Hawaii Randy's Real Estate Opinions: Loan Officers Need an Education

Loan Officers Need an Education

We all know that the lending industry is going through major changes.  The Federal government has stepped up and determined that states either have minimum licensing laws or create them for mortgage brokers.  If they don't, the Feds will step in for them.   This is known as the SAFE Mortgage License ACT.

The SAFE Act does several things as far as tightening up mortgage brokers and their interaction with the public.  In Hawaii this badly needed proposed licensing requirement for mortgage brokers includes education, testing and continuing education.  These requirements are already in place for real estate and insurance agents.  It looks like a step in the right direction.

Here is where the net still has a hole.  The SAFE ACT creates a series of stuff for employees of banks and credit unions.  It also exempts them from the state licensing requirements.

This is the part of my post that will anger a few loan officers at the banks and credit unions.  I completely disagree with exempting them for state licensing requirements period!  State licensing requirements could do a couple of things that the SAFE Act won't.

  1. There is pre-licensing course and pre-license test.
  2. All loan originators would be regulated by one state entity, giving the public a clear course of action when they have been harmed.
  3. Continuing education requirements
  4. A closing of the loophole that would prevent a mortgage broker who has a revoked state license form taking a job at an exempt bank or credit union and doing it again.

In the course of selling real estate I have dealt with more loan officers than I can count.  Most of the ugly situations I have seen came from the mortgage broker side of the industry, but not all of them.  Several have come from out of state banks, one from a local credit union and two of the very worst came from local bank employees.  In one case the loan officer had a license revoked by the State of Hawaii a few years back.  That loan officer was at that time employed by the second major bank since losing their license.  In that case it took me meeting with two vice presidents of the bank to resolve the problem.  In the end my client was still out time and money.  The loan officer was no longer with that bank and off looking for the another place to prey on the public.

No matter how you shake it, no one should be allowed to originate a loan unless they can demonstrate a basic knowledge of the business and laws.  There should also be a simple consistent way for consumers to file complaints anyone who originates a mortgage.  I know that many bank employees are getting ready to tell me how they are federally regulated.  Big deal!  How does that help the consumer who is trying to buy a home and is being taken advantage of?  File a federal complaint?  Get real!

If you are looking to buy or refinance a home in Hawaii, feel free to contact me.  I can give you the names of several professional, honorable loan officers that will give you VIP treatment.

 

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Randy L. Prothero, REALTOR®

Broker-in-Charge, ABR, AHWD, CRB, CRS, e-PRO, GRI, MRP, SFR

eXp Realty

Team Leader - "The Prothero Group"

Randy Prothero is well established as an expert in working with military / VA clients and first time home buyers.  His home seller's (listing) campaign is one of the most aggressive marketing programs in the area.  His luxury home listings sell faster and for more money.

Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) Performs mediations and ombudsman services for the Board of Realtors.  To improve overall professionalism in his area Randy also offers classes for real estate agents. 

www.HawaiiRandy.comOahu (Honolulu County) Property Search  Hawaii Military Relocations

Comment balloon 59 commentsRandy Prothero • February 16 2010 07:15PM

Comments

Randy, as a mortgage broker I agree with you. I agree with continuing education and licensing even though it is costing me a lot of money out of pocket. I like the fact that it will "thin the herd" as it relates to the number of originators out there. I agree that bank loan officers should have to get licensed. The fact that they are exempt is a disgrace. I also detest the notion out there that mortgage brokers are evil and the bank reps are your friend. The difference is when a borrower has a problem with (for example) a Wells Fargo loan officer, they curse Wells Fargo and may move onto Bank Of America next time. When a borrower has a problem with a loan officer who works for a broker, then ALL BROKERS are viewed to be the problem.

Posted by Eric J, Dream Home Financing (Eric J - Dream Home Financing) over 8 years ago

Randy, It is expensive some times but continuing education is part of the job.

Good Post.

