KENNEWICK, Wash.–In support of recent letters it has sent to regulators calling for the ease or elimination of certain mortgage-related compliance requirements–arguing the rules impose significant burdens with little benefit to consumers—Endangered Small Credit Union Defense (ESCUD) has added several examples to its “Hall of Horrors.”
As the CU Daily reported here, in two letters dated March 20, the Endangered Small Credit Union Defense (ESCUD) called on both the National Credit Union Administration and the Consumer Financial Protection Bureau to scale back enforcement of requirements tied to the Nationwide Multistate Licensing System (NMLS) and the Secure and Fair Enforcement for Mortgage Licensing Act.
‘Possibly the Most Time-Wasting Website of All Time’
In the case of the NMLS, Doug Wadsworth, CEO of Tri-CU Federal Credit Union in Washington, who heads up the organization that represents small credit unions, added a post that states, “Possibly the most complicated, non-intuitive, labor-intensive, time-wasting website ever created in bureaucrat history. It requires any small CU employee who even talks about a home equity loan, to go through this highly complex registration process with this national system, pay a fee to enroll, fingerprints, and then annual renewal, plus annual renewal expense of institution. Their website is impossible to navigate, so every website every visit requires a call for technical support, (they keep publishing instruction BOOKS because of the bad reviews, that don’t help and make it take even longer… an instruction book to renew something?).
“In addition, regulations require every single document, through every stage of the mortgage lending process, to have the unique NMLS number of each different employee and the institution, and it is particularly challenging (at a small CU) to configure different loan systems and documents types to pull this information in, and of course it is something that the NCUA examiners militantly examine, and threaten DORs on in case there is one in 20 documents that somehow there was a computer bug with,” Wadsworth continued.
‘Any Value in This?’
“And honestly, has any person in history ever received any value from this? Do any of our members even know what it is or notice it? How many mortgage applicants “look up” that NMLS number after they come apply at a small Credit Union? I would wager less than three times, in 10 years and millions of loans. This regulation originated with some CYA politician who wanted their name on a piece of legislation, so they would look good to their voters after the 2008 housing crash. IE: A solution, without a problem.”
‘Extremely Frustrating’
Added another CEO in an anonymous comment, “This one is extremely frustrating! We don’t even offer mortgages in-house, but have to have this NMLS # to even talk to members about how our mortgage process with our 3rd party works. Currently I’m the only one with a NMLS # and have been trying for the past YEAR to get 2 of my staff registered! They’ve [NMLS] lost the applications one time, lost fingerprints another time, and we’ve gone through the entire process, 3 times so far. It takes time (my staff have to be given time off to go get their fingerprints, which is not local) and we’ve paid the application fee 3 times now too! And they still don’t have their NMLS #’s!!”
2 Responses
ESCUD is getting more small CU stories on the NMLS Burden:
CEO A Feedback: This one is extremely frustrating! We don’t even offer mortgages in-house, but have to have this NMLS # to even talk to Members about how our mortgage process with our 3rd party works. Currently I’m the only one with a NMLS # and have been trying for the past YEAR to get 2 of my staff registered! They’ve [NMLS] lost the applications one time, lost fingerprints another time, and we’ve gone through the entire process, 3 times so far. It takes time (my staff have to be given time off to go get their fingerprints, which is not local) and we’ve paid the application fee 3 times now too! And they still don’t have their NMLS #’s!!
CEO LW: The NMLS processing system and annual verification requirements create administrative burden on our staff, and it really doesn’t mitigate any risk. With a very limited amount of mortgage loan originators on staff, the time spent navigating renewals and ongoing compliance tasks takes valuable resources away from member service and day-to-day operations. For smaller credit unions that already operate with transparency and accountability, the process can feel more like a box-checking exercise than a meaningful safeguard, ultimately reducing efficiency without delivering a clear benefit to our members or our organization.
CEO JS: Hi Doug, I agree 100% and am happy to provide my input on NMLS: “The NMLS website is extremely confusing and frustrating—frequent lockouts and time-consuming password resets, which always require a phone call, are a constant hassle. I’ve accidentally submitted duplicate payments due to the confusing interface and never received refunds. We don’t even offer in-house mortgages, using a third-party provider, so all this compliance work feels unnecessary and a major drain on time and resources.”
CEO MK: “We process an average of 10 mortgage loans a year, including first and second position loans. Just the NMLS licensing and user credentials add over $30 in cost to each loan, not to mention the extra staff time to make sure the number is on the appropriate documents, preparing for the SAFE Act audit, and training. The real kicker is the expense of the audit. That takes the SAFE Act cost per loan over $400. Over $400 in closing cost reductions is what would really benefit our members, not a monitoring system to catch bad actors.”
CEO CK: The dreaded annual renewal drives me and the team crazy, very poor system, not easy to use…overall dreadful and a waste of money, definitely a time waster. Last year we had new business cards printed, not cheap, but they forgot the NMLS numbers, so we had to have those reprinted, causing an additional expense.
More small CU feedback to ESCUD, on the NMLS/SAFE Act burden: CEO SD:
Our credit union has less than $20 million in assets and employs fewer than three mortgage loan originators, including myself in my role as CEO. Due to our size, we do not have a dedicated human resources department to support NMLS registrations or ongoing administrative requirements. As a result, I am personally responsible for managing NMLS registrations for both the institution and individual staff, overseeing annual SAFE Act compliance—including engaging a qualified third party to conduct our SAFE audit—and ensuring all required staff training is completed.
We hold regulatory compliance in the highest regard and fully understand the “one‑size‑fits‑all” framework applied within the NMLS system. At the same time, our credit union has a long‑standing record of maintaining compliance with integrity and diligence, appropriate to our risk profile and operational scale. For institutions of our size, the cumulative administrative requirements often do not materially enhance safety and soundness. Instead, they materially divert executive time away from mission‑critical responsibilities such as growing membership, serving our community, and responsibly expanding our loan portfolio.