Look out Loan Originators: “No More Mr. Nice Guy”

I attended the WAMB breakfast on Wednesday which featured Deb Bortner, Director of Consumer Services for DFI.  The room was filled with anxious mortgage brokers as we listened to her update on licensing and the State’s plans to add more regulations to those of us who are employed at with companies who have the ability to broker mortgages.

Deb Bortner stated "no more Mr. Nice Guy" if a LO has not passed the state required exam by the end of this year, they will not be permitted to take practice their business until they’re licensed.  As of October 1, 2007, out of the 15,000 individuals who applied to be Licensed Loan Originators, 3261 have passed the LO competency exam.   Simple math tells you that there will not be 15,000 Licensed Loan Originators in Washington state by December 31, 2007. 

I believe that we’re going to see a significant reduction of LOs who are employed at a Mortgage Broker, especially if they’re "part time" or just not committed to their field.  I’ve heard of someone being very frustrated with the process from fingerprinting not working (20% of the fingerprints are rejected and to be retaken…I had the pleasure of being printed 3 times) and deciding that this was too much of a hassle.    This is raising the bar of entry to work for a Mortgage Broker and there’s no wrong in that.

Some will be intimidated by the exam or may not pass it the first time and may decide they should make an employer change (work for a mortgage company not regulated by DFI, such as a large bank mortgage company).   

The LOs who depended on subprime mortgages to make a living are now out of luck.  If they’re not willing to learn conforming programs and/or if their company is not an approved FHA lender, they have less options and therefore, their paychecks are pinched.    Many will become frustrated by the current mortgage landscape and decide to bail out all together.   And of course some LOs will discover themselves laid off.

At the last few industry gatherings I’ve attended, I’ve noticed fewer "slick salesy" LOs and more Mortgage Professionals–people I’m proud to be associated with.

More to follow on other topics that were discussed at this meeting including a proposed state bill to regulate "non traditional mortgages".

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