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114th Congress   }                                   {   Rept. 114-316
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                   {          Part 1

======================================================================



 
                 STATE LICENSING EFFICIENCY ACT OF 2015

                                _______
                                

October 28, 2015.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2643]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2643) to direct the Attorney General to provide 
State officials with access to criminal history information 
with respect to certain financial service providers required to 
undergo State criminal background checks, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                          Purpose and Summary

    Introduced by Representative Williams, H.R. 2643, the 
``State Licensing Efficiency Act of 2015,'' amends the Secure 
and Fair Mortgage Licensing Act of 2008 (SAFE Act) by directing 
the Attorney General to provide appropriate state officials 
responsible for regulating financial service providers with 
access to criminal history information to the extent that 
criminal history background checks are required under state law 
for the licensing of such parties.
    In 2006, the states, under the auspices of the Conference 
of State Bank Supervisors (CSBS), developed the Nationwide 
Mortgage Licensing System and Registry (NMLS). According to 
CSBS, the NMLS platform was designed to provide ``improved 
coordination and information sharing among regulators, 
increased efficiencies for industry, and enhanced consumer 
protection.''\1\ Congress codified the NMLS in 2008 through the 
SAFE Act.
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    \1\http://mortgage.nationwidelicensingsystem.org/about/Pages/
default.aspx
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    Section 1511(a) of the SAFE Act requires background checks 
for all mortgage loan originators (MLOs), regardless of whether 
they are regulated at the state or federal level, and 
authorizes the FBI to provide that information. Section 1511(b) 
of the SAFE Act expressly authorizes CSBS to act as a 
``channeler'' of the FBI's comprehensive database of criminal 
history information, meaning that CSBS can act as an agent 
between the FBI and parties seeking criminal background 
information on mortgage loan originators for state licensing 
purposes. The FBI authorizes this practice for civil purposes 
(where supported by state or federal law, such as licensing and 
employment), and encourages ``channeling'' in order to 
alleviate the burden on state criminal justice agencies.
    As a nationwide credentialing and background check 
platform, NMLS, as operated under SAFE Act authority, is 
successful enough that state licensing agencies have attempted 
to utilize it for the credentialing and licensing of other 
regulated non-depository financial service providers. However, 
the SAFE Act only expressly authorizes the release of criminal 
history background information to state officials who regulate 
mortgage loan originators.

                  Background and Need for Legislation

    The Financial Services Committee intends that H.R. 2643 
authorizes the NMLS to process criminal background checks for 
non-depository licensees beyond mortgage loan originators 
(MLOs).
    The Committee is aware that the FBI, citing a lack of 
statutory authority to disseminate criminal history record 
information to a nongovernmental entity, has rejected requests 
from states seeking to obtain background checks for license 
applicants not engaged in mortgage lending.
    A number of states have expanded the use of NMLS to include 
licensing of non-bank financial services companies not engaged 
in mortgage lending. The purpose of H.R. 2643 is to authorize 
the NMLS to process state-required criminal background checks 
for applicants seeking state licensure as financial service 
providers. The SAFE Act currently requires applicants seeking 
licensure as MLOs to have criminal background checks processed 
through the NMLS. To support the states' expanded use of NMLS 
as a licensing system, this Act will enable state officials, 
pursuant to state law, to obtain background checks efficiently 
through NMLS for this broader set of state-licensed financial 
services providers.
    This Act authorizes only state-licensed loan originators 
and other state-licensed financial service providers to be 
processed through NMLS for background checks authorized under 
the laws of the state. This Act may not be construed as a 
mandate to require states to license or register any additional 
class of financial services providers, nor to encourage or 
discourage states from processing background checks for license 
applicants through NMLS.

                                Hearings

    The Committee on Financial Services' Subcommittee on 
Financial Institution and Consumer Credit held a hearing 
examining matters relating to H.R. 2643 on June 11, 2015.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 28, 2015 and July 29, 2015, and ordered H.R. 2643 to be 
reported favorably to the House without amendment by a recorded 
vote of 57 yeas to 0 nays (recorded vote no. FC-56), a quorum 
being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole record vote in Committee was a motion by Chairman 
Hensarling to report the bill favorably to the House as 
amended. The motion was agreed to by a recorded vote of 57 yeas 
to 0 nays (Record vote no. FC-56), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2643 
will facilitate the licensing of non-depository financial 
services entities beyond mortgage loan originators (MLOs) by 
permitting the NMLS to process criminal background checks for 
such licensees.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 6, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2643, the State 
Licensing Efficiency Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz and Susan Willie.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2643--State Licensing Efficiency Act of 2015

    H.R. 2643 would change the process used by state regulators 
to request that the Department of Justice (DOJ) conduct 
criminal history checks on certain providers of financial 
services. CBO expects those changes would reduce the number of 
duplicative requests for criminal history checks. DOJ collects 
a fee of about $20 for this service (which is treated as an 
offset to discretionary spending) and the department spends 
those collections mostly in the same year. Thus, CBO estimates 
that implementing the bill would not have a significant net 
effect on spending for DOJ.
    Based on information from the Consumer Financial Protection 
Bureau (CFPB), CBO expects that enacting H.R. 2643 would not 
significantly affect the agency's workload because no 
additional rulemaking action would be required. The CFPB is 
permanently authorized to spend amounts transferred from the 
Federal Reserve System; therefore, any changes in spending by 
the agency would be recorded in the budget as direct spending. 
Because the bill could affect direct spending, pay-as-you-go 
procedures would apply; however, we estimate that any such 
effects would be negligible. Enacting H.R. 2643 would not 
affect revenues.
    H.R. 2643 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no costs on state, local, or tribal governments.
    The CBO staff contacts for this estimate are Mark Grabowicz 
and Susan Willie. The estimate was approved by H. Samuel 
Papenfuss, Deputy Assistant Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2643 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    Duplication of Federal Programs

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 2643 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(k) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 2643 contains no directed 
rulemaking.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 2643 as the ``State Licensing 
Efficiency Act of 2015.''

Section 2. Background checks

    This section amends the SAFE Mortgage Licensing Act of 2008 
to authorize the NMLS to process criminal background checks for 
non-depository licensees beyond mortgage loan originators.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

S.A.F.E. MORTGAGE LICENSING ACT OF 2008

           *       *       *       *       *       *       *



DIVISION A--HOUSING FINANCE REFORM

           *       *       *       *       *       *       *


TITLE V--S.A.F.E. MORTGAGE LICENSING ACT

           *       *       *       *       *       *       *


SEC. 1511. BACKGROUND CHECKS OF LOAN ORIGINATORS.

  (a) Access to Records.--Notwithstanding any other provision 
of law, in providing identification and processing functions, 
the Attorney General shall provide access to all criminal 
history information to the appropriate State officials 
responsible for regulating State-licensed loan originators and 
other financial service providers to the extent criminal 
history background checks are required under the laws of the 
State for the licensing of such loan originators or other 
financial service providers.
  (b) Agent.--For the purposes of this section and in order to 
reduce the points of contact which the Federal Bureau of 
Investigation may have to maintain for purposes of subsection 
(a), the Conference of State Bank Supervisors or a wholly owned 
subsidiary may be used as a channeling agent of the States for 
requesting and distributing information between the Department 
of Justice and the appropriate State agencies.

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