Bill 3915 is progressing towards a vote in Congress after passing through the House Finance Committee.   If Barney has his way, mortgages will be changed drastically and not all for the better.  Consumers will have financial freedoms taken away.  Apparently some of our elected officials don’t feel consumers can handle the responsibility of owning and financing a home.  They’re correct on a small scale; yet they are going to punish the masses (consumers and lenders alike).   

When I think of the people who I have helped buy homes or restructure their mortgage who would not be able to have a mortgage based on this proposed legislation, it sickens me.   Last year, I helped a woman who’s husband had lost his battle to cancer.  She was relocating back to Seattle to be closer to family and did not have a job.  We were able to do a "no job" loan based on her credit and down payment.   This type of program may not exist if Barney Frank gets his way.

If you are a successful home owner who may have used subprime or alternative financing (stated income, interest only, etc.); speak up or lose your financial freedom.   If you could only use The Bank of Barney Frank, you would not own a home without private financing and you may have troubles (fewer options) refinancing.   Don’t worry though, Barney will do what he can to make sure you can use the money to gamble on line instead of using it for something as dangerous as a mortgage. 

Regarding legalizing on-line gambling, Mr. Frank states

"…adults who work for their money, in the comfort of their homes, should be allowed to engage in a form of recreation which they enjoy and which has no conceivable negative impact on anybody else…"   

How can suffering gambling losses or supporting people with addictions to gambling be "suitable" to Mr. Frank? Argh!

If you are opposed to having this bill pass, I encourage you to take action and contact your representative in Congress and let them know how you feel.   You can copy and paste the letter below and forward it via email to your congress person.

<<YOUR STATE REPRESENTATIVE>>

Dear President George W. Bush, U.S. Senator Jon Kyl, U.S. Senator John McCain, U.S. Rep. Harry E Mitchell:

We want to express our opposition to H.R. Bill 3915. We believe it is burdensome to the independent mortgage broker, anti-competitive, and in the name of consumer protection, it will actually harm consumers. In an already tough lending and real estate environment, this bill will put additional unneeded pressure on real estate prices and cause unforeseen harm to homeowners, mortgage professionals and real estate professionals everywhere. It will also limit the choices consumers have in finding a residential mortgage loan to strictly large financial institutions.

Sincerely,

<<YOUR NAME>>
<<YOUR ADDRESS>>

Click to access Section%20by%20Section.pdf

We endorse the NO on H.R. 3915 Petition to U.S. Senator Jon Kyl, U. S. Senator John McCain, President George W. Bush, U. S. Rep Harry E Mitchell.

Read the NO on H.R. 3915 Petition

104,000 Total Signatures as of 11/7/2007
http://www.petitiononline.com/mod_perl/signed.cgi?HR3915

I’m have my office TV on C-SPAN hoping to catch HR 3915 being presented to the House Finance Committee.   Apparently there have all ready been modifications made since I last posted about this bill.

Summary of Amendments

NAMB’s Call to Action

Hat Tip to Ray Gallegos

This could be something that very few are interested in…but it’s new to me and many other loan originators who are employed by Mortgage Brokers in Washington State.

I’ve been a good girl and have followed all the steps in order to be licensed.   

1. Registration and passing the background check.
2. Attended two clock hour courses:  Ethics (required the first year) and Reverse Mortgages.
3. Passed the competency exam.

The last step…renewing!  Fellow Licensed Loan Originators; don’t forget that after you do steps 1-3 you must go on line and renew your license.   This must be done by December 31, 2007.   DFI is returning your documentation if you send it to them; it’s required you enter the info at their site.   You will need your Promissor certificate, the two course certificates, a credit/debit card to charge $125 and to answer questions regarding if you’ve committed felonies, have a misdemeanor…etc.  It takes less than 5 minutes to complete the renewal process.    Now I’m good through 2008 and will just need to take two clock hour course to maintain my Loan Originator License.   What are you waiting for? 

You may be saying that the mortgage industry deserves it…but your wrong.  It’s not that simple. A majority of the mortgage industry are good hard people who truly care about helping home owners, continuing their education (without being forced to by regulation)…just doing what’s right (telling someone they should not refi or helping someone work on becoming better prepared to buy in the future instead of now).    Yes, the mortgage industry does have it’s share of bad actors, as does many professions.  The topic of why and who’s to blame has been covered quite a bit. What’s important right now is something that may be happening on Tuesday, November 6, 2007:  HR 3915 is scheduled for a committee vote in the House of Representatives.

