What Lawmakers are doing!

During the next year or so that we all get to enjoy this restful industry-wide slow-down, I think it would be a great idea to work on re-building our industry from the inside; actually it's long overdue! Lawmakers in many States and on the Federal side, daily are creating new duties, requirements and regulations to help protect the public from the residential real estate mortgage lending industry - our ‘self-policing' unfortunately didn't exist much the past several years, so now they're gonna 'teach us a lesson' and make originators directly personally responsible for more! In addition to now being 'banned' in several States, there's even a Federal Ban on No Doc, Stated, etc. being considered today! In fact, these past several weeks, more than a dozen State lawmakers have been 'tightening the screws' on originators in many areas.

Broad and substantive mortgage lending requirement and laws being passed I see, are creating a 'duty of good faith and fair dealing.' One of them says mortgage originators (mortgage brokers & loan officers) 'shall act in the borrower's best interest and in the utmost good faith toward borrowers, and shall not compromise a borrower's right or interest in favor of another's right or interest, including a right or interest of the mortgage originator.' A mortgage originator shall not accept, give, or charge any undisclosed compensation or realize any undisclosed remuneration, either through direct or indirect means, that inures to the benefit of the mortgage broker on an expenditure made for the borrower - a full blown fiduciary duty like most other trusted professionals have.

This approach subjecting originators to harsh discipline & aggressive punishment, I have been in agreement with for many years myself - but I frequently see it falls far short in many cases.

Here's what I mean. The individual loan officers (where it seems much of this legislation is aimed), we all need to recognize are not mortgage experts, they are in fact the entry level position in our business. Far too many of them are not ‘career minded' but instead see themselves as 'commissioned salesmen' - a secret they keep from the public. If they were more 'career thinkers', they would take the time to improve their understanding of our business, instead of a narrow focus mostly on their commission earnings. The more career minded ones among their ranks, spend the time needed to read & learn from several regular industry trade publications. During that time invested, they frequently see articles, as I do, about the thousands of disciplinary actions taken against wrong-doers in the business.

Unfortunately they are considered as 'independent contractors' by a great many employers; they advertise and communicate with potential borrowers with virtually no training - when in fact they really have no business being out there independently, in the unsupervised wilderness.