Minnesota would adopt new mortgage industry regulations meant to protect homebuyers, under a bill that won division approval April 7.
Sponsored by Rep. Joe Mullery (DFL-Mpls), HF2600 would enact the “Secure and Fair Enforcement” (SAFE) mortgage licensing act — a set of federal regulations meant to protect homebuyers from corrupt and incompetent mortgage loan originators. The regulations were signed into law by former President George W. Bush in 2008, and all states are required to comply. Minnesota is the only state that has not yet adopted the act.
“I got a call from the banking commissioner of Massachusetts in August. He said, ‘I know you’re kind of independent up there (in Minnesota), but are you seceding or what?’” Mullery said.
He added that failure to pass the bill this year could result in the U.S. Department of Housing and Urban Development taking over mortgage regulation in Minnesota.
“If we don’t pass it this year, the federal government, under their law, has the right to come in and set up a licensing system on their own and charge us whatever they want,” Mullery said.
The bill specifies minimum educational and continuing education requirements for mortgage originators, and requires testing to measure originators’ knowledge and comprehension of ethics and state and federal laws.
Additionally, the bill would require background checks and fingerprinting of loan originators. Each licensed individual would be assigned a unique identification number in the national registry. Felons, people guilty of financial crimes and people whose licenses have ever been revoked would not be allowed to attain a license.
Commerce Department Commerce Analysis Supervisor Robin Brown said that whereas Minnesota currently licenses mortgage lending institutions, the bill would make it so that the individual mortgage originators are licensed instead, and also registered within a new national licensing system.
A companion, SF2643, has been incorporated into SF2839, which awaits action by the full Senate. Sen. Linda Scheid (DFL-Brooklyn Park) is the sponsor.
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