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Feds want to regulate mortgage brokers

A couple months ago I talked about this thing coming with mortgage brokers and actually think it is a great idea. In my original article I wrote of a mortgage broker that told my clients to lie on their application and if I should ask, lie to me so they could get the loan. In the process they ended up losing their home because they really couldn't afford the home they were buying.

The idea of regulating and licensing mortgage brokers was not just because of that situation. I think mortgage brokers have access to a lot more sensitive information than real estate agents who require background checks, finger printing and a whole lot of education over our career.

You see my thought was that, yes I had access to houses pretty much 24 hours a day, but a mortgage broker has access to every persons SS#, DOB, and every bit of information that could be used in an identity theft of someone with great credit.

I'm sure the feds' reason has to do more with mortgage fraud and sub-prime loans, but I personally think this has been needed for a very long time. I would love to hear your feedback on if you think this is a good idea or not.

Todd Clark - broker
Kastings & Associates
Phone: (503)524-9494
Fax: (503)622-8739

Posted by Todd Clark (Broker/Sales Coach), GRI (Beaverton, Oregon Real Estate Expert) on 03/17/2008 12:56 AM

Comments (11)

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regulating mortgage brokers

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11 Comments on Feds want to regulate mortgage brokers

MAR

2008

Mortgage brokers should be held to the same standard as stock brokers

I couldn't agree more. I think that there should be a high set of standards for anyone handling transactions in the 100s of thousands of dollars.

The public should be protected especially from the predators.

Todd, I totally agree. It will weed out those who are were only in it for the money. All other people have to be licensed with con-ed, I think it will raise the standard of the industry.

It most certainly will help.

Todd, I used to be a federal regulator for a few years of the Carter administration. I'm dating myself here. And I came away from the experience with a strong faith in the marketplace as the ultimate regulator. I think that health and safety regulation is one thing - but that's not what we are talking about with the lenders.

There are already many laws on the books that prohibit the type of mortgage fraud you are writing about. If someone would enforce them, that would be a good thing. I'm not sure that another layer of federal licensing is going to do more than provide jobs for some people in Washington who will oversee the program.

I'm not sure of the exact nature of the regulation they have in mind - they may want to have the states do it for them. And most states already license but don't do a whole lot of enforcement.

Todd,

I generally don't like government interference with 'free markets'...their role should be in regulation to keep the playing field level!!! THanks, Fran

Hi Todd...With our Real Estate Services Act in BC you need to be licenced to be a mortgage broker in BC(training is through the UBC university and Governed by the Real Estate Council(elected body, from our industry), which is set down in the rules and regulations in the Real Estate Services Act of BC. The Government department that is responsible here is our Attorney General's Dept. of our Provincial Government.

Mortgage Brokers are also responsible to the Federal Banking Act and they only broker Mortgages, our Banks,Credit Unions and Trust companies lend the money to consumers. There is of course Private mortgages funds which is usually borrowed by people with a lower credit rating than the Banks will accept and usually at higher interest rate.

Cheers, have a great day!

APR

To Anonymous - I agree there needs to be some regulation, but there also needs to be some freedoms allowed like allowing them to sell all loan products if they are qualified to do so. (This is more of a power play by the big banks than to protect consumers)

Randy - I think if someone puts someone financially at risk because of their actions, than they should be fined and possible put in jail. But, more importantly the person they did it too should be made whole again.

Missy - I think they should have the same standards as real estate agents, but I just want to make sure that the banks are behind this making it easier for themselves to get in to real estate.

Keith - Something certainly needs to be done.

Patricia - What were you 2 when you worked in the Carter administration?

Fran - From what I've heard about this and other proposals is that it has nothing to do with making it a level playing field, it would just make it harder for mortgage brokers and easier for big banks to get in to the real estate game full time.

Fred - Real estate agents are licensed here, but not mortgage brokers. They have laws, but they are more general and don't have a governing body to over see their paperwork like we do. I think this might be a big mistake, because so many people are getting away with theft on a daily basis.

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