Mortgage Brokers to be Fingerprinted and Registered

[Guest3722A]

WASHINGTON (Reuters) - Mortgage loan originators will have to be fingerprinted and sign up to a central registry to do business in future, according to final rules issued on Wednesday by the Federal Reserve and other regulators.

The rules are part of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act.

They were issued by the Fed, Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration.

Mortgage brokers came under tough scrutiny in the wake of the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.

The S.A.F.E. Act specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry,

"As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks," a joint release from regulators said.

The final rules take effect on October 1 and it is anticipated that the registry could start accepting registrations as early as January 28, 2011.

Industry sources say that thousands of brokers have gone through mandatory education, credit checks and state and federal testing in order to retain the right to handle mortgage originations.

The process has thinned the ranks of brokers, who may be even fewer soon given talk of a 30 percent fail rate on testing, said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.

"It cleaned up the industry," said Moulton, who nonetheless cautioned that he felt credit availability for mortgage lending has been reduced as a result of uncertainty caused by U.S. financial regulatory reform.

Mortgage brokers to be fingerprinted and registered - Yahoo! Finance

 

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[Russ H]

I'm sorry, this makes me nertz.

It's total white washing.

The busiest and best mortgage brokers were writing TONS of no-doc loans at the height of the RE boom.

Why? BECAUSE IT WAS THEIR JOB.

Get loans for people.

No political commentary intended, but it was CONGRESS that voted in (and made strong statements) about Fannie and Freddie doing all kinds of loans-- and making home ownership accessible to all Americans (not just those who could afford it!). There were literally kids working part time at 7-11 who got $200K loans for houses. :coco:

Sorry, if anyone actually thinks mortgage brokers were the root of the crisis, or that by further testing/fingerprinting abuses like this will stop, they're drinking koolaid.

Same goes for all the other ends of the biz-- banks were loaning 'cuz money was cheap, and the more they loaned, the more $$$ they made.

Fannie and Freddie were buying up stuff like there was no tomorrow. And Wall St was buying all of those derivatives.

Title companies were so busy that now, some banks are having a hard time foreclosing-- BECAUSE THEY CAN'T FIND THE ORIGINAL LOAN DOCS!!!

Imagine that:

You have a loan for half a million dollars, and the bank that loaned it to you (or the one that bought all their loans when they went belly up) doesn't even have a record of the terms/conditions of your loan.

Mind boggling.

(note that many lenders do have the original paperwork-- so this is not something to base any financial moves on!)

Sorry, rant off. :rant:

-Russ H.

:bsmeter:

 

[Allseeingeye]

Hmm George Orwells - 1984 comes to mind!

 

[jrmartin]

I thought that mortgage brokers already had to be fingerprinted and registered? Here in Florida anyone applying for a state license has to turn in a fingerprint card and register with the state. I had to do it when I became a real estate agent as well and my father had to do it twice: once as a realtor and once as a mortgage broker.

Is this just saying that you will have to register with the federal gov't? I'm of the opinion that if you register with the state, then the boys in Washington got your info a long time ago. This is just a formality.

 

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[tchandy]

I've read that even people who buy and sell homes on their own have to be registered for the SAFE act, get their fingerprints taken, etc. Everyone takes a national test as well as a state test. Each year the person has to retake the test. So this doesn't only apply to mortgage brokers.

Tom

 

[Guest3722A]

If this is so, then it's time to look into opening some testing centers.

 

[tchandy]

If this is so, then it's time to look into opening some testing centers.

Recommend you google SAFE Act AND your state. A site or testing center should pop up. I found one where I'm at and the classes can be done online and information is provided for the tests as well.

Tom

 

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[hatterasguy]

I hate the government, how is registering them going to prevent abuse and crime? Is uncle sam going to audit them on a regular bases?

This is just a stupid knee jerk reaction so the politicians can pretend they did something after the RE bubble burst.

