5 Ways To Improve the Mortgage Industry’s SAFE Act
Fair warning: this post is not intended for a broad based mortgage minded audience, it is for my mortgage brethren, the CFPB, Mick Mulvaney and anyone that has anything to do with CE (continuing education) for SAFE Act licensees. But you are welcome to come along for the ride!
Not long ago, I made my annual sacrifice of a day of my life that I will never get back. This annual sacrifice is both necessary and mandated because I can’t do what I do without my mortgage license. And the SAFE Act enforcement
people require that I donate an entire day of my life each year to their CE. Actually, it’s 12 hours all in in a row except, of course, for a lunch break. And then I have to do another three hours for my New York license.
I do 15 hours sitting in a hotel conference room reviewing, dissecting and studying SAFE Act dos and don’ts and struggling mightily to stay focused and understand how the framers of the Act came up with this bad idea for CE.
Before we go any further, and for the record, I am all for the SAFE Act. I believe in continuing education and I am pro-enforcement for violations and mortgage misdeeds. The Secure and Fair Enforcement for Mortgage Licensing Act was passed in 2008 and was intended to bring order to the Wild West chaos that was the mortgage originations industry.
The SAFE Act worked, it created a framework of rules and regs for participants. It required licensing, it defined violations and enforcement, penalties including fines and even jail time were defined, and it weeded out many of the bad actors that helped bring on the near collapse of the late-mid 2000s.
Fact is, the SAFE Act revolutionized the mortgage industry. We have structure, we have rules and we have consequences and most of the mortgage industry bad guys have taken their nefarious ways to pursue exploitable opportunities elsewhere. I say most, my guess is that we still have a few stragglers.
But 12 hours or 15 hours of mind numbing CE is not going to turn a bad guy into a law abiding SAFE Act compliant good guy. For all of you smart guys at the CFPB, that’s not gonna’ happen. Human nature is what it is and our current CE structure is neither a deterrent or an inducement to fly straight. It is waste of time and completely ineffective.
Hereto with is an industry insider insight: it’s not working, we are not learning anything during these marathon CE enduros, we are just trying to survive until it is over.
I submit that being lectured at with material we already know intimately may not be the best approach to necessary CE. Mortgage loan originators are sales people, we are not sit still people and the onset of brain shut down comes quickly in the CE environment structure that is currently in place. There are lots of smart people at the CFPB, surely they can come up with something better than this.
So while technology and the all powerful smart phone has literally put the world in the palm of our hands, all day marathon CE is more akin to a rotary phone.
Here are some alternatives to the draconian CE structure currently in place:
- Condense annual CE down to 2 hours of the most relevant issues actively plaguing the mortgage industry and include a test at the end;
- Periodic and random audits of individual mortgage loan originator’s loan files using standardized quality assessment criteria;
- Mandatory annual submission of licensing and advertising collateral by all licensees;
- Create and distribute to all licensees, an electronic newsletter that highlights applicable industry updates along with actual violations and enforcement actions of the SAFE Act and identify bad guys by name;
- Allow lenders and organizations to create and implement their own individual and compliant CE programs (Bank of America, Wells Fargo, Citi, Chase, etc. already do this and their mortgage people have NMLS credentials).
Of course, there is by now an industry dedicated to SAFE Act training. Companies across the land contract with lenders to provide all of those hours of mind numbing CE in hotel conference rooms everywhere. And this relatively young industry is not going to go away quietly. There is too much money being made and too many people on the payrolls. And while I am empathetic to the army of trainers that may need to find another line of employment, the current system is just too vulnerable to change, improvement and evolution.
Look at what happened to the pager industry when cell phones took over or the GPS device industry when smart phones added GPS apps. It is what happens.
Mick Mulvaney, are you listening, CFPB, SAFE Act, anyone, Beuller?