Improving the Quality of our Industry – Loan Officer Licensing

Here in Michigan, when you buy a home, the real estate professional that assists you must be licensed. The veterinarian that treats your pet is licensed too. Your stockbroker & insurance person carry a license. Get a hair cut, that person must be licensed as well. Ironically, when you obtain a mortgage, the person that guides you through that process, the loan originator, does not need to be licensed! If you are surprised at this, you are not alone. Although there are many high quality mortgage companies and high quality mortgage professionals at work here in Michigan, the existing “easy entry” into this industry has allowed more than a few “bad apples” into this business. Needless to say, not only does this impact the reputation of the industry, but this lack of oversight (to use the current buzzword) certainly has contributed to some of the market weakness. Thankfully, all of this changes as of January 2009 (unless modified by our friends in Lansing). New legislation requires that mortgage loan originators in Michigan must pass a thorough examination test, and be licensed by the State. Anyone convicted of a felony or misdemeanor related to embezzlement, forgery or fraud in a financial transaction in the last TEN years cannot be licensed to originate mortgage loans. Interestingly, originators employed by banks or depository institutions do not have to meet these licensing requirements. There is great expectation and hope that this new high standard will greatly improve the quality of the mortgage process in Michigan. Fraud will be reduced, processes will be better explained, & there will be fewer unpleasant surprises for homebuyers. In short, a strong & long overdue benefit for the consumer. The leadership in our industry & State government worked hard to put this new legislation in place. It is not perfect yet, but is is a great improvement over what we had. Chalk up a win for the good guys!