MBA and Others Express Grave Concerns About Regulations Proposed Under SAFE Act

The Mortgage Bankers Association (MBA), American Bankers Association (ABA), American Financial Services Association (AFSA) and 11 state and local mortgage lending groups filed a comprehensive 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.  In this regard, HUD indicates it may require states to treat servicer employees engaged in loan modifications as originators for the purposes of the Act.  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 letter's central theme is 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.   

Joining MBA, ABA and AFSA in signing the letter are state and local mortgage lending organizations representing California, Colorado, Indiana, Michigan, Missouri, the Carolinas, Florida, Greater Washington (DC), Ohio, Texas and Virginia.