Safe Act Does Not Apply to Bank Originators?

In 2008 Part of the Housing and Economic Recovery Act gave us the NMLS and SAFE Act.

The Government Alphabetical soup: 

NMLS: Nationwide Mortgage Licensing System

SAFE: Secure and Fair Enforcement for Mortgage Licensing Act

What does this entail? Well, for 2010 all MortgageLoan Originators, except those working for banks, need to be licensed by both Uncle Sam and the States that they work in, all in all that is not a bad idea. (more on that below)

To be licensed you need 20 hours Class time for the Federal license and then have to pass a Test. For the State Test, there is another 4 hours of class time and another test.

The Federal test is not an easy one. When it first came out the failure rate was 70%, Since everyone learned about the difficulty of the test and started studying for it, that failure rate dropped to about 30%. You need to get a 75 or better to pass the National test. The NMLS Data is also a public record, you can view individuals that are licensed, and even see their work history.

The SAFE Act not only requires class time, passing the test and continuing education moving forward. It also requires Criminal Background checks, Credit reports,and finger printing.

Here is the fun part of it all, and to me it seems to conflict with the Secure and Fair piece of the act.... If you work for a Federally insured bank you do not need to do any of this, No class time, No testing, No Credit report, etc...  How is that Secure and Fair?

This means that your Mortgage Bankers, and Mortgage Brokers will have more education than people working at banks. They also will have more expenses, and a License that is NOT required for mortgage guys/gals that work for banks.

Federally Chartered Banks have always been able to Trump State Laws.  For example, a Federally Chartered Bank can charge a prepayment penalty in NJ even though prepayment penalties are illegal in NJ. This made some sense to me since The Federal Government is bigger than the State Government, and the big guy always wins.  Now as I try to apply this to the new NMLS andSAFE act I just do not understand how Federal can trump Federal? How is this good for the consumer?

It is clear to me that the cream of the industry will end up working for Mortgage bankers and Mortgage Brokers, while many that can not "cut it" any other way might just end up working for a bank - Aren't banks screwed up enough already?

I just thought the world may want to know that the world is unbalanced right now, and if you see people jumping ship to go work for a bank it might just be because they couldn't afford the classes and tests, or worse... They couldn't pass the test, or the background checks.

As a consumer, who would you choose for your mortgage?