BANK LOAN OFFICERS REQUIRED TO REGISTER
Loan officers at banks will now be required to register, and provide their names and fingerprints to a national loan officer database as part of an effort to crack down on shady operators who were part of the mortgage meltdown.
The new requirements were actually mandated by a bill passed in congress over two years ago, but Federal regulators just approved them yesterday (Wed July 28th). The rules apply to employees of banks regulated on both the state and federal level. Mortgage brokers and non-bank lenders are already required to be licensed by the system.
The new bank registration requirement stills leaves a major gap in loan officer licensing. While banks, brokers, and non-bank lenders will all now be registered in the system, only brokers and non-bank lenders (typically called "Direct Lenders") are also required to also have mandatory education, including pre-license education and yearly continuing education.
Mortgage brokers and non-bank lenders are also currently required to take mandatory federal and state tests to obtain their individual license, have criminal background checks, and their personal credit reports reviewed, while bank loan officers do not.
The banking industry fought hard to avoid having their loan officers meet the education and testing requirements, while the broker industry has applauded the requirements, pointing out how brokers will clearly be the lender of choice for smart shoppers wanted good information from educated loan officers.
The gap in knowledge and education between banks, brokers, and non-bank loan officers is expected to grow even greater, as non-bank and brokers who are unable to pass the stringent new testing requirement flee to positions at banks that do not require education and testing. While all have the same "Loan Officer" title, not all loan officers do the same job. Many just take an application, while others manage a file from beginning to end.
The registry is expected to start accepting bank loan officer applications by the end of January 2011.
(c) 2010 - Joe Metzler - Mortgages Unlimited, St Paul, MN: National Loan Officer Lic#274132