According to an article in the New York Times, almost a third of loan officers taking federally mandated license tests are failing to meet the grade. Consumer confidence in the lending industry, still struggling to regain its footing following the collapse of the housing market, continues to waiver. Many have placed much of the blame for the housing crisis squarely at the feet of unregulated, unqualified, or dishonest lenders; and whether or not the criticisms are fair or accurate seems insignificant to the millions who have suffered foreclosure or lost value as a result the disaster.
The exam, a requirement of the Housing and Economic Recovery Act of 2008 and known as S.A.F.E., The Secure and Fair Enforcement for Mortgage Licensing Act, establishes minimum standards for mortgage training and continuing education. Separate from the requirements and testing procedures of each state, the test requires a passing grade of 75%.
Following the release of the test results, the National Association of Mortgage Brokers was quick to point out that the fail rate of its members was much less than the national average. Encouraging, perhaps, but not necessarily sufficient to regain the public’s trust.
While there are obviously many qualified, honest, and ethical lenders, it would seem that the industry has experienced a loss of confidence similar to that experienced by real estate, and has a public relations challenge if it expects to rebuild its image. Perhaps the lending industry should take a more proactive approach and provide evidence of self-policing and training of its membership. With only 20 hours of pre-licensing education required, 3 of which deal with ethics and consumer protection issues, some have suggested that the industry itself should demand more stringent measures.
Additionally, the test isn’t required for those who work for conventional banks, who are regulated by the states in which they operate. As the government works out the kinks in this new testing and regulating system, only time will tell whether or not consumers will benefit or just be burdened by an expanding bureaucracy.
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