LICENSING FOR LOAN OFFICERS BY 2010

Well, it’s a start!!  Finally, effective January 1, 2010, loan originators must pass a test, background check and work for a licensed Banker or Broker.  I hope this will lay the groundwork for more stringent testing and higher standards for what our starting point is. 

Good things about the bill are:  mandatory background check to see if the loan officer has any criminal records, fraudulent history or judgements pending.  It also puts the burden of fraud / mis-doings onto the L.O., not just it’s employer.  It should also eliminate many of the out of state lenders that do business here illegally.

The shortcomings of the bill are:  The bill EXEMPTS institutions at the FEDERAL level.  This is a joke.  It means the loan officers at Wells Fargo, Bank of America, Wachovia etc. do not have to be licensed.  All in all, these direct employees already meet higher screening standards that brokers don’t necessarily have to meet.  I have no issue with these peers.  In fact, most legitimate Federal Bank employees will take the tests and get certified just to have the accreditation.  My objection is that is still gives a green light to the “bulk”banks of the world, all who employ illiterate call-center loan officers, the ones that slam many consumers into products or loans that are unsuitable.  These “call center banks” are all owned by Federal Banks.  

In an ideal world, I’d love to see loan officers bonded, along with having a credit report history that proves the individual is not in financial difficulty.  Too often we see loan officers (along with similar realtors) making a transaction just for the sake of commission, only because they are in such dire need for the commission—at the expense of their client.

THESE DAYS’ WILD MARKET RIDE

The Dow Jones has dropped almost 900 points over the past few weeks.  Our 30 year fixed rates, creeping into the high 6%s just a few weeks ago after the FED basically announced the rate cuts are over, have come back down to the low 6%s.  This is due to investors moving their money from an unstable stock market into our bond and mortgage back security market, which is where we get our mortgage money.  Lots of factors, but one of those factors is the major bank earnings—er, uh, I mean losses.  Until the banks, known as ‘the financials’ in Wall Street talk, stop losing money—the stock market will suffer, house loans will be in short supply, and this will keep our housing market either suppressed, or in further decline.  Ouchie !!!!

Why are we one of only 8 states where mortgage people are not licensed??? Can you say LOBBYISTS??!!!!!!

Trust me, every mortgage professional I know wants licensing. They want it yesterday, and desire the licens-ing requirements to be difficult and meaningful.

Imagine that, a mortgage broker or banker who must provide fiduciary duty and put the borrower in a loan that is both “reasonable and prudent”. Fiduciary—Reasonable—Prudent. All words that Certified Financial Planners must adhere to.

So who are these lobbyists representing??? Could it be the Countrywide‟s / DiTechs / Quicken Loans of the world?? The answer is yes and then some. Add whoever has a stake in Internet and Call Center mortgage sales. Do you think these entities would want the expense to train their loan representatives, along with the liability for doling out imprudent loans?? Of course not. How can you stay in business by paying your people $200 a loan if they are professional?? You can‟t. So the victim is the consumer!!

How many people have needlessly paid for an appraisal (the call center mortgage people call it a non-refundable „application fee‟) for a loan that could never have been done?? How many people pay unnecessary points on a loan, just to get to the advertised teaser rates that are usually 1% higher than a more responsible loan with zero points or costs?

Did you know that DiTech‟s (GMAC Mortgage by the way) hiring criteria for mortgage professionals is the following:

** High School Diploma or GED Equivalent

** 6 months of public interaction experience on the job

In other words, a high school dropout who‟s worked 6 months at Burger King can do loans!!! No wonder we‟ve gone from one of the most respected industries to “scum of the earth”.

It is estimated that 1/3 of all loans done in Arizona are done by non-licensed mortgage companies. The majorty of which, a mortgage license bill, just killed, would have eliminated those. Bonding mortgage bro-kers, killed in the prior bill, would have cancelled out another 50%. So we go.

Write or call your local State Senator or Congressman and demand licensing, if it moves you to do so. In the meantime, the market is slowly chafing out the deadweight