Reduced mortgage brokers
http://www.housingwire.com/2008/01/02/p ... ashington/
The number of licensed mortgage brokers in Washington state is apparently dropping dramatically, with only 66 percent of previously licensed mortgage brokers and 42 percent of previously licensed loan originators fully renewed and approved to do business in the state.
"The low number of renewals — compared to the number practicing prior to December 31, 2007 — is a concern," Washington Department of Financial Institutions director Scott Jarvis said, "particularly in light of the numerous notices issued."
"We understand that the reduction reflects a dramatic drop in loan activity due to the downturn of the mortgage industry and a number of firms going out of business or dropping their state license," Jarvis continued, "but the reduction is still a concern."
Washington state brokers are required to be licensed, per legislation passed in 2006. From the the Seattle Post-Intelligencer:
"We're concerned that people will be doing business without being licensed," said Deb Bortner, head of DFI's consumer division. "We want to know where they are. I think we were a bit surprised."
State records indicated that in 2007, 1,261 mortgage brokers and 13,722 loan originators (agents of mortgage brokers) applied for and received a license after the 2006 passage of legislation requiring loan originator licensing. The Department denied 170 licenses for criminal histories, bad credit, or character and fitness issues.
While 6,139 have passed the competency test so far, the number of completed renewals is only 5,720, the agency said. DFI has processed all licenses with complete applications and the Department expects hundreds of applications to arrive in the first weeks of 2008.
I'd written last week about similar problems in Maryland, where state regulators have been ill-prepared to enforce a state-wide licensing effort for mortgage brokers.
http://www.dfi.wa.gov/consumers/news/20 ... rokers.htm
The number of licensed mortgage brokers in Washington state is apparently dropping dramatically, with only 66 percent of previously licensed mortgage brokers and 42 percent of previously licensed loan originators fully renewed and approved to do business in the state.
"The low number of renewals — compared to the number practicing prior to December 31, 2007 — is a concern," Washington Department of Financial Institutions director Scott Jarvis said, "particularly in light of the numerous notices issued."
"We understand that the reduction reflects a dramatic drop in loan activity due to the downturn of the mortgage industry and a number of firms going out of business or dropping their state license," Jarvis continued, "but the reduction is still a concern."
Washington state brokers are required to be licensed, per legislation passed in 2006. From the the Seattle Post-Intelligencer:
"We're concerned that people will be doing business without being licensed," said Deb Bortner, head of DFI's consumer division. "We want to know where they are. I think we were a bit surprised."
State records indicated that in 2007, 1,261 mortgage brokers and 13,722 loan originators (agents of mortgage brokers) applied for and received a license after the 2006 passage of legislation requiring loan originator licensing. The Department denied 170 licenses for criminal histories, bad credit, or character and fitness issues.
While 6,139 have passed the competency test so far, the number of completed renewals is only 5,720, the agency said. DFI has processed all licenses with complete applications and the Department expects hundreds of applications to arrive in the first weeks of 2008.
I'd written last week about similar problems in Maryland, where state regulators have been ill-prepared to enforce a state-wide licensing effort for mortgage brokers.
http://www.dfi.wa.gov/consumers/news/20 ... rokers.htm
Comments
There's another witching hour deadline of Valentine's day. After their license expired on 12/31, LOs still have 45 days between now and 2/14 to finish up their required paperwork, edu, and testing, plus pay a penalty for renewing late. If they miss the V-day deadline, then they'll have to start all over from the beginning.
I'm sure most of the 419 who passed the test will renew. It's the other 7,000 that we'll want to watch. I predict 2,000 of these 7,000 will ultimately renew and the rest will fall away.
BTW, lower numbers means less revenue for state regulators, less money to enforce their laws.
Well I expected hundreds of students to feign ignorance over the 12/31/07 deadline and to swarm into the classroom between Jan 1 and yesterday, Valentine's Day.
That did not happen.
Class sizes dropped dramatically. In December we had upwards of 90+ students in each class. In January and February our average class size was 13 students; very, very low.
Many of these folks were LOs who knew they had missed the Dec 31st deadline and were very nonchalant about it.
Many were people who had been working as an LO part time and had another full time job. Jobs varied: auto mechanic, nurse, pilot, fireman, stay at home mom or dad. They told us that inquiries for refinances drove them into the classroom to renew their license instead of just letting it lapse.
I will guess that another couple of thousand renewed which would still leave LO attrition somewhere at 2/3rds: astonishing.
Let's say that I was up past midnight every night this week processing last minute students.
There was a mortgage broker commission meeting this past week. Their tech guy will upload a podcast in a week or so. I'll listen and report back.
Meanwhile, brokers have more to worry about. Two bills seem to be at a point where they will surely pass. One will mandate fiduciary duties for brokers and LOs and the other will mandate that any additional YSP earned and not disclosed will have to be refunded to the consumer at closing. This closes a predatory lending loophole.
Brokers and LOs who operate above board welcome the change.
Many many many many many many many many many many many many many many many brokers and LOs are worried.
Factoring in the new legislation, tougher guidelines, reduced loan to values, shrinking pmi...a few LO's are not coming back. Gee...and we might have fiduciary responsibilities to borrowers? That's it I QUIT (NOT).
Thanks for the updates. Out of curiosity, what would you say to someone that graduated last year, wasn't able to find a job in their chosen field and then this year decided to become a mortgage broker?
In short, there is an extra grain of salt to take whenever an RE professional declares that business is picking up.
Anyone know what % of the state economy RE and construction make up? Whatever it is, it's safe to say that about 30% of recent job growth is in the process of reversing course. Even if everything else stays healthy, this is still huge.
Hi Perfectfire,
I actually ASK questions like this in the classroom all the time. At the beginning of the Exam Prep class for LOs, it's always really helpful for me to know what a new person use to do, before he/she entered the mortgage lending industry. I define new as anyone who entered the business 2 years or less. For example, if someone use to be a mechanic then that helps me because I can help them understand that a mortgage loan has many moving parts.
Every time I ask the new folks why they entered mortgage lending, I get the SAME answer, 100 percent of the time: "I want to make a lot money." One hundred percent of the time, they answered an ad that said "make six figures your first year with no experience."
What I might say to those folks today is that you have to ask yourself if you really want to do the job of making loans. Because if there's no INTERNAL motivation to do the work, to learn, to counsel, to listen, to empathize, to connect with customers, and the only motivation is an external reward ($$), then you will ultimately fail.
Some people already have developed a great deal of compassion and space interally to connect with others by the time they graduate. For other folks this could take a lfetime.
So that's the long answer.
The short answer: That person must ask himself or herself if making loans is what he/she really wants to do. Many people fall in to mortgage lending and they fall in love with it. This person might be one of those people. Only he/she will know.
So to answer your question: what would you say to someone that graduated last year, wasn't able to find a job in their chosen field and then this year decided to become a mortgage broker....
Here is some advice:
1. Do not enter this field unless you have enough savings you can live off of for at least 12 months.
2. Take every opportunity to learn and stay on top of programs. This could be as simple as attending sales/training meetings at your office or could be taking classes from Jillayne.
3. Before you originate mortgages, I would recommend spending a few weeks "processing"...glued to your processor's side. Learn the "inside" before you venture out.
4. Develop a business plan. Where are you going to get business? Do you have friends, family or a social network who would refer business to you? Does your employer do "up calls"? (I don't recommend buying leads or taking leads from your employer that have been bought).
This is probably tmi...
I say start at a lending institution that offer initial and continuous education and training.