Greg Fischer

Today, I'm completing my mandatory 20 hours of "pre-licensure" education in the mortgage industry, even though I've been a professional in the New Hampshire mortgage industry for 6 years; was awarded the Mortgage Bankers and Brokers Association in NH's President's Award in my second year; completed (and then helped to develop) the MBBA's educational courses, totaling over 30 hours of history, mechanics, products and process when I entered the industry. I expect to have completed the requirements for MBBA-NH's Certified Mortgage Professional - their highest level of certification - by the end of the year, and am scheduling the test to get certified by the National Association of Mortgage Brokers.

But according to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, ALL mortgage professionals who do not work for a depository bank, are required to take a 20 hour "core pre-licensure" course. That's Mortgage Origination 101. I'm learning how to calculate the loan to value of an $80,000 on a $100,000 purchase. With a calculator. It's painiful.

When I started in this business, qualification and training consisted of "Congradulations! You're a Loan Officer. There is your phone. Now get busy."

As a professional in a complex field, I completely support licensing. I completely support required education to maintain that license. I question the efficiency of the current registry system (even the web site is a navigation disaster) but I applaud the intent. Realtors need a license. Financial advisors and insurance salespeople need a tough license. To think that people with no qualifications could become loan officers is sad, and I'm glad we're looking to fix that.

But under today's rules, a professional with 20 years in the business, who owns his own mortgage company, has been responsible, ethical, honest and professional (which is why he's survived for 20 years) needs to take 20 hours of Origination 101, pass a national licensing test (which is fair) and then take a separate state test for EVERY state he plans to conduct business in. Here in New England, that's easily ME, NH, VT, MA, CT and RI for a total of 7 exams just to continue to originate loans in the northeast. There are no exceptions to this.

Unless you're working at a Big Bank. So long as your bank holds deposits, offers checking and savings etc, you're required to register with the national system - and then stop. So the person staffing the "lending center" down on the corner at a national Bank is presumed safe and competent to lend in all 50 states, without a background check, or licensure, or required education, or any more expertise than was required to be hired for the job.

Before you pick up and call the 800 number on your bank statement looking for a new mortgage and speak with an operator in Texas (hopefully) about your new home in Concord, NH or anywhere else consider this: your local mortgage broker is better educated, more thoroughly screened, and has stricter professional requirements than your bank. If that's important to you, you should feel very SAFE working with a specialized mortgage company

Just the other night, I watched Jon Stewart’s Daily Show report on the economy. He was berating the networks for interrupting David Blaine’s latest stunt, the “Dive of Death” with breaking news about the American economy’s, well, “Dive of Death.”

Like so much financial news lately, I wanted to laugh, but had a hard time bringing myself to do so. Every day I’m answering a few phone calls from friends and past clients, all asking the same thing “What the (heck) is going on?”

Two years ago, near the beginning of the Mortgage Meltdown, a retired banking industry friend of mine explained a concept to me: there is no such thing as money.

There used to be. It was backed by precious metals. Today, we all exchange credit. Since US credit (in the form of 5’s 10’s and 20’s) is universally accepted, this sci-fi money system has worked pretty well for us. In the past two years, we’ve seen what can happen when the availability of credit shifts. The current economic crisis didn’t begin as a meltdown – just a liquidity problem.

Many mortgage lenders weren’t lending money. When you arrived at the closing to buy your home, there was a check there from the “lender”, but they borrowed that money from someone else. A big middle-man lender like American Home would have had huge reserves of credit, but modest reserves of cash. After the closing, they sold the asset that was the mortgage, paid off their credit line, and then had room to lend more money. When Wall St investors started to see the housing market current change, they weren’t willing to buy these mortgages any more. That meant the mortgage lender couldn’t profit on the sale of the loan, or repay their credit line, or have more “money” to lend. So, Lender goes out of business, news headlines flash and Wall St investors get nervous and buy fewer loans.

What we face today is the same problem on a larger scale. I can’t say what started the circle – the housing market, the credit cycle, weakened dollar or something else. The Big Investment Banks who are dying like Mayflies are a delayed reaction to the Meltdown of 06-07. The people who were lending the credit to the people who were lending credit to you and I have now run out of credit. No “money” to lend slows buying. Fewer sales (of anything) means lost jobs. Lost jobs means more people who have to buy with credit – which they can’t get, so they don’t buy...

I have yet to hear a very convincing argument that $700 billion will somehow solve the problem. Maybe that’s enough. Maybe there isn’t a number big enough to “cure” us. As a good free market guy, I suspect that eventually a lender is going to look at the landscape and think “You know what, it’s a risk, but I think I can make some money here,” loosen a lending guideline, and others will follow.

The truth is that mortgage financing is as available as it’s been all year, and is still FAR more available to more people than it was 10 years ago. Yes, there are more rules and fewer options than we’re used to, and there are “risk based pricing” adjustments, and we’re all about to be on the hook for some $700B in mortgage securities. But for people who can prove they qualify, we still have credit to lend.