 

[jrmartin]

I hate the government, how is registering them going to prevent abuse and crime? Is uncle sam going to audit them on a regular bases?

This is just a stupid knee jerk reaction so the politicians can pretend they did something after the RE bubble burst.

Im sure there is some sort of fee involved in getting it done that wasnt there before. $100 per broker per year isnt enough to make the mortgage brokers give up their trade, but ends up being a nice fat paycheck for a poorly run gov't in need of $$$

 

[hatterasguy]

Yeah that to, more fees great.

Got to love the US government, all they do is make it harder and more expensive to do business.

 

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[Red]

I'm sure the reasons for implementing licensing requirements are multiple & varied.

1. Previously, in the state of AZ, there was NO licensing/accreditation/testing required to become a loan officer. If you're 18 and have a pulse, you can be a loan officer. Felon? Convicted ponzy scheme runner? Were you a landscaper last week? Congrats! You're now a loan officer!

2. Due to the above fact, there is no governing agency/professional organization that enforces ethics or rules of conduct with outlined methods of compensation for those found to be harmed. When the public is the victim of questionable practices or just defrauded, they have next to no recourse other than to go after the individual for their losses. Spend a ton in attorney's fees to get nothing? No thanks.

3. Yes, I believe it's a knee-jerk reaction & a paltry attempt to look like the gov't is addressing the issue. If they really cared, they would implement regulations on the secondary market and look into why companies were allowed to name products of insurance as "credit default swaps" and therefore not come under insurance regulation or guidelines. But that won't happen because too many of our governing members have their hands in these financial institutions and therefore receive dividends, or act on boards, or profit in some way from the questionable practices that are allowed to continue at the expense of the people they are there to service.


In the end, we need to quit blaming the bubble on one individual cause or scenario- it was an intricate combination effort of greed, fraud, ignorance & well-intentioned people who just didn't understand basic math & the power of interest. Implementing licensing for loan officers will not prevent another bubble on its own merit, but it is a small step in the right direction, if only for the sake of the public.

 

[Russ H]

Wow, Red, thanks for clarifying.

Our guy sits on the California Association of Mortgage Brokers (and is also a member of NAMB), so he's always telling us about the latest legal requirements.

Mortgage Broker License In California

I just assumed (dopey me) that other states had similar laws/requirements. :smx4:

-Russ H.

 

[hakrjak]

No wonder houses aren't selling even though interest rates rest at all time lows....

This is just the beginning of too much government intervention, killing the US Real Estate markets.

Folks -- you have forgot that it is the banks JOB to loan money and take risks. If the government wasn't now in the business of propping them up when they fail, then they wouldn't NEED to overregulate --- because the banks would either succeed or fail based on GOOD BUSINESS sense.

I predict that the clock will swing the other way in a few years, and you'll have cries for less regulation again. Once that occurs, things will start to move -- and the money supply will finally loosen.

- Hakrjak

 

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[Russ H]

No wonder houses aren't selling even though interest rates rest at all time lows....

Folks -- you have forgot that it is the banks JOB to loan money and take risks. If the government wasn't now in the business of propping them up when they fail, then they wouldn't NEED to overregulate --- because the banks would either succeed or fail based on GOOD BUSINESS sense.

Ah, but they did loan money and take risks.

That's what got us here.

Most banks are sitting w/LOTS of property on their books right now.

They've foreclosed on stuff that they took the risk on, and is now worth less than the money they lent.

So they're keeping them on their books until the values go up (just like we are).

But this means they don't have as much working capital to lend (it's tied up in Real Estate).

So it's a catch-22: They can't sell prop that doesn't have value. So they wait for the values to rise (just like all of us).

But home values won't go up until more people can get loans.

From banks.

Which are not granting as many loans because they are under water w/the RE they've foreclosed on . . .

(. . . and round and round it goes . . .)

