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Consumer Protection and Lender Transparency: The SAFE Act Doesn't Go Far Enough

By Donne Knudsen

Mortgage and Lending with Los Angeles & Ventura Counties in CA

July 30, 2010 06:33 AM

I subscribe to the daily webcasts of Think Big, Work Small (TBWS), which is hosted by these two guys, Brian Stevens & Frank Garay. TBWS was founded a couple of years ago by a bunch of real estate and mortgage people who wanted to teach others in the business how to work smarter to grow their business.

Today's video was especially interesting because there was a segment on how mortgage brokers and their Mortgage Loan Originators (MLO) have to now be licensed in accordance with the Secure And Fair Enforcement (SAFE) Act.

Frank and Brian go on to explain that it would be much fairer if all MLO's were licensed and not just MLO's for mortgage brokers. Furthermore, the SAFE Act was established by lawmakers and legislators because of poor underwriting standards and practices by lenders underwriters. For the record folks: MORTGAGE BROKERS AND THEIR MLO'S HAVE NEVER UNDERWRITTEN A SINGLE LOAN!!!

This is just another clear example of how completely WRONG our legislators have it in regards to protecting the consumer with transparency in our industry. If they want to protect the consumer and provide greater transparency, they need to make all MLO's licensed. No exclusions to banks and their loan reps.

Anyway, here is today's video and I hope you enjoy it as much as I did. I want to also suggest checking out some of their more recent ones too as well as their blog threads. Very interesting discussions going on.

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Robert Rauf

CMG Home Loans - Toms River, NJ

Hi Donne, The SAFE act clearly seems to point at Brokers as the bad guy, but Mortgage Bankers are also caught up in this as well.

WHY doesnt a loan officer that works for a bank need to pass a test, have continuing Ed Classes, Get finger printed, poked and prodded, have their credit run etc???

It certainly is NOT a level playing field! I wrote a blog about it this past winter after I got my 24hours of class time done and passed the state and federal tests after my strip search at the testing center!

If you know of a LO that went from a broker or mortgage banker to a Bank recently, it is probably because they couldnt pass the test, or couldnt afford the costs involved, or perhaps that back ground check might scare them a bit?

Jul 30, 2010 06:50 AM

Ken Barker Realtor® GRI, E-Pro Certified

Dilbeck Real Estate - Burbank, CA

Donne - This is ridiculous what they are putting the MLO's through. There is no consistency. As Robert says to go through the scrutiny for everything and not being on the same playing field as everyone that works loans. They just need to know that you as an MLO can do your job and do it well. All the testing that you need to go through is incredibly ridiculous.

And I subscribe to the TBWS daily and it is hilarious and educational. You have to love thier humor though. Crazy dudes.

Jul 30, 2010 07:33 AM

Kyle Jan

Scottsdale, AZ

Phoenix AZ Homes for Sale

As a licensed MLO, I think this is a bunch of C%$p! All MLO's should be held to the same standard. The bottom line is that the mortgage broker's don't have the voice in Washington. Someone in lending had to be the fall guy and as with everything, those who don't have the money, don't have the voice. That is the only transparent thing about the SAFE ACT.

Jul 30, 2010 07:56 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Rob - AMEN!!! I agree that mortgage brokers and bankers are not the bad guys here - BANKS AND THEIR UNDERWRITERS APPROVE THE LOANS! On another note, I wouldn't be too quick to say that MLO's leaving the industry couldn't pass the test or have something to be scared of.

I have known quite a few MLO's that have passed their tests and submitted to all personal and bodily searches (LOL) and are still leaving. They're not going to banks either but rather are pursuing something else.

They're leaving because their stress levels are off the chart and they've developed a serious case of insominia (direct quotes from one associate). They're leaving because they've had enough of the day to day nonsense that we (MLO's) have to put up with. They're leaving because they need to make a decent living that doesn't require that they work 70+hrs a week. They're leaving because if they don't, they're spouses/significant others will leave them (another direct quote from two other associates). They're leaving because they've been offered another job, making better money, working less hours and offers benefits. I could go on but I think I've made my point.

So before anyone goes around thinking that MLO's leaving the industry right now are doing so because they didn't pass their tests or they are hiding something or they're afraid of something - think again and this time, think of someone less fortunate than yourselves. JMHO

Jul 30, 2010 09:05 AM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Ken - I actually support the continuing education, testing and licensing. What I don't support is that bank loan reps (I refuse to call them MLO's) don't have to perform to the same standards. The fact that this requirement only applies to mortgage brokers and bankers is ridiculous.

As I stated, the SAFE Act was established because of poor underwriting standards and practices. Mortgage brokers don't underwrite loans - underwriters do and their bank employers allowed these poor underwriting standards and practices! Now these same banks and their underwriters are now exempt from the protections that were put into place because of THEM!

Anyway, enough of my ranting. I'm getting down off my soapbox now.

Kyle - AMEN!!! And I'm sure there is some truth to what you say too. Everyone knows that the only reason banks got exempt from the SAFE Act is because of their lobbyists.

Thx for stopping by guys; I really appreciate it. Have a good weekend. :)

Jul 30, 2010 09:15 AM

Tammy Lankford,

Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA

Broker GA Lake Sinclair/Eatonton/Milledgeville

Sadly, I think the folks in Washington are looking out for only the folks in Washington and their largest campaign contributors. I think they have NO idea what the "average" American consumer wants or needs. And they are always passing legislation that they haven't read. WTF? That would be like me signing a contract I haven't read.

Jul 30, 2010 12:20 PM

Donne Knudsen

Los Angeles & Ventura Counties in CA - Simi Valley, CA

CalState Realty Services

Tammy - AMEN!!! I couldn't agree more that they (legislators) are just looking out for their best interests and if the bank lobbyists are supporting them then they are going to support the bank lobbyists.

Thx for stopping by; I really appreciate it. Have a wonderful weekend too. :)

Jul 30, 2010 02:32 PM

Karen Cooper

Karen Cooper | Sr Mortgage Loan Originator ! NMLS # 223305 | First Federal Bank of Florida, Ocala, FL - The Villages, FL

Helping Homeowners w/Home Loans in 27 US States

Hi Donne - so often "the fix" when it comes from out of touch decision makers who don't involve the input and perspective of the folks that are in the trenches really "fixes things good". The source of campaign contributions is rarely providing non-biased data and input based on real people's needs.

Jul 31, 2010 09:01 AM

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