Long Beach, CA. Two years ago, there were over 90000 mortgage brokers nationwide. Last year, less then half of those applied for the stringent new licensing requirments demanded by State governments. Now, less then 36% of those people who applied for their licenses have reapplied to continue to practise as mortgage brokers. The bottom line is that there is much less choices for consumers and much hire cost to get a mortgage in today's real estate market.
Home buyers need to be aware of what the State of California will do with the implementation of the SAFE act, it stands for Secure and Fair Enforcement for Mortgage Licensing Act. In a few weeks California will enact the SAFE Act which means individuals will have to obtain their own licenses if they want to operate as loan brokers. According to the California Mortgage Bankers Association, individual loan officers can no longer latch onto a company license and must obtain their own.
A spokesman for the trade group noted the "act should pass here in the next few weeks, which will be a much bigger change than in some other states that already individually license loan officers." California also is working on major legislation to reorganize and consolidate all the financial/real estate agencies and departments, and create a new consumer-focused department but no further action is expected until next year.
What does that mean - more regulatory oversight, and for those of you that every worked in a banking environment, it will arrive for the mortgage banker and broker full force. Quick refresher on trying to maintain compliance with this issue. By the end of this year's legislative season, it is anticipated that each state, with the exception of Minnesota, will have passed legislation that implements the requirements of the S.A.F.E. act. The state legislation will require that mortgage originators meet the minimum requirements set forth in the S.A.F.E. act -- such as fulfilling pre-licensure education requirements -- and potentially meet more restrictive state requirements to the extent a state law goes beyond the act's requirements. Pursuant to the S.A.F.E. act, NMLS has been tasked with establishing standards for originator examination and education requirements. NMLS completed the development of its national examination required under federal law, allowing loan originators to register and providing access for completion. Though it has gotten off the ground, NMLS is continuing to work with state regulatory agencies in connection with preparing and releasing state-specific examination components.
Bottomline: Prepare to for full government intervention in the real estate markets to the point of nausea. These new laws are poignant examples of what happens when the regulation pendulumn swings far too much to the other side.
Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office," and a Net Branch of, GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110
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