Why would a consumer work with a non-licensed Mortgage Originator?

As I read over the internet each day to see what is new and trending, I came across this great article.  I started thinking, many consumer’s (buyer’s) don’t know the difference or requirements for Licensed Loan Officers and Bank Originator:

Why would a consumer work with a non-licensed Mortgage Originator?

Following the release of the QM and Ability to Repay rules from CFPB, I decided to try to read through the proposed Loan Originator Compensation rules. I found this pretty interesting. Instead of making additional regulations for Mortgage Originators who work at banks or credit unions, why not just make them subject to the SAFE Act and require them be licensed? 
If I were a consumer, I would only consider working with a Licensed Mortgage Originator verses a “Federally Registered” Mortgage Originator (allowed at depository banks at credit unions).
From the Federal Register Reg Z – Loan Officer Compensation

3. Qualification Requirements for Loan Originators

Section 1402 of Dodd-Frank amends TILA to impose a duty on loan originators to be “qualified” and, where applicable, registered or licensed as a loan originator under State law and the Federal SAFE Act. Employees of depositories, certain of their subsidiaries, and nonprofit organizations currently do not have to meet the SAFE Act standards that apply to licensing, such as taking pre-licensure classes, passing a test, meeting character and fitness standards, having no felony convictions within the previous seven years, or taking annual continuing education classes.

SAFE Act Property GuidingTo implement the Dodd-Frank-Act’s requirement that entities employing or retaining the services of individual loan originators be “qualified,” the proposed rule would require entities whose individual loan originators are not subject to SAFE Act licensing, including depositories and bona fide nonprofit loan originator entities, to: (1) Ensure that their individual loan originators meet character and fitness and criminal background standards equivalent to the licensing standards that the SAFE Act applies to employees of non-bank loan originators; and (2) provide appropriate training to their individual loan originators commensurate with the mortgage origination activities of the individual. The proposed rule would mandate training appropriate for the actual lending activities of the individual loan originator and would not impose a minimum number of training hours. In developing this provision, the Bureau used its discretion….

And we should trust banks to train their Loan Originators and continue to not be held to the same standards as a Licensed Mortgage Originator per the SAFE Act because they have such a great history of originating safe mortgages and hiring stellar mortgage originators.
Here’s more about bank/credit union non-licensed mortgage originators:

“For depository institutions, the enhanced requirements related to findings from a criminal background check may cause certain loan originators to no longer be able to work at these institutions. It also slightly limits the pool of employees from which to hire, relative to the pool from which they can hire under existing requirements”

If you work with a Licensed Mortgage Originator TODAY – you are working with someone who has passed a criminal background check and met the SAFE Act Standards.  It’s mind boggling to me that LO’s who work for banks and credit unions are not licensed and held to the same standards per the SAFE Act.

Do you trust a bank to look out for your best interest and protect you?
Kara’s Guest Blogger:   Rhonda Porter+

After reading over the information,  if I can help you-  A Licensed Mortgage Originator for the State of Florida feel free to call me, Kara Holleran- 239-246-6000.  License #300761

Posted on January 28, 2013, in Finance and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Leave a comment.

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