We all know that the lending industry is going through major changes. The Federal government has stepped up and determined that states either have minimum licensing laws or create them for mortgage brokers. If they don't, the Feds will step in for them. This is known as the SAFE Mortgage License ACT.
The SAFE Act does several things as far as tightening up mortgage brokers and their interaction with the public. In Hawaii this badly needed proposed licensing requirement for mortgage brokers includes education, testing and continuing education. These requirements are already in place for real estate and insurance agents. It looks like a step in the right direction.
Here is where the net still has a hole. The SAFE ACT creates a series of stuff for employees of banks and credit unions. It also exempts them from the state licensing requirements.
This is the part of my post that will anger a few loan officers at the banks and credit unions. I completely disagree with exempting them for state licensing requirements period! State licensing requirements could do a couple of things that the SAFE Act won't.
- There is pre-licensing course and pre-license test.
- All loan originators would be regulated by one state entity, giving the public a clear course of action when they have been harmed.
- Continuing education requirements
- A closing of the loophole that would prevent a mortgage broker who has a revoked state license form taking a job at an exempt bank or credit union and doing it again.
In the course of selling real estate I have dealt with more loan officers than I can count. Most of the ugly situations I have seen came from the mortgage broker side of the industry, but not all of them. Several have come from out of state banks, one from a local credit union and two of the very worst came from local bank employees. In one case the loan officer had a license revoked by the State of Hawaii a few years back. That loan officer was at that time employed by the second major bank since losing their license. In that case it took me meeting with two vice presidents of the bank to resolve the problem. In the end my client was still out time and money. The loan officer was no longer with that bank and off looking for the another place to prey on the public.
No matter how you shake it, no one should be allowed to originate a loan unless they can demonstrate a basic knowledge of the business and laws. There should also be a simple consistent way for consumers to file complaints anyone who originates a mortgage. I know that many bank employees are getting ready to tell me how they are federally regulated. Big deal! How does that help the consumer who is trying to buy a home and is being taken advantage of? File a federal complaint? Get real!
If you are looking to buy or refinance a home in Hawaii, feel free to contact me. I can give you the names of several professional, honorable loan officers that will give you VIP treatment.