Tucked inside the Foreclosure Rescue Bill signed by the President yesterday is a provision calling for all loan originators to be licensed. Bankers, brokers, consumer loan lenders, and credit unions; it doesn’t matter where you work. If you’re an LO you must pass a competency test that will be developed by the National Conference of State Bank Supervisors and pass with a 75% or higher, and ALSO, ALL NEW licensees will be required to take a mandatory 20 prelicensing course. For many of you reading my emails, you know my opinion on this: This is GOOD for our industry. Some companies train their LOs well. Others, not so well. In order to start rebuilding consumer trust, the mortgage lending industry as a whole must start with the relationship between the LO and the consumer. Some companies will have to be dragged kicking and screaming into higher standards, some clearly are already there. Obviously, I’m biased for more education because I’m an educator and this will bring more income to my firm. Yet we should all prepare for tougher exams, more required pre AND continuing education for many years to come. If you took the ethics class from my company, you heard us predict this all throughout 2007. My prediction today: Even tougher standards are on the horizon. You will owe higher duties to the consumer and will also have more liability. This is a natural narrative path for any emerging profession. Congratulations, LOs, you’re on your way to becoming professionals. Who remembers the last step towards achieving professional status? Whoever the first person is to email me with the correct answer, I’ll let you attend a continuing ed class at no charge. Answer posted in next month’s newsletter and on the NAMF blog as soon as it happens.
Update: Mike England from The Money Store was the first person to email me the correct answer:
A highly specific code of ethics along with industry self-regulation of ethical conduct. (Remember, a simple, vague code with NO enforcement is meaningless.)
I agree with licensing. It has given me the opportunity to achieve a higher level of professionalism for my clients.
Across the board licensing for all originators of mortgage loans rates a 10 on my scale.
It did seem interesting to me to see all the folks leaving the Broker “industry” to work for banks when we were first required to become licensed.
I think it has made me a more knowledgeable loan officer, and gives a pathway to ensure that all lending is held to the same standard. I have always been concerned when I walk into my bank or credit union to see the mortgage specialist. Not knowing what kind of traning they have received.
Open and level playing field and an opportunity to continually be educated. Seems like a good plan to me.
Ha… what a funny topic. I love the new tougher standards being put in place an enforced. Yes, for people like me who have a little thing I like to call Integrity it is a slight inconvenience to have to take these classes but over all it is great! An educated mortgage professional is an even more competitive professional. Why this industry allowed so many scrupulous people into it with so little training I will never know. I have employed many, many people over the life of my career and never one that I did not trust. The way I see it is my competition has been cut my 80% or more. Those scum bags that were taking advantage of people can now go back to what they should have been doing in the first place… FLIP MY BURGER you uneducated succubus…
My feelings are the more demanding the requirements to enter into this profession the better off we all are. Wouldn’t bother me if they required a higher education degree(ba/bs) coupled with a way to test around a college degree requirement provided you have four years experience and can pass a very rigorous exam developed by our own industry(one that has practical significance). If we don’t want all the riff/raff jumping on the ship during the boom periods taking $$ from those that are serious LO’s we have to actively engage in bringing up the entrance requirements to board the ship. I worked in the real estate sector 25 years ago, what a free for all it was, 6 cocktail lunches and worse. It appears that industry has made considerable advances in its practices and ethics in Washington. I believe we should have much more stringent requirements than the real estate side, we handle the money side, we should have demanding hoops to get through to do what we do!
Im all for personal developement and National Licensing was the best thing that could’ve happen to this industry. It weeded out a large percentage of unethical LO’s, that were in it for a fast buck. Just think of the confidence and trust this will bring to the industry. Anyone who originates loans should have to meet these requirments, although I hope it doesn’t become to costly. We are in a recession.