SAFE Act Confidentiality and Privilege Enhancement Act

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 4626) to ensure access to certain information for financial services industry regulators, and for other purposes.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous materials for the Record on H.R. 4626, currently under consideration.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I rise today in strong support of the Safe Act Confidentiality and Privilege Enhancement Act, legislation that I introduced this year.

One of the lessons learned from the financial crisis of the last decade was there were significant gaps in communication between State regulators. Duplicitous mortgage originators were able to move from State to State, virtually undetected, perpetuating fraud on consumers. In response, Congress passed the SAFE Act, which required all mortgage loan originators to be licensed and registered through the National Mortgage Licensing System and Registry. The SAFE Act also set minimum licensing standards that States must meet.

Since its creation in 2008, this registry has allowed State regulators to efficiently search a mortgage loan originator's history and detect previous fraudulent behavior.

The success of this registry has not gone unnoticed. Since April 2012, State regulators have been working with other financial services providers to use the NMLS as a platform for the licensing and registry of other financial services providers, like money service businesses, debt collectors, pawnbrokers, and check cashers. In fact, my home State of West Virginia is now using this platform for their money service businesses.

The use of this national licensing system not only provides efficiencies for the regulated businesses, but it also strengthens consumer protections for the licensed products. The licensing of these providers and the sharing of information between State regulators helps ensure that the consumers are properly protected from fraudulent lending. These registries will allow State regulators to better track fraudulent actors, making it less likely that these fraudsters can obtain a license to do business and harm consumers.

H.R. 4626 provides a minor amendment to the SAFE Act, ensuring that information shared between the State financial services regulators is protected. My legislation simply clarifies that information that is shared with these State regulators receives the same privileged and confidential treatment that is currently afforded to State banking and mortgage regulators. Without this minor change, there will be gaps in the system that could limit information sharing.

During a hearing in the Financial Institutions and Consumer Credit Subcommittee 2 weeks ago, West Virginia Division of Financial Institutions Commissioner Sally Cline said: ``This possible gap limits the States' ability to use NMLS as a licensing system for nonmortgage financial services providers. The change proposed by H.R. 4626 addresses this uncertainty and would provide me and West Virginia- regulated entities with certainty that confidential or privileged information shared through NMLS would continue to be protected under State and Federal law.''

Ensuring the confidentiality of the shared information will bolster the effectiveness of these national registries. Expanding licensing to new lines of business and tracking those that are licensed will better protect consumers in my State and across the country.

Mr. Speaker, I urge support of this legislation, and I reserve the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

I would like to thank my friend from Colorado for his support of this and for his service on the committee. He is a great member of the Financial Services Committee.

Mr. Speaker, I would just like to reiterate that ensuring confidentiality will bring about more effectiveness with the national registers. We are responding basically to what a lot of our State regulators have asked us to do, to make sure that they better protect consumers and are able to keep the information in a privileged and confidential manner.

With that, I would urge passage of the bill, and I yield back the balance of my time.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, H.R. 4626, introduced by Chairwoman Capito, aims at protecting shared information in the mortgage and financial services industry by putting safeguards on confidentiality.

The bill is very simple. It applies the same confidentiality standards to information shared with State regulators regarding nondepository financial services companies that it enjoyed prior to being entered into the national mortgage licensing system, as long as that information is shared through the Nationwide Mortgage Licensing System among all mortgage regulators.

In the lead-up to the financial crisis, State regulators and Congress recognized the need to oversee the mortgage industry more comprehensively and efficiently by promoting smart and efficient financial regulations to State-licensed, nonbank financial services providers.

H.R. 4626 helps develop the Nationwide Mortgage Licensing System, NMLS, so that regulators retain the ability to keep track of bad actors and provide responsible mortgage providers with greater efficiency and consistency in the licensing process.

H.R. 4626 does not create any additional privilege or confidentiality rights, but the SAFE Act currently provides that information shared through the Nationwide Mortgage Licensing System among mortgage industry regulators retains existing State and Federal privilege and confidentiality protections.

The bill makes it so that these privileges and confidentiality protections remain as long as the information is shared with another mortgage regulator.

Mr. Speaker, the bill addresses uncertainty of confidentiality by clarifying that confidential or privileged information shared through the NMLS would continue to be protected under State and Federal law.

This bill will increase the cooperation--and I think this is the key piece--this bill will increase the cooperation between Federal and State regulators while ensuring that the NMLS fulfills its mission to enhance consumer protection and stability in the mortgage lending industry.

This is a good bill. It should be passed by the House of Representatives. It provides for safety for the home mortgage lending system and the licensure system. It provides for cooperation between Federal regulators and State regulators while preserving confidentiality rights of folks who are part of the licensing system, so I think a number of different goals are achieved.

I thank the gentlewoman from West Virginia for introducing this bill. With that, I urge its passage, and I yield back the balance of my time.