Chartered Bank Loan Originators versus SAFE ACT Arizona Licensed Loan Originators? You Make the Choice!

By
Mortgage and Lending with Lend Smart Mortgage NMLS#207208 NMLS 207208

I am sure you have heard about this by now, but if you have not let me share again.

Effective July 1, 2010 all Mortgage Bankers and Mortgage Brokers in the State of Arizona will require their loan originators to be licensed.

Now based on an exemption in the laws the big Interstate Chartered Banks do not require their loan originator working for a big bank such as Chase, Wells Fargo and Bank of America to be licensed.

Now I am not trying to make this into a David versus Goliath story, but I am trying to emphasize the huge differences and implications this change will have on the consumer.

Here is a chart to show the differences:

SAFE ACT AZ LO’s Chartered Bank LO’s
Licensed Yes No
FBI Background Yes No
Fingerprinted Yes No
Assurity Bonded Yes No
20 hours upfront education Yes No
8 hours continuing education Yes No
Credit checked Yes No
Fed and state testing Yes No
Complaint mechanism w/ DFI Yes No
Licensing  fees and renewals Yes No

So I think the choice is clear.  The funny part is the cost for the service based on rates and fees are about the same.  The best analogy I can use is having a choice of working with a CPA vs. Turbo Tax but paying the same price.

Posted by

Gary Miljour, Licensed Mortgage Loan Originator: 

 

 

 

 

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Donne Knudsen 06/13/2010 06:37 AM
  2. Kyle Jan 06/24/2010 05:20 AM
Topic:
Mortgage / Finance
Location:
Arizona
Groups:
Realtors®
Arizona Real Estate
All About Mortgages/Mortgage Networking
Arizona Mortgages
Tags:
arizona mortgages
safe act
arizona mortgage orignator licensing

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Ambassador
533,690
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Gary - Interesting.  I never understood why not be consistent across the board with licensing.  And I agree the choice seems pretty clear.

Jun 12, 2010 07:51 AM #1
Anonymous
glen

Gary, although you make true comments here, for the most part you are a little off.  When I went to the classes to get my NMLS licensing, the instructor explained why the FDIC banks don't need to go thru the licensing.  One of the biggest reasons is that the big banks do in fact do credit checks, background checks, etc before hiring.  I guess not fingerprinting.  They also have compliance policies in place that are monitored closely.  The broker world had basically nothing and any fool could originate loans.  So, all the classes and licensing is to put people more on equal ground.  I do agree it should be for everyone, but the case you are making is misleading to a consumer.  You can't really think it is CPA vs Turbotax type of a comparison.  There are many FDIC loan officers that took it upon themselves years ago to get additional classes and training by enrolling in CMPS etc. All in all, I think it is a more even playing field and not what you are showing in this example.

Just some food for thought, not meant to be an attack!!

thanks

Jun 12, 2010 08:24 AM #2
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

Jason-  I have to agree that a consistent platform would make the most sense to keep everything equal.  But as we see this is just not the case.  Thanks for the comment.

Glen-  I would like to comment back to you and I do not take your comment as an attack.  However, I cannot agree with the manner that you are stating that my post is misleading.  For something to be misleading it must first assume that the information I am providing is not factual which in this case is all factual information.

I understand that the big banks do in fact do credit checks and background checks, but this is more for hiring purposes and has nothing to do with licensing requirements.  My company I work for does the same checks prior to hiring. However they also must make sure that I am a licensed loan officer.  My company also has company policies that are monitored closely.  Just because you are an FDIC insured bank does not mean that your credit checks, background checks and policies are better than a small mortgage broker or banker shop.  This is just not true.  I understand you state that the broker world basically had nothing, but that was the choice of that mortgage broker and that licensed broker was responsible for his employees actions.  However now, all loan originators on an individual basis must be licensed and the fact is the FDIC insured bank loan officers do not.  Also, you are making an argument that the big banks acted in better faith then the small shops, I do not buy into that theory.  I also understand that some FDIC loan officers took additional training, but that training was available to anybody that wanted to take it.  I have no problem with originators choosing to further educate themselves.  But the facts are the facts and my information above it true.  These are the things that we must do to each year and FDIC loan originators do not.   