That's why back in 2008, the US Treasury Secty proposed the Feds buy up troubled assets (e.g, foreclosed homes that were not worth the loans that had been written on them). Problem was, there were too many homes (I think I just read that 20% of the homes in the US now are under water, loan wise).

-Russ H.

 

[hakrjak]

If I take a risk and buy a house to flip, but can't sell it -- I go bankrupt and am done, the bank takes my property and I'm busted....

But the banks took bad risks and should have gone bankrupt and been out of business -- but didn't....

We had the opportunity to kill all of the "mega-banks" that were doing this behavior, and replace them with a wave of new neighborhood Mom & Pop style banks like the old days -- and we blew it.... By bailing out the major chain-banks. The smaller guys that would have replaced the Mega-Banks would have had an incentive to loan money and start up their companies, but we never got to see that happen!

Now the result is that we're stuck with these huge "too big to fail" entities that have no incentive to loan money (They are sitting on some of the flushest balance sheets they've ever had right now), and who are being restrained more each month by the Federal government.

My solution? Now that all the water has gone under the bridge, the US Government should just buy up the toxic mortgages from the major banks, board these houses up, and sit on them like investments until the market recovers. Sell them in 5-10 years when things turn around and they can recover their investment. This would take a huge # of houses off the market, helping supply go down, and would free up the balance sheets of the banks to lend more freely... If they screw up again -- let them fail, and allow a new wave of smaller regional banks to start-up and take over the banking system in our country.

- Hakrjak :smxG:

 

[hatterasguy]

I hate the big banks, I'm quite sad I didn't get to see them all go under when the market fell apart. Sure things would have gotten bad quickly, but they also would have improved much faster.

 

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[hakrjak]

Saw an article today where some business guys have other ideas on how to improve things.... I like the idea of refinancing every mortgage in the country automatically to a lower rate.... Would free up a lot of spending money for Americans each month, and probably raise property values!

Banking execs say gov't needs to back mortgages - Yahoo! Finance=

 

[hatterasguy]

Screw the government, banks and insurance company's.

Those guys are responsable for whats going on now.

I can't get a permit to start a house thanks to the local government, insurance rates are nuts, and banks don't want to loan money.

We freaken bail these jerks out, and FL gets nailed by storms yet we have to pay.:cuss:

Rant off, I'm trying to create jobs these guys are in my way.:cuss:

 

[hatterasguy]

Saw an article today where some business guys have other ideas on how to improve things.... I like the idea of refinancing every mortgage in the country automatically to a lower rate.... Would free up a lot of spending money for Americans each month, and probably raise property values!

Banking execs say gov't needs to back mortgages - Yahoo! Finance=

The banks are not lending money, its as simple as that. They are sitting on a ton of cash with sweet balance sheets thanks to our tax dollars. Their is zero incentive to lend.

To buy a house these days you have to be the cream of the crop, everyone else is screwed. You can't have that, you meed to fund the average people.

The only thing keeping us afloat are the small banks that are willing to lend money and write mortgages. We lost a golden chance in this country to get rid of all these big useless banks. Small banks are whats driving business, not the big ones.

 

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[Red]

The banks are not lending money, its as simple as that.

Hatter- I hate to break it to ya, but the banks are lending. We are simply back to lending standards circa 2000. I wasn't in real estate in 2000, but I'm pretty sure people bought houses before then.

To buy a house these days you have to be the cream of the crop, everyone else is screwed.

Actually, they aren't. FHA loans are not FICO driven, so whether you have a 640 or an 840, you qualify for the same interest rate. FHA loans are also 3.5% down as opposed to the "standard" 20% down that it used to be. We actually have it pretty easy, even today, compared to the "good ol' days..."

The only thing keeping us afloat are the small banks that are willing to lend money and write mortgages. We lost a golden chance in this country to get rid of all these big useless banks. Small banks are whats driving business, not the big ones.

