MBA sues Labor Department for loan officer overtime rule change

The Mortgage Bankers Association filed suit Wednesday against the Department of Labor over a reversal of federal regulation that exempts loan officers from the right to overtime pay. According to the MBA, the Labor Department sent an opinion letter to the trade group a few years ago that concluded lenders did not have to pay a typical mortgage loan officer overtime, stating that the employees were exempt from the Fair Labor Standards Act. The MBA requested the letter to clarify the DOL rule. But in March, the DOL issued another interpretation, which, according to the MBA’s lawsuit, was an “abrupt reversal” of the previous letter, requiring officers be paid overtime and putting lenders at risk to unnecessary litigation. The MBA made the same argument it is making about a possible national mortgage servicing standard. The trade group claims regulators are rushing the industry into rules before giving them enough time for discussion or compliance. In December, the MBA and several other trade groups pressured the DOL not to make this reversal. MBA Chief Executive John Courson said lenders are now open to lawsuits for past actions and will have to make costly changes to internal operations and how they compensate employees. These costs, he said, will ultimately make their way to the borrower. “Requiring loan officers to be paid overtime will not increase their compensation and asking them to now track and report their hours will deprive them of the flexible schedules they and their customers have enjoyed,” Courson said. In the suit, the MBA asked the court to set aside the ruling, alleging the Labor Department did not follow protocol by filing a proposed rule first and opening it up to public comment. “If the department were to do that, we are confident it would find that the existing ruling providing an administrative exemption for loan officers from overtime should remain,” Courson said. The DOL denied to comment. Write to Jon Prior. Follow him on Twitter: @JonAPrior