Hello World, I’m 510-LO-32047

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Yep.  This afternoon, I finally received my Loan Originator License.   I guess I can stop checking the DFI site to see if I’m official.   So, now I’m trying to update my websites, blog sites, business card, letterhead, all of my letter templates…it’s a bit of work and hopefully worth it.

The next step, in order for me to retain my new bright and shiny license will be to pass the exam that is suppose to be available later this year. 

This is part of the reason I wish we just had ID cards, certificates or maybe a badge to wear.   What’s going to happen to the poor loan originators who do not pass the exam (we get 3 attempts at $125 a test and then have to wait two weeks before taking another test for another $125) and have spent their time and money over the last few months updating all of their marketing just to have the number revoked?  

I know, “play me a fiddle”…there’s not a lot of sympathy for any loan originator these days.   I’m sorry, this number displayed on everything that we have our name to just doesn’t sit well with me.    And bottom line, it will still be up to the consumer to verify that the license is active.  Having the license number plastered everywhere does not guarantee a Loan Originator is a legit mortgage broker.

Enough grumbling for tonight!

Colorado’s Mortgage Broker Law Bars 10 Originators

Like Washington State, Colorado’s new mortgage broker law, the Morgtage Brokers Registration Act, went into effect January 1, 2007.   All ready, they have banned 10 mortgage brokers according to the article in the Rocky Mountain News.

Will Washington State be banning unsavory brokers?   We’ll have to wait and see.

I’ll keep you posted.

Loan Originator Licensing Links

Try saying that 3 times fast!  I’m preparing for my presenation at the Greater Eastside Escrow Association on Thursday on Loan Originator Licensing.   I’m going to feel a little like the wolf in front of the hen house…although I’ll be out numbered!  It’s actually all good.   I have a background in title and escrow in my past life before I was a lender.   Since I’m working on assembling a list to hand out to the Escrow Officers, I thought it might be more convenient to post the website regarding licensing here. 

Mortgage Broker Practices Act

Mortgage Broker Practices Act Rules

Washington State’s Broker and Loan Originator Licensing Law Chpt. 208-660 WAC

DFI’s List of Licensed Loan Originators (this is very backlogged…I’m not on it yet and I should be.  So please don’t assume that because a LO’s name is not on the list that they didn’t pass the background check).

WAMB’s LO Licensing info

Seattle Time’s Article

Rain City Guide blog that I authored, Licensed to Loan

Ethical Lending Foundation — offers clock hour approved courses for loan origintors.

I’m sure there’s more information available…this is just a quick place to start!  If you have suggestions for other links I should post here, please comment and let me know.

Credit Unions, Banks and Brokers…OH MY!!!

Recently I found myself drawn into a blog on Rain City Guide.  The topic that got my attention is Wiz authored by Jillayne Schlicke titled “Hot or Not” which featured various tips for first time homebuyers from an USA Today article.   The specific “hot” tip that forced me off of the sidelines and onto the paying field (it was New Years weekend…football…etc.) was: 

"Hot:  The author also suggests comparing rates and fees from three different lending sources: a mortgage broker, a banker and a credit union". 

After a few friendly banters back and forth debating our points, I realized what my real issue was…it’s not the institution, it is the person.   I do believe that a broker is going to offer a consumer more products and rates from many different sources than a bank or credit union…and I’ll still stick by my guns to say a “licensed originator” (banks and credit union loan officers do not have to pass background test and exams and be licensed) is probably better suited to serve a consumers mortgage needs.   Credit unions and banks typically just offer their products and rates.  If a bank loan originator elects to "broker" and not use a bank product, they are often paid a lower commission.   Brokers typically work many different banks (For example, the Broker I work for, Mortgage Master, works with over 80 different lenders, banks, etc.) and all of their products and rates.   

My recommendation is that a consumer should, instead of going to a bank, credit union and mortgage broker for rate and fees, consider these three options:

1)      Referral from a family member, co-worker or friend who has just bought or refinanced their home.

2)      Recommendation from their Realtor and, ask the Realtor why they prefer the lender over others.

3)      Recommendation from their CPA or CFP for the lender they endorse.

If a consumer does not yet have a Realtor, CPA or CFP, then I would recommend they ask a friend, family member and a co-worker for their lender.   

The whole idea of rate shopping is misleading and a potential for disaster for home buyers or people who want to refinance. A rate shopper really needs to be educated before picking up the phone, going to the internet, or picking up the "liars list" in the newspaper.  It really does come down to the individual providing you the quote, their ethics and expertise…how do you measure (or “shop”) for that? 

A mortgage is one of the largest investments most people will make in their lifetimes.  I cannot imagine allowing anyone providing me advice unless they could demonstrate they are competent, dedicated, educated and equipped with the latest mortgage programs available.   

