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House approves mandatory licensing for mortgage loan officers after debate on fraud and enforcement
Summary
The House passed a second-substitute to HB 249 requiring mandatory licensing and continuing education for mortgage loan officers, 51–20, after extended debate about mortgage fraud in Utah, enforcement capacity and whether a voluntary certification would suffice.
The Utah House on Feb. 26 approved second-substitute House Bill 249, a measure to require licensing and continuing education for mortgage loan officers, after a lengthy floor debate about fraud, enforcement and industry standards.
Representative Brent Parker, sponsor of the second substitute, said the measure responds to widespread mortgage fraud and will raise consumer protections by making licensure mandatory where previously there was none. Parker said federal and state investigations and FBI case work show Utah among the states with elevated mortgage-fraud activity and told colleagues that mandatory testing and licensing will help restore the market’s integrity and lower rates that he said have risen because of the state’s record.
Opponents urged caution and urged giving voluntary certification more time. They noted prior work on House Bill 277 — a voluntary certification measure — and said a voluntary approach would let industry groups step up. Several members also questioned enforcement capacity and whether state agencies have sufficient staff to police a newly licensed industry.
Lawmakers debated whether the measure should cover federally regulated depository lenders and whether reciprocity for out-of-state lenders should be included; sponsors said the bill provides for licensing of out-of-state lenders and allows adjustment for reciprocity if tests and standards are comparable.
The House adopted Representative Parker’s amendment to add fiduciary responsibilities for individual licensees at the request of the Division of Real Estate. After debate and a motion to cut off further discussion, the Clerk recorded the vote: second substitute HB 249 passed the House 51 yes, 20 no, and will be forwarded to the Senate for further consideration.
The bill’s passage follows months of industry and agency consultation, including input from the Division of Real Estate, the Division of Finance and mortgage-industry groups that participated in drafting revisions.
Following the vote, sponsors said current employees would be grandfathered for a year if they can pass the competency test; the bill removes seat-time education requirements, retaining a single-test standard for existing workers who must pass within the grace period.
The House will next transmit the measure to the Senate where it will be considered under that chamber’s rules.
