[House Report 115-552]
[From the U.S. Government Publishing Office]


115th Congress    }                                     {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                     {      115-552

======================================================================

 
   TO AMEND THE S.A.F.E. MORTGAGE LICENSING ACT OF 2008 TO PROVIDE A 
TEMPORARY LICENSE FOR LOAN ORIGINATORS TRANSITIONING BETWEEN EMPLOYERS, 
                         AND FOR OTHER PURPOSES

                                _______
                                

 February 13, 2018.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2948]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2948) to amend the S.A.F.E. Mortgage Licensing 
Act of 2008 to provide a temporary license for loan originators 
transitioning between employers, and for other purposes, having 
considered the same, reports favorably thereon without 
amendment and recommends that the bill do pass.

                          Purpose and Summary

    Introduced on June 20, 2017, by Representative Stivers, 
H.R. 2948 amends the Secure and Fair Enforcement (SAFE) 
Mortgage Licensing Act of 2008 to provide temporary loan-
origination authority for registered loan originators: (1) 
moving from a financial institution to a state-licensed non-
bank originator, or (2) moving interstate to a state-licensed 
loan originator in another state. This legislation also updates 
civil liability protections to ensure that those protections 
continue to apply where state regulators use the National 
Mortgage Licensing System and Registry (NMLS) as a licensing 
system for financial services providers other than loan 
originators.

                  Background and Need for Legislation

    Congress enacted the Secure and Fair Enforcement (SAFE) 
Mortgage Licensing Act of 2008 (``SAFE Act'') as part of the 
Housing and Economic Recovery Act (HERA). The SAFE Act created 
state licensing or registration requirements for mortgage loan 
originators (MLOs). MLOs working as loan officers in federally-
regulated depository institutions were required to register 
with the National Mortgage Licensing System and Registry 
(NMLS). MLOs working for non-depository mortgage companies were 
required to become licensed at the state level, complete annual 
continuing education, and pass criminal background checks.
    Because bank loan officers are not state-licensed MLOs, a 
problem arises when an individual wishes to leave a bank and 
instead work for a non-bank mortgage company: he or she must 
wait until completing the SAFE Act's state licensure 
requirements--a process that can take weeks or months, 
depending upon the state--in order to originate loans for the 
mortgage company, notwithstanding his or her prior experience 
as a registered bank loan officer. Under current law, the SAFE 
Act allows for a 60-day grace period for changes in employment 
due to acquisitions, mergers, and reorganizations, but does not 
provide for a grace period or other transitional accommodation 
for bank loan officers seeking to work for non-bank mortgage 
companies.
    H.R. 2948 makes it easier for a registered bank MLO to 
transition to a non-bank mortgage company, or for a state-
licensed MLO to move to another state. The bill grants such 
persons temporary authority to originate loans for up to 120 
days after submitting their application for licensure. H.R. 
2948 also establishes eligibility requirements for MLOs seeking 
transitional loan origination authority. For instance, 
registered MLOs seeking to move to a non-depository mortgage 
company must have been registered as an MLO in the NMLS for the 
12 months immediately prior to seeking the transitional 
authority. Additionally, the registered MLO must:
           Not have had an application for an MLO 
        license revoked or suspended in any governmental 
        jurisdiction;
           Not have been subject to a cease and desist 
        order;
           Not have been convicted of a felony that 
        would make the individual ineligible for licensure; and
           Have submitted an application to be a state-
        licensed MLO through the NMLS.
    H.R. 2948 establishes similar transitional authority for a 
state-licensed MLO to originate mortgages in a different state, 
provided that the person is employed by the mortgage company in 
the state where licensure is sought and has:
           Not had an application for an MLO license 
        revoked or suspended in any governmental jurisdiction;
           Not been subject to a cease and desist 
        order;
           Not been convicted of a felony that would 
        make the individual ineligible for licensure;
           Submitted an application to be a state-
        licensed MLO through the NMLS; and
           Maintained licensure in the first state for 
        the 30-day period preceding the date of application 
        submission.
    H.R. 2948 provides that both the MLO and the company hiring 
the MLO are subject to the SAFE Act and applicable state law as 
if the MLO were duly licensed, thus enabling state regulators 
to fulfill their obligations as regulators of mortgage 
companies and individual MLOs under the SAFE Act and state 
financial and consumer protection laws.
    Finally, H.R. 2948 includes a technical change to Section 
1513 of the SAFE Act to update the SAFE Act's existing civil 
liability protections to ensure that those protections continue 
to apply where state regulators use the NMLS as a licensing 
system for financial services providers other than loan 
originators.
    In a December 12, 2017, letter of support, the Mortgage 
Bankers Association expressed its support for H.R. 2948, 
stating:

          Rather than leaving a job on a Friday and starting a 
        new job on a Monday, an MLO who moves from a bank to a 
        non-bank lender must sit idle for weeks, and sometimes 
        months, unable to engage in loan origination activities 
        while they complete the SAFE Act's licensing and 
        testing requirements--despite the fact they have 
        already been registered in the NMLS and originating 
        loans. H.R. 2948 promotes a fair and competitive labor 
        market by eliminating barriers to the ability of non-
        bank lenders (especially small lenders) to compete for 
        talented staff, and allowing MLOs to more easily move 
        to the employer that offers them the best chance to 
        succeed.

