted could make credit union mortgage staff look as though they are not as professional as other loan originators under the licensing requirements.
And, there is a rumor swirling that bankers, who were happy to lobby hard on Capitol Hill for the licensing of mortgage brokers after the subprime mortgage lending crisis first came to light, are looking at shaking public confidence in credit unions by pointing out that CUs, with their booming mortgage lending business, employ unlicensed loan originators.
Mortgage brokers have to be licensed under applicable state laws. Licensing requirements vary from state to state but generally include classroom time, a passing score on a written test, background checks including a look at a prospective broker's credit score and a continuing education requirement.
But, while CU loan originators only have to get registered once the nationwide registry is online, CUSOs are under different requirements. NCUA said in its opinion letter that whether the CUSO is owned by a state or federal credit union, individuals employed by CUSOs who engage in loan origination activities must be licensed in accordance with state requirements.