I get that you're frustrated at the situation, but the simple truth is, letting the banks fail would have caused far more carnage than the Lesser-Of-The-Two-Evils option that the gov't took in the form of the bailout. Were the funds mis-handled and mis-appropriated in grandiose proportions? You bet. Did bank brass walk away practically scott-free while the little guy got screwed when he couldn't pay his mortgage? Absolutely. I'm not insinuating that we absolve the entities responsible of the misappropriations of their responsibilities, but at this point, what's done is done and all we can do is live and learn. As with any other trend, there is always a way to make money and always a way to capitalize on the situation at hand.

 

[Russ H]

Ah, Red, ya beat me to it. I'd give ya rep speed, but I've got to spread the love around a bit.

Great answer to Hat's rants.

Hat, I won't repeat what Red said. But you would have gotten much the same from me-- albeit less nice.

Hat, I can hear you're p*ssed. But telling yourself that small banks are the solution to everyone's problems is garbage. Look at all of the small banks that the Feds have closed this year:

FDIC: Failed Bank List

I count more than 100.

And building depts across the country are reeling from staff cuts.

You can blame all you want, but as Red says, we've just gone back to the way everyone bought houses before the madness (c 2000 and before). I sincerely doubt we'll go back to the crazy easy money days of 2002-2008.

It was nice while it lasted.

But it's time to move on.

-Russ H.

 

[Russ H]

The banks are not lending money, its as simple as that. They are sitting on a ton of cash with sweet balance sheets thanks to our tax dollars. Their is zero incentive to lend.

To buy a house these days you have to be the cream of the crop, everyone else is screwed. You can't have that, you meed to fund the average people.

The only thing keeping us afloat are the small banks that are willing to lend money and write mortgages. We lost a golden chance in this country to get rid of all these big useless banks. Small banks are whats driving business, not the big ones.

Hat-

Here is some data for you:

Smaller and regional banks, however, have less flexibility. They have accounted for nearly all the banks that have failed this year.

The FDIC's deposit insurance fund, which fell into the red about a year ago, posted a slight improvement. Its deficit declined to $20.7 billion from $20.9 billion.

The FDIC expects U.S. bank failures to cost the insurance fund around $100 billion through 2013. The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to help replenish the fund.

Last year, 140 federally insured institutions failed and were shut down by regulators. It was the highest annual number since 1992, when the savings and loan crisis hit its peak. Last year's failures extended a string of collapses that began in 2008, triggered by loan defaults in the financial crisis.

The pace of bank collapses this year exceeds last year's. So far, 118 banks have failed in 2010. The pace has quickened as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.

Another fact from the article: Lending is down-- but only 1.4% from the 1st quarter:

http://www.npr.org/templates/story/story.php?storyId=129551162&ft=1&f=1001

-Russ H.

 

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[hatterasguy]

I don't know I can only go by my experience and what I gather from the people I know and my family who has been in the business since the 1920's.

Things are rough out their, its about as bad as in the 80's if not a bit worse.

We have been having issues with every bank except the small local ones. The big guys under appraise houses, take FOREVER to write mortgages even to people with 700 or 800 credit and a large down. FHA takes awhile but they are pretty reliable. Appraisals have been killers because of the new rules. Now you get an appraiser who has never even been to my city doing appraisals with all the wrong comps, and they just screw it up.

We actually had one last year; I think it was BOF kill a closing the day of when they asked the buyers for an extra 10k, literally the moving truck was packed. These people had very good jobs, were pretty conservative on the loan to income, and had high 700 credit scores. Luckily it was solved but it took 4 days, utter BS.

My uncle said this is worse than the BS he saw in the 80's. Also no where near the 90's, the 90's were quite good.

When money loosens up a bit, and things start moving again it will be like the 90's, which IMHO is good. Now were somewhere between the depression and the 80's. The only reason I'm still making money is the competition is bankrupt, and new construction loans just about don't exist anymore. Established cash players are all that's left standing. So in my little corner of America their is actually a bit of a pent up demand for nice new houses in the $300k range.