To start with, there will be a significant reduction in those who can legally take a loan application in Washington. Effective January 1, 2008, if a loan originator works for a company that is registered with the State of Washington Department of Financial Institutions (DFI), the loan originator must have:
- Passed their competency exam. (Most who take it do pass…many are simply opting to not take the test).
- Attended two DFI approved 3-clock hour courses (one must be on ethics).
- Renewed their license if it expires by 12/31/2007.
The last stats I’ve heard is that out of the over 15,000 Loan Originators who registered with DFI, fewer than 2,000 have taken and passed the exam. That’s reduction of just over 85% of Loan Originators working for mortgage brokers in Washington State.
Originally I assumed that LOs who do not want to take the steps required to work for a mortgage broker, would decide to work for a mortgage bank where they are not held to these standards by the state of Washington. This is not going to be the case. After talking with a few of my mortgage banking brothers & sisters, I’ve learned that many banks are "googling" Loan Originators names before hiring and if they were rejected from DFI, the bank sales manager is able to see the nitty gritty details of their disqualification of being a Licensed Loan Originator. Bank Mortgage Sales Managers also visit DFI’s site and run an LO’s last name to see if they were rejected, withdrawn or licensed. Add to this equation that there are going to be fewer jobs for Loan Originators with some local banks, such as Washington Mutual, laying off employees and closing some of their retail loan centers.
A majority of the 13,000 or so Washington Loan Originators who have elected not to take the three simple steps I’ve referenced really don’t have a lot of options in the mortgage industry. Yes, a bank will hire a good producer who has not been rejected from DFI…but there’s only so many of those and no reason for a bank to hire someone who’s a marginal producer.
Let’s also not forget that it’s been an amazing ride for the mortgage industry since August. Some LOs will decide this job just ain’t worth it. You really need to know your guidelines and various programs these days and be prepared to forget what you just learned because the guidelines just changed (again) or the program is discontinued.
So after the New Year celebrations pass, if your Loan Originator is still around to help you as your preferred Mortgage Professional, give ’em a pat on the back. There will be fewer of us left standing when it’s all said and done.
I personally cannot wait for this year to end and to start new in 2008!
Happy New Years!