Catherine Reagor reported in the Arizona Republic today that Arizona lawmakers passed a bill yesterday that will require loan officers and mortgage originators to pass a test, pay a fee, and notify the Arizona Department of Financial Institutions where they are working.
Governor Janet Napolitano still needs to approve the bill, but reports are that she is in favor of the measure. If passed, the new law would go into effect January, 2010.
Personally, I think this is good legislation. I don’t know whether having such a law on the books would have resulted in fewer “bad loans” in the past, however. That’s so hypothetical. I also wonder how difficult this test will be, whether there will be a pre-licensing class that is needed, and just how much the fee will be. Naturally, the higher the cost and effort it takes to get into the business, the more likely it is to weed out a couple of more bad apples.
Per Robin Gronsky, who has been tracking states that add or plan to add licensing requirements for loan originators, Arizona will join 35 other states that already have or plan to have licensing requirements.
{ 4 comments… read them below or add one }
Craig J. Frooninckx 06.30.08 at 10:42 am
This is the first step in regulating and holding accountable those professionals in the Mortgage industry. I doubt it would have prevented some of the situations that we are currently paying for, but I do think it is a step in the right direction in helping prevent those that are unethical and unprofessional from just writing bad loans. Just my $.02 worth.
DebtFreeDave 06.30.08 at 1:34 pm
The bad thing about this bill is that it is for brokers and not bankers. If it is going to be effective, it needs to include everyone. Bankers had a larger percentage of the mortgage abuse than brokers did. Banks just want to eliminate a portion of their competition. The end result will not benefit the average consumer on the street. It only looks like good news, it is not. Anyone whose knows the industry will tell you it is a political move only.
Eric Murrietta 06.30.08 at 4:39 pm
I do believe that licensing is going to add more credibility to the profession. Though there will always be those who push the ethics envelope, whether they have the license or not, it will be a good for the profession in the long run.
Steve Belt 07.01.08 at 7:55 pm
@Dave, interesting perspective, particularly coming from a mortgage broker type. I do agree that the “bad loans” couldn’t be written by a mortgage broker, if the banks didn’t come up with them, and their underwriting guidelines didn’t allow them. That people could qualify for a loan based on the short term introductory rates of some of those stupid loan programs was absolutely atrocious.