                                Hearings

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 2948 on April 26, 2017, and 
April 28, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
December 12, 2017, and ordered H.R. 2948 to be reported 
favorably to the House without amendment by a recorded vote of 
60 yeas to 0 nays (Record vote no. FC-129), a quorum being 
present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 60 yeas to 0 nays 
(Record vote no. FC-129), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2948 
will provide a temporary license for loan originators 
transitioning between employers, and for other purposes, would 
amend the S.A.F.E. Mortgage Licensing Act of 2008 to provide 
temporary loan-origination authority for registered loan 
originators: (1) moving from a financial institution to a 
state-licensed non-bank originator, or (2) moving interstate to 
a state-licensed loan originator in another state.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 12, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2948, a bill to 
amend the S.A.F.E. Mortgage Licensing Act of 2008 to provide a 
temporary license for loan originators transitioning between 
employers, and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 2948--A bill to amend the S.A.F.E. Mortgage Licensing Act of 2008 
        to provide a temporary license for loan originators 
        transitioning between employers, and for other purposes

    The Nationwide Mortgage Licensing System (NMLS) was 
established by a consortium of states in response to 
requirements of the Housing and Economic Recovery Act of 2008 
that mandated the creation of such a system. The purpose of the 
NMLS is to track people who provide mortgages--across state 
lines and through changes in employment--to ensure that they 
meet certain qualifications and cannot evade pending regulatory 
action by moving to a new state or changing employers.
    H.R. 2948 would provide temporary authority for licensed 
mortgage originators to work in a new state or under a new 
employer--if the employer is a state-licensed mortgage 
company--for up to 120 days or until a new license is issued. 
Licensed originators with certain active or previous regulatory 
violations would not be eligible to obtain the new temporary 
status.
    Using information from the Consumer Financial Protection 
Bureau (CFPB), CBO estimates that rulemaking to implement the 
registration requirements would cost $1 million. The CFPB is 
permanently authorized to spend amounts transferred from the 
Federal Reserve to fund its operations. Because that funding is 
not subject to appropriation, the CFPB's expenditures are 
recorded in the budget as direct spending.
    Using information from the Department of Housing and Urban 
Development and the NMLS, CBO estimates that enacting H.R. 2948 
would have no significant net effect on the collection of 
licensing fees (which are considered revenues) or on the NMLS's 
subsequent spending of those fees for its operations. Any 
change in the timing of when fees are collected would be 
insignificant.
    Because enacting the bill would affect direct spending and 
revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 2948 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 2948 contains no private-sector mandates as defined in 
the Unfunded Mandates Reform Act (UMRA).
    H.R. 2948 would impose an intergovernmental mandate as 
defined in UMRA by preempting state licensing laws. The bill 
would grant a temporary license for some loan originators who 
become employed by a state-licensed mortgage company. Because 
the preemption would impose no duty on state governments that 
would result in additional spending or a loss of revenues, CBO 
estimates that the cost of the intergovernmental mandate would 
fall well below the UMRA threshold ($78 million in 2017, 
adjusted annually for inflation).
    The CBO staff contacts for this estimate are Stephen Rabent 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was approved by H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee estimates that the bill requires no 
directed rulemakings within the meaning of such section.

             Section-by-Section Analysis of the Legislation


Section 1. Eliminating barriers to jobs for loan originators

    This section provides temporary loan-origination authority 
to registered loan originators: (1) moving from a financial 
institution to a state-licensed non-bank originator, or (2) 
moving interstate to a state-licensed loan originator in 
another state. This section further provides that both the 
mortgage loan originator and the company hiring the MLO are 
subject to the SAFE Act and applicable state law as if the MLO 
were duly licensed.

Section 2. Amendment to civil liability of the bureau and other 
        officials

    This section updates the SAFE Act's existing civil 
liability protections to ensure that those protections continue 
to apply where state regulators use the NMLS as a licensing 
system for financial services providers other than loan 
originators.

Section 3. Effective date

    This section states that the Act takes effect 18 months 
after enactment.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

               HOUSING AND ECONOMIC RECOVERY ACT OF 2008

SEC. 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Housing and 
Economic Recovery Act of 2008''.
  (b) Table of Content.--The table of contents for this Act is 
as follows:

Sec. 1. Short title; table of contents.
     * * * * * * *

                TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

     * * * * * * *
Sec. 1518. Employment transition of loan originators.

           *       *       *       *       *       *       *


DIVISION A--HOUSING FINANCE REFORM

           *       *       *       *       *       *       *


                TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

SEC. 1501. SHORT TITLE.

  This title may be cited as the ``Secure and Fair Enforcement 
for Mortgage Licensing Act of 2008'' or ``S.A.F.E. Mortgage 
Licensing Act of 2008''.

           *       *       *       *       *       *       *


SEC. 1513. LIABILITY PROVISIONS.