Does licensing or an earned designation prove this?   I think it’s a step in the right direction.   I am one of the few loan originators in the fine State of Washington (grey, rainy and windy today) who has taken the steps to become a Certified Mortgage Planning Specialist (CMPS) and who is looking forward to having brokers become licensed…it’s just too bad the licensing does not apply across the board to EVERYONE originating any type of mortgage loan.   Alas, it’s only for Mortgage Brokers (Countrywide, Washington Mutual, Wells Fargo, Chase Manhattan are just a few of the loan officers who will not have to pass the test).    I predict that once the testing takes place (estimated mid 2007) you will see a shift of loan originators who use to work for brokers, leaping to mortgage banks to either avoid the test and background test, or because they could not pass the states requirements.

The true test of mortgage broker licensing will not be known to us until we actually take the exam late this year.    Measuring the ethics of anyone, let alone a loan originator, can be a tricky task…I guess that’s where I keep coming back to getting a referral from resources you trust. 

A Christmas Present from Congress for Homebuyers

Xmas1969 If lawmakers get their way, Private Mortgage Insurance (PMI) will become tax-deductible for home loans originated after January 1, 2007. PMI is a requirement for most home loans in which borrowers make a down payment of less than 20%.

The bill has already been passed by Congress and awaits the President’s signature before it becomes law.

While the new deduction is restricted to homebuyers whose annual household income does not exceed $100,000, the legislation could impact nearly 50% of all homebuyers, according to a SMR Research study of homes financed in 2005.

Up until now, many homebuyers have used "piggyback" loans in order to avoid paying PMI. A piggyback loan is where the homebuyer obtains two mortgages, a first mortgage for 80% of the purchase price, and a second mortgage for the remaining funds required, outside of the down payment.

Since many homebuyers have chosen a Home Equity Line of Credit (HELOC) as their second mortgage, their required monthly payments have increased significantly as a result of the actions of the Federal Reserve. Today, many homebuyers with a HELOC are now paying more than they would have if they had chosen PMI with their original mortgage.

What does this legislation mean to you?

Under the law, homebuyers will have more financing options available that offer greater tax deductibility and lower monthly payments. This means a homebuyer could potentially afford a more desirable home! In addition, homebuyers could qualify for traditional mortgages rather than the more expensive options they were forced to pursue in the past.

The new law, should President Bush allow it, would apply to home purchases and restructuring of acquistion mortgages (no cash out refinances) only.   The bottom line is it is always great to have more options for home buyers.

UPDATE:  Sure enough…President Bush just signed this new law to be in effect from January 1, 2007 –  December 31, 2007.   I’ll post more information as I find it. 

You’ve Got To Start Somewhere

I have been meaning to do this (create my own blog) for quite a while now.  Sadly, it has taken all of the recent bad press about others in the mortgage industry for me to get off my duff and a "snow day" in Seattle (when most everything else grinds to a halt).    

I am a Certified Mortgage Planning Specialist.  I have been in the mortgage, title and escrow fields for over twenty years and have been amazed at what I have seen.  I love my career.  There is nothing more rewarding for me than to see how much owning a home can impact a family’s quality of life.   

It is equally amazing to me that up until recently, Loan Originators (aka Loan Officer, Mortgage Consultant, Mortgage Planner, Loan Specialist… to name a few) have been one of the few individuals without any requirements in our great state of Washington, to handle a family’s largest investment, their mortgage.   Thankfully, this is all about to change.   In fact just yesterday, I completed my on-line application with the Department of Finance to become a Licensed Loan Officer.   Amazing, isn’t it?   Up until now, only Realtors, Escrow Officers and Appraisers have been licensed (for the most part)…but the person advising you of the best mortgage and devising financial strategies for your future could have absolutely no training whatsoever or even be a known felon!

Governor Gregoire signed House Bill 2340 which will regulate all Loan Originators (UNLESS they are employed by a bank, such as Washington Mutual, Countrywide or Wells Fargo) providing residential mortgage loans in Washington State.    Here are the basic requirements effective January 1, 2007:

  1. All Loan Originators will need to pass a basic compliance skills examination (this will not be available until mid 2007.  Until then, we are just required to obtain our license and then we get to keep the license assuming we pass the test in 2007).
  2. Continuing Education courses will be required on an annual basis.
  3. Background checks will be required prior to licensing.  Persons with felonies may be allowed to practice if their felony was prior to seven years ago.   

This is, like my first blog, at least somewhere to start.  It is definitely overdue.   Many consumers and real estate professionals that I have talked to are often shocked to learn that there has been no regulation of mortgage originators (for the most part) in our state.    It will be interesting to see how this will all evolve.   As I mentioned earlier, I completed my application (all nine pages) yesterday.   The questions that were presented blew me away–most were based on "have you ever committed a felony, fraud, caused a company to lose their bond…as well as wanting a 10 year employment history".  I had the joy of being fingerprinted just last month (I’ve got sweaty hands).  The real change in our system, after the background checks are complete, will be seeing how many loan originators will or will not pass the exam.   

It’s not entirely the loan originator’s fault for not being educated.   Most mortgage companies do not offer training.  There are many courses and presentations available on line and "live".  Currently, in most cases, it’s up to the loan originator to be motivated and passionate enough about their field to take these steps.   Effective January 1, 2007, unless they work a big bank, it will be mandatory if the loan officer wants to continue their practice in Washington State.