This week, MHI staff and MHI’s outside counsel McGlinchey Stafford held separate meetings with the Conference of State Bank Supervisors (CSBS) and HUD to discuss the proposed rule regarding the SAFE Act, which was published December 15, 2009. After conferring with industry executives, lenders, community owners, and other interested parties via conference calls the past several weeks, MHI approached both CSBS and HUD with several strategies and suggestions that we believe would comply with the intent and purpose of the SAFE Act, while also clarifying for the manufactured housing industry just how the law would apply to the day-to-day industry practices of selling and financing homes.
Specifically, MHI maintains that Congress did not intend for states to require licensing for the mere taking of an application, and in fact the legislation provides exclusions for administrative or clerical tasks. Moreover, the federal definition of a loan originator requires a person to be licensed if they both take an application and offer or negotiate terms. In addition to clarifying definitions, MHI suggested that clarification be made to indicate that compensation or gain does not include the receipt of a sales commission, thus if there is no compensation then the functions test is not met and the individual is not subject to licensing.
MHI also raised a number of other suggestions, including a de minimis exclusion for smaller businesses that handle a very small number of loans each year, and assistance in eliminating dual licensing requirements for lenders that exist in some states due to the passage of the SAFE Act. MHI also raised the possibility of extending or delaying the implementation date due to the unusual hardship this would bring to those industry members whose specific businesses would require licensure under the SAFE Act.
MHI believes the meetings were very productive in addressing industry concerns. The comment period for the proposed rule concludes February 16, 2010. All of the issues raised by MHI will be incorporated into our comment letter which should be available at the MHI Meeting in Savannah, Feb. 1-2. MHI will be encouraging industry members to use the MHI comment letter as a template for submitting their own comments.
