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 feel licensing is long overdue for LO’s. This will lead to more professionalism in the industry and weed out those who are not qualified and those that don’t have the ethical standards necessary to provise to their customers.
I definitely agree with national LO licensing. I’m also happy to see that bankers, credit unions etc. are also among those to be licensed. That way, those who couldn’t make it in the broker world can no longer hide behind a bank title.
National Licensing is a good thing. It will definitely put some professionalism back into the industry and hold Loan Officers a little more accountable for their transactions. With the National Licensing, the Loan Officer’s throughout the country will be a more uniform, eventhough individual states will still maintain some of their own lending laws.
National Licensing is fine as long the fees and costs of these courses do not get to high.
I think the licensing is a very good thing, and also agree with Stephanie that it is nice to see that all originators of mortgages are under this group, rather than just loan brokers. Anyone that is offering mortgages to the public should be have to meet the same requirements. Also, as Michael mentioned, the fees and costs are certainly a concern of mine as well. I have already felt a bit of a “money grab” going on at the state level with our WA state licensing requirements, and having to pay fees a second time to get registered on the online database, even though I already paid to have that done under the old system. That is my predominant concern, because I believe that the regulators know that since we have to pay the fees to be legal, they can essentially charge whatever they like.
It is about time that banker-brokers fall into this category too. When this came down for LO’s, I knew a few LO’s that went to work for banks to avoid the fees and the licensing. I agree with Stephanie, they can no longer hide behind a bank.
I have worked very hard to be compliant and maintain trust and integrity with my clients. I want all LO’s to do the same. This is our profession and we have to protect it.
I agree. Licensing is necessary. Even though it doesn’t establish who is above board. If the fees become prohibitive you will see loan officers move to lending institutions who will most likely offset the costs of continuing education.
I agree. I think the licensing is very good, I think all LO’s should be treated the same, we should all have the same requirments. I too would be concern about the fees, They need to keep the cost down. I just got my license in Aug, now I have to renew and take 2 continue classes befor Dec, I feel the crunch. We do need to protect our profession. Maybe the consumer will feel a little bit more secure, knowing that LO’s have to go through alot of training.
When I became a loan officer in the middle of 2007, I was very suprised to find that classes, testing, and licensing had not already been required. We are dealing with people’s life savings, the next 30 years of their lives, their investments, not to mention the legal liabilities. I agree with the licensing requirements and am also so glad that this will include bankers, etc…
I agree with the concern regarding the fees of courses and licensing. I do not believe I can write the fees off as I am a W-2 employee in order to do FHA loans.
Loan officers who work for banks, credit unions and savings & loans do not have to be “licensed” but only “registered” under the current law. That means they do not have to take courses or pass an exam.
The bank lobbyists have a much bigger budget than does the National Association of Mortgage Brokers.
I double checked with DFI on the licensing issue and that was their “take” on the national licensing law.
I strongly support anything that advances the professionalism of our industry and this is an excellent next step. I particularly like the provisions for ALL LOs and common standards for Bankers & Brokers. I’m also an advocate of life-long learning both for personal and professional development – this works for me!
Practice makes perfect and if its perfect practice then…practicing improper and or unethical behaviour just hurts everyone.
Sure this is very good for consumers and LO’s alike. But what about the the Banks? The balance is not there and this is unfair –
Provision is a good start toward raising the bar of professionalism and competency in our industry. Lawyers, stock brokers and others are required to be trained and tested. We have seen how low quality mortgage securities can affect our economy, we need to make sure that all actors know the business.
It’s great to learn and know more. I think that all consumers should also have to take a class before they buy a house. I think everyone needs to be educated on what is in store for them.
Hi Beth,
Realize that if LOs put the burden on the consumer to self-educate, you will be worth less in the eyes of your client.
I am happy that we have licensing requirements. I only wish that it extended to the banks. I am tired of hearing “I’m exempt I work for a banker” It is from the slimey LO’s that jump from one place to another. At least they will have to be in the national database I believe, right?
I can’t believe it took so long to require licensing. I was alway embarrassed when people would come into my line of work, my profession, with no experience,or training. It seemed to de-value what I did for my clients.
Having no licensing for LO’s was a big joke for years around the business. You can take any Joe off the street and make him a LO. The company I use to work for actually advertised on the radio how
all the LO’s for our company passed the Mortgage Broker’s exam when no licensing was required. Anything that brings trust and confidence to our profession is a good thing.
