Helping Washington State homeowners learn more about their mortgage options.
Today’s Mortgage Brokers Commission meeting was attended by many concerned mortgage brokers and correspondent lenders (brokers with warehouse lines of credit) who feel as though they’ve had a real doozy pulled over them by recent legislation, specifically SB 6471. Deb Bortner of DFI (bad photo compliments of my Treo) insists that it was not DFI’s intentions to rope in the correspondent lenders who are licensed as mortgage brokers to be regulated by the Consumer Loan Act.
Many Washington State correspondent lenders (and we, loan originators who work for a correspondent lender) are feeling very frustrated (to sugar coat it). A majority of us have abided by the State’s licensing laws, paid our dues, passed our background checks and the exam…even if we were not a “true” broker. We played along and played by the rules. In an attempt to “capture” a few Correspondents who apparently do not broker (they’re direct endorsed lenders, like Mortgage Master, except we will broker a small portion of our loans), who were exempt from the Mortgage Brokers Practice Act, the State decided to deem any mortgage broker with a warehouse line (i.e. Correspondent Lenders) will now be regulated under the Consumer Loan Act. Correspondent Lenders can retain both licenses and be held liable accountable under both acts, or just maintain their newly required Consumer Loan License. There’s significant expenses for both licenses which I may or may not get into in a future post.
After Deb Bortner defended DFI’s position, she handed the floor over to the audience and here’s a few of the comments from “the floor” of brokers that I found interesting (I’m paraphrasing, since I was not able to write fast enough and I’m not quoting the individual broker):
“This [obtaining a consumer loan license] goes against every value we have in our business. We can now hire felons, are no longer required to do continue education and the consumer will pay. What you’re doing is STUPID.”
“This is a nasty little bill with nasty little consequences.”
“We are Correspondent Lenders. We are different than Mortgage Brokers and we are NOT a Pawn Shop.”
“I wish the media was here to see all of these mortgage brokers fighting for the consumer.”
“For half of the mortgage industry to have to go through the licensing again is crazy.”
“Everyday that goes by is less chance of closing a loan. We [correspondent lenders] have the ability to draw docs and close loans quicker and more efficiently than true mortgage brokers.”
“How many lenders were actually not licensed through the loophole? It seems the motivation here is more taxes.”
“What is DFI going to do with all the extra money?”
Mortgage Brokers and Correspondent Lenders, your next chance to hear what DFI has to say is next week in Bellevue on Tuesday, May 13–however you must RSVP by this Friday, May 9, 2008. For more information, click here. As of midnight, June 11, 2008, if you have a warehouse line of credit and you’re a mortgage broker or correspondent lender, you need a Consumer Loan License.
A correspondent lender is a blend between a bank and a mortgage broker. What sets correspondent lenders apart from others is that they have significant credit lines that allow us to fund loans which are then sold to the lender after closing. A correspondent lender processes, underwrites and prepares the loan documents which allows them more flexibility than the traditional broker. Correspondent Lenders have access to many different lenders unlike most banks. Even if bank mortgage companies can broker, loan originators often will not as they’re typically paid a lower commission if they do not use their bank’s products.
So why is now such an important time to select a correspondent lenders? With banks pulling back (or suspending) products or repricing and lenders shutting down, it’s important to work with a Mortgage Professional who can make adjustments if needed in a rapidly changing market. Many were caught at closing when they sent loans to American Home Mortgage, one of the nations largest lenders. If you were getting ready to close with a mortgage broker, the loan would need to be re-processed, re-underwritten, and new loan docs prepared and delivered to escrow. With a correspondent lender, as long as the rate had not changed, you could possibly keep the same docs and your escrow appointment.
Because it is more difficult to become a Correspondent Lender vs. a Mortgage Broker there are fewer of us and therefore, we’re a bit more challenging to find. How do you know if your Mortgage Professional is employed with a Correspondent Lender? Ask. A “mortgage broker” or “mortgage banker” is not the same as a correspondent lender.
A Correspondent Lender just may make the difference in your transactions closing on time in this uncertain market.
Rhonda Porter is a Licensed Mortgage Originator MLO121324 living in the greater Seattle area. Rhonda began her career in 1986 in the title and escrow industry and began her mortgage career in 2000. She enjoys helping people understand the mortgage process and started writing The Mortgage Porter in late 2006. Read More…
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