(From guest blogger Josh Lewis of the Mortgage Guild in Costa Mesa)
Following my commentary on May 16th, two articles have been published which expand on the lack of oversight and licensing faced by loan originators. I say
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June 1st, 2007 at 8:27 am
I’m licensed by the DRE and my wife and I run our little mortgage bus. out of the house. I’ve been in the business since 1997.
In CA the Dept. of Corporations shops hired anyone they want like the article stated. In the broker shops they also hired anyone they wanted, the difference is the name on the loan application was the broker, or other licensed individual in the office, because the person doing the loan was unlicensed. It has pissed me off for so many years that these greedy scum bag brokers just hired anyone they wanted and got around the licensing issue in this fashion. You would see a mortgage broker who has 3 people that are licensed and 20 originating loans under those 3 names.
June 1st, 2007 at 9:05 am
The state doesn’t have money to hire additional auditors and regulators at the Dept. of Corp. or DRE.
There is a problem, but the solution requires more money, more taxes, neither of which is going to appeal to voters.
June 1st, 2007 at 9:14 am
That is true. I am an account executive and have seen numerous broker shops using only the brokers name on the application. In some cases the entire shop was not licensed but doing business under the brokers name…
June 1st, 2007 at 10:39 am
FRAUD is FRAUD.
Becoming licensed or working under a corporation to originate loans is not going to matter to the loan originator that believes that the law does not apply to them. The legal system must step up and prosecute whenever and wherever possible.
The next layer of scrutiny must be pointed at the lenders that are offering what they are referring to as the future of mortgage lending. Rather than calling their wholesale account executives just that, they are titled something along the lines of a closing agents. These individual walk brokers/loan officers/processors through the loan submission process, helping them do determine the most appropriate loan doc type. Then, once the loan has been submitted, these individuals underwrite the loans, sign off on the conditions, and acts as funders. To boot, they are open to the fact that these individuals receive commission incentives as compensation.
This idea is either brilliant and the entire industry should be modeled accordingly, or… I’ll let you use your imagination!
June 1st, 2007 at 12:44 pm
This comment: “There is a barrier to entry, however small, which prevents you from walking across the street from the Mercedes dealership and getting a loan officer job the same day.”
It is a well-known industry practice that unlicensed people simply use licensed originators information on mortgage applications as an easy way to bypass this licensing requirement, as the first commenter mentions. This basically renders any “barrier” meaningless.
I think your idea of a national registry is dead on. The mortgage industry needs a NASD-type governing body to help provide oversight to the industry. The industry could go a long way towards the development of an institution like this via some form of self-regulation.
I would add one last piece to your puzzle - enforcement. Without any enforcement legislation reform is meaningless. We have good laws, they are just not enforced. The enforcement agencies are woefully understaffed and underfunded. New laws, new disclosures, etc. are worthless with out the backup on the enforcement side.
June 1st, 2007 at 3:10 pm
Licensing or “educating” these individuals does not matter. Fundamentally all involved knew what they were doing and their actions were calculated and deliberat. All done in the name of the almighty $$. The ability to diferentiate between right and wrong it intuitive. The willingness to do what is right defines character. Any lender that tears down the proverbial wall between ommissioned based sales and credit decsion makers allowing them to approve their own loans will surely fail. Time to put thoses walls back up. Peoples Choice, Fremont, New Century and others exemplify my point.
June 1st, 2007 at 6:08 pm
You haven’t named the hedge funds which provided funds to the lenders and subsequently cut off that funding, creating the sub-prime crash and real estate melt-down. Is this an omission of choice or ignorance?
June 2nd, 2007 at 12:16 am
In regard to my earlier post, here is a link to an Orange County Lender that has an audio file link to a
June 5th, 2007 at 1:11 pm
Since when does having a license prevent someone from commiting fraud. It’s not about education or licensing it’s about the commitment of the owner of each company to practice fair lending. It’s maintaining control of each L/O to make sure he/she adheres to the policies and procedures set forth by the employing company. Having a DRE license doesn’t prevent fraud or misrepresentation. I agree with OC Trojan. There aren’t enough auditors to handle the volume of complaints. I’m sure this is why there aren’t more complaints registered with the DOC or DRE.
July 25th, 2007 at 12:32 pm
I worked in the mortgage industry as a mortgage broker for 5 years and I can tell by experience that these people are scumbags. Its all about defrauding people out of money and half those I worked with didn’t have a clue what they were doing. They were being told to do things that at time were completely criminal and they didn.t even realize it thats how stupid they are. I hate to say it but being a mortgage broker is worse then being a used car salesman the trust factor is nill. Its not even a profession its what people do when they have no other options. Everybody I met always talks down about mortgage brokers.