  The Bureau, any State official or agency, or any organization 
serving as the administrator of the Nationwide Mortgage 
Licensing System and Registry or a system established by the 
Director under section 1509, or any officer or employee of any 
such entity, shall not be subject to any civil action or 
proceeding for monetary damages by reason of the good faith 
action or omission of any officer or employee of any such 
entity, while acting within the scope of office or employment, 
relating to the collection, furnishing, or dissemination of 
information concerning persons who [are loan originators or are 
applying for licensing or registration as loan originators.] 
have applied, are applying, or are currently licensed or 
registered through the Nationwide Mortgage Licensing System and 
Registry. The previous sentence shall only apply to persons in 
an industry with respect to which persons were licensed or 
registered through the Nationwide Mortgage Licensing System and 
Registry on the date of the enactment of this sentence.

           *       *       *       *       *       *       *


SEC. 1518. EMPLOYMENT TRANSITION OF LOAN ORIGINATORS.

  (a) Temporary Authority to Originate Loans for Loan 
Originators Moving From a Depository Institution to a Non-
depository Institution.--
          (1) In general.--Upon employment by a State-licensed 
        mortgage company, an individual who is a registered 
        loan originator shall be deemed to have temporary 
        authority to act as a loan originator in an application 
        State for the period described in paragraph (2) if the 
        individual--
                  (A) has not had an application for a loan 
                originator license denied, or had such a 
                license revoked or suspended in any 
                governmental jurisdiction;
                  (B) has not been subject to or served with a 
                cease and desist order in any governmental 
                jurisdiction or as described in section 
                1514(c);
                  (C) has not been convicted of a felony that 
                would preclude licensure under the law of the 
                application State;
                  (D) has submitted an application to be a 
                State-licensed loan originator in the 
                application State; and
                  (E) was registered in the Nationwide Mortgage 
                Licensing System and Registry as a loan 
                originator during the 12-month period preceding 
                the date of submission of the information 
                required under section 1505(a).
          (2) Period.--The period described in paragraph (1) 
        shall begin on the date that the individual submits the 
        information required under section 1505(a) and shall 
        end on the earliest of--
                  (A) the date that the individual withdraws 
                the application to be a State-licensed loan 
                originator in the application State;
                  (B) the date that the application State 
                denies, or issues a notice of intent to deny, 
                the application;
                  (C) the date that the application State 
                grants a State license; or
                  (D) the date that is 120 days after the date 
                on which the individual submits the 
                application, if the application is listed on 
                the Nationwide Mortgage Licensing System and 
                Registry as incomplete.
  (b) Temporary Authority To Originate Loans for State-Licensed 
Loan Originators Moving Interstate.--
          (1) In general.--A State-licensed loan originator 
        shall be deemed to have temporary authority to act as a 
        loan originator in an application State for the period 
        described in paragraph (2) if the State-licensed loan 
        originator--
                  (A) meets the requirements of subparagraphs 
                (A), (B), (C), and (D) of subsection (a)(1);
                  (B) is employed by a State-licensed mortgage 
                company in the application State; and
                  (C) was licensed in a State that is not the 
                application State during the 30-day period 
                preceding the date of submission of the 
                information required under section 1505(a) in 
                connection with the application submitted to 
                the application State.
          (2) Period.--The period described in paragraph (1) 
        shall begin on the date that the State-licensed loan 
        originator submits the information required under 
        section 1505(a) in connection with the application 
        submitted to the application State and end on the 
        earliest of--
                  (A) the date that the State-licensed loan 
                originator withdraws the application to be a 
                State-licensed loan originator in the 
                application State;
                  (B) the date that the application State 
                denies, or issues a notice of intent to deny, 
                the application;
                  (C) the date that the application State 
                grants a State license; or
                  (D) the date that is 120 days after the date 
                on which the State-licensed loan originator 
                submits the application, if the application is 
                listed on the Nationwide Mortgage Licensing 
                System and Registry as incomplete.
  (c) Applicability.--
          (1) Any person employing an individual who is deemed 
        to have temporary authority to act as a loan originator 
        in an application State pursuant to this section shall 
        be subject to the requirements of this title and to 
        applicable State law to the same extent as if such 
        individual was a State-licensed loan originator 
        licensed by the application State.
          (2) Any individual who is deemed to have temporary 
        authority to act as a loan originator in an application 
        State pursuant to this section and who engages in 
        residential mortgage loan origination activities shall 
        be subject to the requirements of this title and to 
        applicable State law to the same extent as if such 
        individual was a State-licensed loan originator 
        licensed by the application State.
  (d) Definitions.--In this section, the following definitions 
shall apply:
          (1) State-licensed mortgage company.--The term 
        ``State-licensed mortgage company'' means an entity 
        licensed or registered under the law of any State to 
        engage in residential mortgage loan origination and 
        processing activities.
          (2) Application state.--The term ``application 
        State'' means a State in which a registered loan 
        originator or a State-licensed loan originator seeks to 
        be licensed.

           *       *       *       *       *       *       *


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