YEAH for licensing! Its about time this is a requirement, maybe some LO’s would have a little knowledge and take some of the responsibility off the Brokers. I still feel that there are licensed LO’s just out to make a buck and then there are those Professional Mortgage Loan Officers. I believe it’s all in the eye of the beholder. I believe the industry grew very fast and there was way too much competition. People weren’t even having to work very hard and now those who are in it still are working hard to stay alive, those who were in it for a buck have moved on. There should be a way that when its good, people can’t just on board with training and professionalism.
as for your questions; Who remembers the last step towards achieving professional status? Certified Strategic Alliance Professional (CSAP):
In addition to achieving CAAM status the individual is expected to accumulate additional alliance education and experience points and pass a standardized exam. The CSAP will be based on the ASAP Strategic Alliance Manager competencies framework.
I applauded the fact that LOs had to be licensed. I felt that banks that claimed their LOs were trained via their internal program sometimes led to some really lazy LOs that actually didn’t know what they were doing. With licensing, it weeds out those LOs that are just out to bring in as many clients as they can without actually knowing what to do. I agree with Teresa Gallaher’s comment that I sometimes felt that our profession was de-valued because of so many unqualified LOs.
Lookng back it was so un real back in 2002 , anyone could become a LO just by finding a broker willing to sign you up .You did not need to be familiar with anything , just find someone who wanted the
financing .Lack of regulation is what has casued the collaspe of the housing market , by Bundling the loans and selling to Wall street ( Lehman bros ) the risk was passed to others and everyone made money in the pyramid sheme of raising values Before de regulation the lender making the loan had to keep it .Having a whole industry with un licensed persons making huge commissions can havee problems .
This upcoming licensing defenitly sound like music to my ears!!. Customers will be the first benefited out of this regulation. And, defenilty, those who are already profesionals will benefit with a higer appreciated perception from customers. It’s going to be a big + and worthy the fact that lots of “Bad Apples” will be put on the side of this industry and that will surely make this industry a best place for customers and profesionals.
I agreed to the Bill signed by the President. In this way LOS will be more educated with the code of ethics, state and federal laws. And somehow come to a more standarize profession.
I also,am of the opinion that all people providing mortgage services should be required to be lisenced. In order to have the proper knowledge and ability to perform the task, there should be education involved. The proposed law would mandate every body to complete the education, in order to have a better undersanding of the mortgage loan process . It will also prepare the person to have what it takes to deveop proper attitude towards the people that you serve , like to have good ehical traits , sensitivity and responsibility towards the client.
At firt glance it may seem like this could breed discrination in favor of the most educated but ,I believe that the most educated sooner or later wil venture into other industries and the playing field wii level off.
I think it would be difficult to argue against LO licensing. It is essential that loan officers be trained – that they understand and can impart knowledge about the products they are selling. I think that it will be crucial for the exam and for the continuing education to be of substance however…not just a revenue stream or a loop to jump through, but something that truely educates loan officers and makes us better able to do our jobs.
I agree with licensing 100%. I have never understood why Realtors had to be licensed but anyone could walk into a broker office, give them info and started getting people’s personal information. As Loan Officers we deal with bank accounts, ssn’s, credit card numbers, etc.
Licensing was LONG overdue. I think it has helped us weed out many of the “bad seeds” in the industry.
Think of how much safer our roads would be if everyone had to take a drives education class every year. I am comfortable any time I’m required to take a renewal class. It makes me safer out there. We do deal with the financial lives of our clients.
I like that we are licensed now as LO’s. It tells our customers that those of us who are still doing loans have passed criminal background checks and are continuing our education in this industry. I encourage my clients to look up my information if they so choose. Any consumer who is doing their due diligence before they enter into a contract should be given all the information they need to make an informed choice. Most importantly am I doing business with a reputable source.
It is about time. (Licensing)
I am completely behind the licensing as well as the continuing education for LOs. Among many other positives of the licensing and training, one is that some people needed that extra little shove out of the industry. I’m sure that there are some LOs out there that will let their licenses lapse going into 09′ who may have otherwise still been soliciting business.
excellent Idea. I think we have to do this and the penalties for miscuduct should be more severe so those who want to do one loan a month and take home $10000 think twice. Nowhere in the world could you sell loans without a lisence, working two jobs or three jobs
and and having no continuing education to give you the tools to protect your clients and do what is best for them.
I’m all for tougher requirements. It keeps the lazy fast buck artists out our house!!
The licensing requirements should have been put in place for all LO’s, Brokers, etc., rather it has been a reactive move by regulators and government. I think continuing education should be increased and background checks rigorous.