 

 

 

Jun 12, 2010 10:51 AM #3
Rainmaker
601,332
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Gary - Great post and I would like to re-blog.  On another note, every mortgage broker I have worked for during my eight year mortgage career has required their LO's to be CA DRE licensed, which means we are fingerprinted and backgrounds checked and here in CA are required to have 45hrs of continuing education every four years.

So in addition to my CA DRE licensing requirements, I now have to maintain NMLS licensing requirements so I strongly doubt that some bank rep has to have that much training, education and qualifying.

Jun 12, 2010 11:56 AM #4
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

Donne-  First of all have fun with the re-blog.  :)  Thank you so much for the comment, I did not know that you guys have to have 45 hours every 4 years. 

Jun 12, 2010 01:53 PM #5
Rainer
213,991
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~

I think the licensing should be across the board.  The bank LO's should have to have the same training, CE, etc. as those on the outside of the bank.  What makes them different.  Lobbyists?  And for the record, at BOA anyway, all employees are finger printed when hired. 

Jun 13, 2010 09:23 PM #6
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

Doreen,

I agree with you that the mortgage loan originator license requirements should be across the board.  I love your comment: What makes them different.  Lobbyists?, So True!

Now let me state that I understand BofA requires finger printing, but is this an FDIC rule, or just a BofA background check?

My biggest point in this post is that the FDIC Federal Charter banks background and criminal checks are an internal process, while mine requires me to be licensed by national and state statues.  I think that is the biggest difference here. I have to adhere to laws or face consequences.  What are the consequences for an FDIC Federal Charter Bank Loan Originator?

Thank for commenting.

Jun 14, 2010 05:35 AM #7
Rainer
213,991
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~

I would have to guess that it's just a background check.  I only mentioned it because of an earlier comment.  I agree all of you doing the same work need to have the same license requirements. 

Jun 14, 2010 06:45 PM #8
Anonymous
Stephen G.

You make it sound like a bunch of non-educated nim wits work for the banks and the broker world is a bunch of Harvard grads. The facts are the banks have greater hiring standards and do have FBI Backgrounds Checks and credit standards. CPA to Turbo Tax? Come on its more like Ex-Bartender(Broker) to a Masters Degree (Bank). A guy who has never done loans before would not be hired by a bank right now and on the flip side a broker would hire a guy from McDonalds. The reason why the banks dont have to do the testing is because they already have been doing it for years internally. Should the standards be across the board? Yes, but you above list is very misleading.

Jul 29, 2010 01:32 AM #9
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

Stephen-  In my post I never state that banks are nim wits.  That is a conclusion you are drawing upon yourself, however the facts presented in the post are truthful and the laws are real.  I would also argue that the banks do not necessarily have greater hiring standards.  You are the one drawing to that conclusion.  Also, you are lumping me in as a broker, when I am in fact a mortgage lender.  There is a difference between a mortgage bank and a mortgage broker (big time).  However, you also draw to the conclusion that brokers or mortgage banks are not educated people.  Be careful with that one, I know a lot of folks that went through the license process that have bachelor and master degrees in finance, accounting and other technical degrees (including myself).  Your argument is insulting to the entire mortgage lending community.  Also, I know a couple of chartered banks that are out there using the non-license issue as a reason to come work for them, so again folks that cannot get licensed for the time being are going to work for chartered banks.  Not all chartered banks are created equal just as not all mortgage lenders and mortgage brokers are created equal.  Again the facts above are the law and truth and you cannot dispute that.  Oh and your telling me that internal standards are better?  I used to work for a big chartered bank in the past and their internal testing was a joke.  Again my list above is not misleading it is the truth.  However, I have some good news for you, I just heard that chartered LO's might now need to be licensed under the SAFE Act like the rest of us in the near future.  This is a good thing for the industry. 

Jul 29, 2010 04:20 AM #10
Rainmaker
400,528
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Gary - Im not sure why you waste your time responding to people who are not members. Don't get me wrong, I think that everyone has a right to their opinion, but only a coward makes a statement like that without being signed on. I completely respect peoples opinion about posts, whether they agree or strongly disagree. My problem with "Stephen G's" comment is that he obviously has a negative feeling towards brokers.... yet is not man enough to show who he really is.

