Long Beach Broker skeptical about new Mortgage Licensing Requirment

Long Beach, CA. James B. Lockhart, director of the Federal Housing Finance Agency (FHFA), announced that with mortgage applications taken on or after Jan. 1, 2010, Freddie Mac and Fannie Mae are required to obtain loan-level identifiers for the loan originator, loan origination company, field appraiser and supervisory appraiser. This is the result of Title V of the Housing and Economic Recovery Act of 2008, the S.A.F.E. Mortgage Licensing Act through which Congress required the creation of a nationwide mortgage Licensing system and registry. With enactment of the S.A.F.E. Mortgage Licensing Act, identifiers will now be available for each individual loan originator.

Redundancy is wasteful. Although in the past, only real estate appraisers and underwriters were listed on a loan file, the new move will be to also license loan officers and put them on the file as well. Firstly, I do believe, from my own experience, that licenses seem to be more of a revenue collecting device for the government, rather then an actually helpful tool for the consumer.

If you don't believe me, just look at the American Construction Industry which is ripe with unlicensed contractors who undercut legitimate contractors everyday. Is it fair? No, life is not fair. These back alley construction workers and day laborers work openly and cannot be punished simply because they are not licensed. The facts are, that so much insurance is required from real licensed Contractors that to be legitimate you have to upfront invest a small fortune, not to mention the workers compensation that must be paid; therefore, a blackmarket has been created.

What are the implications of this in our Real Estate Industry concerning Mortgages? In addition to the real estate board fees, already too expensive, that many loan officers pay right now, they will be burdened with even more fees and licensing requirements. This is absurd. Given the demographics and history of Southern California real estate. You probably will see a similar Black Market of mortgage loans develop by non-licensed, nothing to lose, unprofessionals who will end up funding loans for a small fee through a legit licensee. I

The facts are that Consumers themselves have to be burdened with the responsibility of knowing what they are getting themselves into when they purchase or refinance a home.

The last item I will mention today is about the future licensing of mortgage originators and the company they work for. Remember we mentioned this at our last Manager meeting about importance of loan quality. It used to be that appraisers and underwriters were the only ones with their names on the loan file. Now you as an originator will join this group.

Kirk Mulhearn, a mortgage planner and real estate broker, may be reached at:

562-989-4608 ext. 110

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