Mortgage brokers, who served as scapegoats during the financial meltdown, are still facing unfair regulations
It’s not news that much of the blame for the housing crisis has been directed at mortgage originators.
However, almost eight years later in a much improved housing climate, the group is still paying for the financial meltdown and shoddy lending practices.
Since the housing bust, mortgage originators have been held to strict regulations, presenting an unlevel playing field for mortgage lenders and giving banks the upper hand. While mortgage originators are governed by a host of federal laws and regulations, banks are protected under the FDIC and are not required to have continuing education.
Rodney Anderson, producing manager at Supreme Lending in Plano, Texas, says the different regulatory rules are one of the biggest challenges the mortgage industry faces today. “Why is it that I have to pass exams and be licensed, but the banks out there don’t have to?” he says. “It’s just beyond me, and it troubles me.”
Anderson says it wouldn’t make sense in any other industry.
“It’s like if you went to a doctor’s office, and on one side of the street, the doctor’s offices have to be fully licensed and pass exams. While across the street you have a medical firm where no one has to be licensed or pass exams,” he says. “It makes no sense.”
Cindy Laffey, a branch partner and mortgage planner at Inlanta Mortgage, echoes Anderson’s sentiment, adding that mortgage bankers offer more knowledge. “We as mortgage bankers have a broader product line; we have to be licensed and are required to do continuing ed,” says Laffey. “We are more knowledgeable and up to date on changes in the industry.”
Laffey adds that when competing against the big banks she feels like mortgage bankers have much more control over the transaction. “We can get a loan through the system quicker and easier. With the big banks, it can take weeks to get through processing and underwriting,” she says. “As a mortgage banker we can turn a file in a matter of days.”
Today, mortgage originators must comply with: the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act and the Federal Trade Commission Act, as well as fair lending and fair housing laws, according to the National Association of Mortgage Brokers (NAMB).
The regulation of mortgage originators begins at the federal level, but it certainly does not end there. Under the SAFE Mortgage Licensing Act of 2008, brokers have to pass state licensing exams in order to prove they know the rules of the financing game. The group must also comply with continuing education requirements and criminal background checks in 49 states and the District of Columbia.
NAMB has previously stated that no amount of law or regulation will ever completely eliminate abusive practices from the mortgage industry. “Placing additional restrictions on legitimate and law-abiding originators will not successfully address the problem of the truly unscrupulous lenders who brazenly ignore the laws as they currently exist.”
NAMB suggest the application of uniform legal standards to all mortgage professionals will create a lending environment where consumers are free to shop and compare mortgage products and pricing without fear or confusion.
What do you about the different regulations? Sound off in the comments below.
However, almost eight years later in a much improved housing climate, the group is still paying for the financial meltdown and shoddy lending practices.
Since the housing bust, mortgage originators have been held to strict regulations, presenting an unlevel playing field for mortgage lenders and giving banks the upper hand. While mortgage originators are governed by a host of federal laws and regulations, banks are protected under the FDIC and are not required to have continuing education.
Rodney Anderson, producing manager at Supreme Lending in Plano, Texas, says the different regulatory rules are one of the biggest challenges the mortgage industry faces today. “Why is it that I have to pass exams and be licensed, but the banks out there don’t have to?” he says. “It’s just beyond me, and it troubles me.”
Anderson says it wouldn’t make sense in any other industry.
“It’s like if you went to a doctor’s office, and on one side of the street, the doctor’s offices have to be fully licensed and pass exams. While across the street you have a medical firm where no one has to be licensed or pass exams,” he says. “It makes no sense.”
Cindy Laffey, a branch partner and mortgage planner at Inlanta Mortgage, echoes Anderson’s sentiment, adding that mortgage bankers offer more knowledge. “We as mortgage bankers have a broader product line; we have to be licensed and are required to do continuing ed,” says Laffey. “We are more knowledgeable and up to date on changes in the industry.”
Laffey adds that when competing against the big banks she feels like mortgage bankers have much more control over the transaction. “We can get a loan through the system quicker and easier. With the big banks, it can take weeks to get through processing and underwriting,” she says. “As a mortgage banker we can turn a file in a matter of days.”
Today, mortgage originators must comply with: the Real Estate Settlement Procedures Act, the Truth in Lending Act, the Home Ownership and Equity Protection Act, the Fair Credit Reporting Act, the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act and the Federal Trade Commission Act, as well as fair lending and fair housing laws, according to the National Association of Mortgage Brokers (NAMB).
The regulation of mortgage originators begins at the federal level, but it certainly does not end there. Under the SAFE Mortgage Licensing Act of 2008, brokers have to pass state licensing exams in order to prove they know the rules of the financing game. The group must also comply with continuing education requirements and criminal background checks in 49 states and the District of Columbia.
NAMB has previously stated that no amount of law or regulation will ever completely eliminate abusive practices from the mortgage industry. “Placing additional restrictions on legitimate and law-abiding originators will not successfully address the problem of the truly unscrupulous lenders who brazenly ignore the laws as they currently exist.”
NAMB suggest the application of uniform legal standards to all mortgage professionals will create a lending environment where consumers are free to shop and compare mortgage products and pricing without fear or confusion.
What do you about the different regulations? Sound off in the comments below.