National licensing is long overdue. Continuing education and tougher requirements will help clean up the mortgage industry. Consumers need to know where licensed and have had a criminal background check. They need to be able to trust us. And know where out for their best interest. Not ours.
Totally on-board with national licensing.
Our current fix is not entirely the fault of the criminal elements that populated this industry, but it certainly was made MUCH worse by it. National licensing should greatly discourage criminals, and would be criminals from becoming LO’s
Ironically, the first state in the nation to adopt licensing was Florida, and yet, because the state government failed to even vaguely enforce their own rules, thousands of criminals were allowed to originate loans. Nice job you’re doing there, Jebbie…
http://www.miamiherald.com/multimedia/news/mortgage/brokers.html
Read it, it is truly frightening.
Accredidation of any sort is no measure of ethics nor is any degree from any accredited institution any badge of honor. Just because someone holds a certificate of accomplishment in the mortgage industry in no way binds them to ethical practices. So how are ethics measured and to what standard are professionals going to be held to protect these consumers? A test is just a test of regurgitated material and is not a reflection of a person’s moral duty or abilities to provide outstanding service in any field.
Furthermore, what are the new requirements by lenders and to their “investors” who created the guidelines who’ve led to this mess?! Are they to be held to new standards of performance? Where are those reforms?
I’m really happy that the bankers and everyone else is required to pass this licensing test. This is going to be a good consumer protection. Not everyone should be doing loans, not everyone has the same ethics and moral standars that are needed for this job. I think that this was long overdue. I’m 100% behind it.
Standards are definately needed and welcome. Like others above, all loan originators must be licensed, not just those working for brokers. It is a shame that anybody could become a lender in the past. It has allowed dishonestly and a huge lack of professionalism. The great concern is will the pendelum swing too far, and become unreasonable. In addition, will government hands see licensing as another means of generating revenue instead of creating professionalism and protecting the consumer.
This would be oan outstanding precedent to have everyone involved in the process licensed. The regulatory process would absolutely weed out the types we have been reading about for too long.
Bankers as wwell as brokers have a need for continued education and accountability just as the rest of us.
Hopefully the fees and costs involved in implementing a larger scale licesing arm won’t run the little guys out of business.
This is a good requirement to help increase the level of service we give to our clients and to weed out the LOs who aren’t willing to go the extra mile for our clients.
I feel that this will help stop the unethical lending from National Chartered banks and the LOs that have not been careful about what they do because they are used to being licensed under the “bank” and are thrown into the field with not much knowledge and training. This will help the preparation of future loan officers and current loan officers at all parts of retail and wholesale and it will set a high standard for our industry. I believe that this change will highly impact the market and it will help prevent predatory lending.
I am all for all LO’s being licensed. Anyone who handles other peoples finances should be educated and licensed. It use to be that anyone who who didn’t have a higher education could just step into the mortgage business. I believe that we are now getting in the era of being part of that higher education bracket. I believe that the banks, etc. should also have to abide by the same licensing and education requirements at mortgage lending does.
Let’s agree to take the necc. steps to become the pro’s our borrowers would like us to be. Bring on testing and licensing, the unfortunate side effect is additional fees. A self regulating industry might help to keep this a little more under control.
I agree this is good for the idustry. For the companies that train their LO’s well the test won’t be a big deal. It will just add to their integrity. For the less trained it will help with their jobs and ability to do whats right. I think we should all be held accountable.
I think natioanl licesing of LO is a good thing. When a licesing started here in WA it washed out lots of people who had no idea what it takes to be a LO. They got in into the business becouse it was “easy” money, fast. Alot of them are out, for the benefit of consumer.
I believe this to be a good thing!!I was starting to wonder why some had to have there license and other didn’t. And if the duties are performed the same they should have to be on the same pages as everyone else of what is ethical and what is required of them.But I like the comment Michael Belisle said “the fee’s and cost do not need to be so high. I feel its a way of (states)to make Money!!and again Greed comes too mind all over again
This is great for our industry. Like I said in my previous comment, LO’s should have to go through a bachelor’s degree
program and it should be implemented in our universities. Hopefully
this will prevent a crisis that we are in today and banking will steer away from crooked.
It’s about time that all LO’s were licensed. I’m glad to here that they also included banks credit unions and consumer loan lenders. LO’s deal with most peoples largest financial asset their house.LO’s also deal with a lot of personal information that can be very sensitive. Hopefully this help keep people out of the industry that are just trying to make a fast buck.As for continuing education you can always learn something to help you be better at what you do although I will admit it can be time consuming. Especially if you are involved in more than one field and more than one state.