March 22, 2010

Texas Housing Counselors Are SAFE from Licensing Requirements

3 min

Housing counselors have a reason to celebrate. On March 17, 2010, Texas announced that housing counselors employed by U.S. Department of Housing and Urban Development (“HUD”)-approved agencies would not be subject to the registration and licensing requirements under the Texas Secure and Fair Enforcement for Mortgage Licensing Act (“Texas SAFE Act”), Tex. Fin. Code Ann. §§180.001-180.252.

The Texas SAFE Act implements the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), 12 U.S.C. §§ 5101-5113, which requires that every state set up a licensing plan to regulate mortgage loan originators. Although the statute does not specifically cover housing counselors employed by HUD-approved agencies, states are free to enact broader laws. The potential application of SAFE Act-based licensing laws for loan originators to housing counselors would have massive and widespread adverse implications for housing counselors and the agencies that employ them. Until now, it was unclear whether the Texas SAFE Act licensing requirements would apply to loan originators or housing counselors who work for nonprofit groups.

The announcement followed a meeting between members of the Texas Foreclosure Prevention Task Force, including housing counseling representatives, and Commissioner Douglas Foster of the Texas Department of Savings and Mortgage Lending. The announcement confirms that employees of HUD-approved housing counseling agencies are exempt from the new licensing requirements when they are engaged in activities such as:

  • Foreclosure prevention counseling;
  • Pre-purchase counseling; and
  • Reverse mortgage counseling.

However, employees or volunteers of nonprofit organizations involved in affordable housing programs that conduct loan origination activity would need to be licensed under the Texas SAFE Act. Thus, employment by a nonprofit organization which is tax-exempt alone is insufficient to qualify for an exemption in the view of Texas regulators.

HUD is presently considering rules that would interpret the minimum licensing requirements under the SAFE Act that states would be required to enforce, including whether or not housing counselors should be covered by the licensing requirements. However, states are free to enact broader or stricter licensing requirements.

Effective dates for new licensing requirements in each of the states vary, but generally will be no later than July 31, 2010. Transition requirements also will vary by state and are often staggered depending on the number of changes to pre-existing requirements and the types of licenses being issued. Companies and persons holding licenses under the prior statutes may be required to apply for a new license or registration.

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The Texas announcement makes clear that housing counseling services alone, when provided through a HUD-approved housing counseling agency, are sufficient to warrant exemption from these otherwise-burdensome licensing requirements. The Texas decision could have a powerful impact on HUD and other state regulators in the process of implementing their own mortgage origination licensing requirements. Housing counselors should embrace the decision – it could discourage other states from taking positions that hinder efforts to assist homeowners and homebuyers.

For additional information about the HUD rulemaking see the Venable article available at HUD Seeks Comment on SAFE Mortgage Licensing Act Responsibilities: Housing Counselors in the Crosshairs?.

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For more information, please contact Jonathan Pompan at 202.344.4383 or

For more information about this and related industry topics, see

This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can only be provided in response to a specific fact situation.