This article is about the country’s lawmakers’ decision to police-up the mortgage industry by requiring loan officers to be licensed and registered nationwide; a law that most states, including Arizona have also adopted. While I have always been a proponent of loan officer (LO) licensing I did not expect to be forced to get one for myself since I am a licensed mortgage broker.   A mortgage broker license is much harder to obtain and requires a higher level of achievement for the applicant. So why then are we, mortgage brokers, required to have both licenses? One theory I have is that it will produce more fees. Every year, I now have to pay for two licenses and must fulfill continuing education for both which isn’t free either. Another theory is the weeding out process. If you are in agreement with this theory that more fees and testing and fingerprinting and background checking was all designed to remove the bad apples from the bunch (and we all know there are many of them) well you might be surpised to know that on this basis, the law is a total failure.

Yes, that’s right, this law fails to remove even one bad apple from originating loans in this country for one simple reason. Banks got a sweetheart deal that exempts all of their loan officers from these licensing laws! No kidding, you thought I was going to rant and rave about the trouble it was to get my redundant LO license but I’m not (not really).  As soon as this law hit the books, banks from all over the country contacted me to offer employment as an unlicensed loan officer. There were no requirements, none. I just needed to have a desire to be employed by them and could have had a track record of loan fraud that would’ve been disregarded. There were other enticements like the ability to originate loans in all 50 states without federal OR state licenses. I had bank executives telling me it would be just a matter of time before I would be out of business as a mortgage broker, so I might as well climb aboard with them where no license was needed. So, I ask you now, where do you think all of the LO’s that had blemished records and couldn’t pass a background test or a state exam went? To your bank. That is who will be selling loans for the Banks of America and others from now on.

Times are hard for us mortgage types, housing values are down, customers are still trying to get loans with no credit and no money down (please don’t call me) and the government wants all mortgages to be handled by someone in a call center in India that works for Bank of America (which is really Countrywide….remember they bought Countrywide ;0) Our government is trying everything they can think of to kill mortgage brokering yet some of us (masochists) remain in the industry because we’ve done no harm, have excellent service and can still deliver a competitive price.

For now, I am proud to have my licenses and I guess I will just keeping jumping through hoops to prove I am a qualified, certified and ratified. The next time someone asks you what the difference between a mortgage broker and a banker is, you can tell them that a mortgage broker and its loan officers are state and government licensed entities, investigated and approved by law to safely handle your mortgage application and a bank is a depository generating a revenue stream from the mortgage business that employs loan officers without any background or licensing requirements.

Michael Manfredi is an Arizona Reverse Mortgage Specialist

Reverse Mortgage Concepts

7310 N 16th Street #315

Phoenix, AZ 85020

(800) 507-2080