Here are some of the points I’m concerned about with HR 3915:

Eliminating YSP (Yield Spread Premium).   YSP is compensation that mortgage brokers receive from lenders and they must disclose the "lender rebate" to borrowers.  Often times, the YSP is used to pay for closing costs or to allow for a mortgage priced at zero origination.  Both of these are benefits to the consumer.   This may provide less options for a consumer working with a mortgage broker.   Mortgage Bankers do not disclose what they’re paid "on the back end".   Even though this portion of the bill may not directly impact me (since I work for a Correspondent Lender; I’m treated more as a banker); I still give this a thumbs down.   Competition is good for consumers; this is what America is built on.  Yes, I welcome a "smaller pool"; however, I only want the bad fish gone. 

National Licensing for ALL Mortgage Originators…YEAH, if this is for ANYONE (broker, banker, or candlestick maker) who originates a mortgage loan for a residential property.  I’ll eat a shoe if banks are not able to lobby their way out of being licensed.  There would also be a national registry of licensed loan originators which would prevent unsavory LOs from crossing state lines.  In addition, loan originators will be required to have a net worth of $100,000 or be bonded.

The "Net Tangible Benefit" Requirements.   This could really squelch home owners being able to refinance.  The LO must show there is a "net tangible benefit" to the home owner in order to refinance.  How do you define that?  This could cause investors to refuse to purchase loans, banks may refuse to issue loans and brokers would not be able to originate mortgages because the consumer could and would come back and say "you shouldn’t have sold me this loan".  The potential for liability to all in the mortgage industry would be too great and many home owners would lose the option to refinance in circumstances that didn’t seem to provide a clear "net tangible benefit".   This will impact mortgage bankers and mortgage brokers alike.   

Bottom line, many in Congress don’t understand what they’re trying to regulate.  Mortgages are complex.   I’ve listened to more testimony from our elected officials and I believe (truly hope) that my clients understand more about mortgages than most of them do.  Here’s a thought: before they can present a bill impacting mortgages, families who depend on a mortgage to purchase a home, livelihoods of mortgage originators; our Congress men and women should have to pass the mortgage competency exam.   Why do we want someone making laws they don’t understand the full impact of? 

I believe if this bill becomes law, it will actually harm consumers.  The cost of mortgages may increase.  There will be fewer mortgage options and fewer lenders willing to provide them.  Competiton is good.   Home owners should have the right to make choices about their financial future.

Here is a link to sign an online petition against HR 3915.  If you’re a mortgage originator, real estate agent, appraiser or home owner; I encourage you to contact the House Committee of Financial Services to tell them about your positive experiences with your mortgage before Tuesday. 

I’m torn between attending a seminar that I sign up for this morning, or…attending a Mortgage Broker Commission Meeting.  I received notice of this event a few moments ago.

Here is the tenative agenda:

• Loan Originator Update and Renewals
• Mortgage Broker Examination Findings
• Enforcement Unit Update (should be interesting)
• Rule Making Update
• and much, much more!

This will take place on Wednesday, November 14, 2007 from 9:00 a.m. – 11:00 a.m. (the exact same time as the seminar) at the Renton City Hall in the Council Chambers on the seventh floor.

If you are planning on attending, Beth Craig, Administrative Assistant 5 with DFI would like to know by November 9, 2007.   You can call her at 360-902-8793.

I think this is such a crucial time for mortgage brokers.  It’s time for us to take action and support each other.  Putting our heads in the sand won’t save our industry.

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".

Early this morning I went to Promissor to take my Loan Originator test.  Passing the LO exam is required by all loan originators who are employed by Mortgage Brokers prior to January 1, 2008.    I’ve passed my background check from the DFI and FBI and I’ve attended my two clock hour courses (ethics–which is required for the first year of licensing and reverse mortgages)…the test was the last step in retaining my license to be a Loan Originator.  I passed!

If Loan Originators (we go by many names:  mortgage consultant, mortgage planner, loan officer, mortgage specialist…etc) who work for a Mortgage Broker have not passed the 100 question exam by the January deadline, they will not be allowed to practice as a LO for a Mortgage Broker.   I’m betting we’ll see the LOs who do not want to take the exam or who did not pass the exam become employees at mortgage companies who are exempt from having licensed loan originators (mortgage company banks like WaMu, Chase, Wells Fargo, Countrywide; credit unions; consumer loan companies). 

As a Licensed Loan Originator, I am required to continue taking two classes per year approved by DFI in order to maintain my license. 

I would love to hear from a local bank Loan Originator/Loan Officer to hear in detail what they are required to do in order to maintain employment at Wells Fargo, Countrywide, Chase or Washington Mutual…I’m all ears!