Based on your post, you are absolutely correct about the testing. It makes sense for anyone working on in this indidustry to be properly licensed and 'checked out' with background checks. Anyone concerned about that has something to hide... and therefore should NOT be in this business.

Jul 29, 2010 05:26 AM #11
Rainmaker
601,332
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Gary - I'm glad that you set that commenter straight on the characteristics of an NMLS licensed MLO.  As an NMLS licensed MLO, I am also a college graduate and have been a CA DRE licensed MLO for my entire mortgage career too.  Furthermore, my current employer runs credit & background checks on every employee hired in addition to the same checks by the DRE.

Furthermore, we are required to attend lender trainings every single month in order to stay abreast of changing guidelines and requirements.  Lastly, I too have been seeing the marketing tactics of some of the banks around here using the lack of NMLS licensing requirements in order to recruit.  SERIOUSLY???

On another note though, I'm going to politely disagree with John's comment about people who have something to hide not being in the business or leaving it.  I know quite a few MLO's who are getting out of the business and not because they have anything to hide.  They have taken their tests, and passed and they have already submitted to the FBI background checks and credit checks. 

They're not leaving because they have something to hide but rather they're leaving because they can no longer deal with the day to day nonsense of this business and the contant beating that MLO's are taking from the government and lenders.  They're leaving because their stress levels are off the charts and they've developed a serious case of insominia.  They're leaving because of the 60+ hrs a week that they're working and the commission checks that are getting smaller and smaller because of the dropping home prices as well as their average sale.  They may as well be working for minimum wage somewhere.  They're leaving because they can no longer make a decent living. 

Heck, the thought of leaving the business has crossed my mind quite a few times in the past year or so and not because I have anything to hide.  I've passed my tests and submitted to my background and credit check too.  But my income is still down 40% from where it was just three years ago.  While it is up from where it was last year and the year before, it is still down and my savings has taken a major beating.  I've also been presented with some other opportunities as well, better paying opportunities.  Some rather appealing and one particular one that I just may end up moving on.  I haven't decided yet.

So before anyone assumes that MLO's leaving the business right now are leaving because they have something to hide - think again and this time, think of someone less fortunate than yourself.  Sorry for the long comment Gary, I know I should have just made this a post of my own but your post today just kind of struck a nerve with me.  Have a good day Gary.  :)

Jul 29, 2010 05:59 AM #12
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

John-  Thanks for the comment, I also agree, when a person is not a member of AR or chooses to be silent on who they truly are.  I am not afraid to defend a position I believe in.  Thanks for the comment.

Donne-  Thanks for the comment, I appreciate you all defending our position of being licensed SAFE ACT LO's.  Some would like you to think that we are a bunch of uneducated idiots that just choose to work as a broker for the sake of not being licensed and that is just not true.  The flexibility and independence to truly run my own business and clients is why I have chosen to work for a small mortgage bank.  Sorry John struck a nerve, I might be wrong, but you might be reading into his comment too far.

Jul 29, 2010 06:17 AM #13
Rainmaker
99,135
Gerry Suarez Jr.
Jet Home Loans NMLS 1660135 - Maitland, FL
FL Mortgage Guru

Hey Stephen G and any other commenter's that think the big bank way of vetting has been good enough...

I was just put in the enviable position of having to tell a couple they would NOT be able to buy their dream home because their newbie BofA call center MLO improperly prequalified them by grossing up income that was being taxed. This after he received two years tax retunrs that showed the income being taxed! What's worse is I took less than a day to come to that conclsusion with no expense to them. He strung them along for over 4 months and two appraisals, and was still pretending he could close them.

While all bank MLO's aren't this bad, situations like this prove the field should be even and everyone should have the same bar to measure up to. Banks obviously don't want that to happen.

Gerry Suarez, Jr.

Your FHA Loan Pro!

Jul 29, 2010 07:05 AM #14
Rainmaker
149,087
Gary Miljour
Lend Smart Mortgage NMLS#207208 - Southern Pines, NC
Mortgage Originator NMLS Licensed in AZ and NC

Gerry-Thanks for the comment and sharing your story, I have seen the same type of things on my end.

Jul 29, 2010 11:42 AM #15
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