Credit union mortgage lenders face an array of different and very confusing regulatory changes as new rules meant to more tightly oversee the mortgage industry get put into effect, an expert told the American Credit Union Mortgage Association at its Washington, D.C., regional workshop this week.
One significant area of possible confusion and contention arises from federal rules created by the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which is supposed to oversee the registration and, to some extent, tracking of mortgage originators.
Under the new rules, there are areas of conflict between when and under what circumstances, an individual is an mortgage loan originator and when they need to be registered (federal rules) or licensed (state rules).
Further, there are mortgage marketing consequences for much of this. Costas Avrakotos, a lawyer with the law firm of K&L Gates LLP, told the meeting that some of his clients have begun to ask about these issues.
For example, rules implementing the SAFE Act exempted credit unions from having to license their mortgage originators and let them register loan originators instead.
This exempted credit unions from the significant regulatory burden of licensing their employees that take mortgage applications, but it also left them vulnerable to competition from other firms whose employees do have to be licensed, Avrakotos said.
This distinction has begun to pop up in some CUs markets where competitors to banks and credit unions have advertised that their employees have licenses as opposed to the credit unions which do not.
"I have people asking about these ads, can they do that? Can they say that," Avrakotos told meeting attendees. "What I have to say is, yeah, they can, and perhaps your marketing and promotion materials will need to reflect that."
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