Posted by Ted Tyndall, FL Homes for Sale-Palencia, World Golf Village,Nocatee,St. Augustine (Davidson Realty Inc.) over 8 years ago

I hope that our underwriters take some of these courses - and quit making personal decisions instead of using the guidelines - oh I better stop -

Posted by Thesa Chambers, Principal Broker - Licensed in Oregon (Fred Real Estate Group) over 8 years ago

Eric - In Hawaii to get a license to originate mortgages you only had to pay $25.  If you worked for an exempt lender you did not even have to do that.  There is an insne number of untrained people walking around who go do a ton of damage to a consumer.

Ted - Real estate and insurance agents already have to do it in our state.

Thesa - Please don't get me started about underwriters.  That is a whole other post.

Rick - So true, but it would be nice to be able to file the complaint locally instead of going to a federal agancy.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

FEDERALLY REGULATED??? 

HA!  That and about $2.50 will get you a cup of coffee somewhere.

 

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 8 years ago

i'm in florida, so i'm sure there are differences, but one thing i agree with wholeheartedly, there should not be any exemptions. none, period.

don't presume however, that the regs will help cure the problem, at least in florida, the state often fails with implementation, for example

i took the required course and passed the test. the students were warned/told up front that the purpose of the course was to learn how to pass the test. the test is outdated and the experienced loan officers were instructed to disregard their knowledge of the new laws, as they needed be able to pass the test, and answering the question correctly could result in in being marked wrong. so our test really was a history lesson.

how does that help the newbies. it doesn't.

oh, by the way, the state has no intention of updating the test as the laws, in regards to licensing, will change again in october.

so how does this help?

Posted by Jay Beckingham, "I love first time homebuyers" (Fairway Independent Mortgage Company) over 8 years ago

Randy,

You and I have been talking about this for almost 4 yrs so I'm in total agreement with you. If Realtors need to go through the educational requirements....then certainly loan officers...mortgage brokers should be. Actually they handle the financing part which is most important since the buyer can't purchase without financing unless it's an all cash deal. If we do it then they should too.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) over 8 years ago

It should be all or none. To exempt Bank and Credit Union employees makes no sense. Are they not intelligent enough to pass the requirements. I know they are. Why the difference in handling? It's like saying a listing agent has to be licensed but a Buyer's agent does not. Again, makes no sense.

Thank you

Posted by Scott Baker, Realtor Homes for Sale in Cincinnati, West Chester, Mason, OH Area (www.eHomeReports.com Coldwell Banker West Shell) over 8 years ago

I have a problem with owner financing.  What happens when an investor decides to retire and sell all his properties?  One of the options is to do owner financing, but now this person has to become a mortgage lender.  And if this education is anything like what Jay says, I see more problems being created than solved

Posted by Tere Rottink (CoastalVa Realty Inc) over 8 years ago

The barrier to entry is so low for so many real estate related professions that continuing education seems absolutely necessary.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) over 8 years ago

You are totally correct that people who cannot pass the state licensing requirements will just try to go the bank route.  Hopefully, the banks will do a thorough screening before they hire someone.

Posted by Rodney Mason, FHA 203(k) & HomeStyle Renovation-AL,FL,GA,TN (On Q Financial) over 8 years ago

As a mortgage broker we have had our reputations sullied as the cause of this meltdown. There is probable cause to believe this may be true in some cases, but at a much smaller scale then the banks. What is not focused on is the big banks , Countywide now B of A class action lawsuit for predatory lending, WAMU 996,000 inflated loans using there preferred appraisers, Fannie Mae requiring B of A to repurchase $4.3 Billion and Chase $5 billion because after doing audits on these loans they sold to Fannie Mae they were found to be deficient in meeting the guidelines that Fannie Mae had in place. Yet they are exempt from be licensed? If you continue to do the same thing can you really expect a different outcome? I doubt it.

Posted by John Le Francois over 8 years ago

I think a minimum federally mandated program is essential, but not at the expnese of a state. For instance, California has a higher pollution problem with cars becasue of the population, so they went beyond federal standards. On the other hand Oklahoma does very little in respect to state regs on mortgages.

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) over 8 years ago

Obviously, I agree also.  Not having all originators licensed makes no sense nand definitely demonstrates a bias towards the banks and credit unions.  I think it is about time that our profession requires licenses, why did it take so long? 

Posted by Kyle Jan, Phoenix AZ Homes for Sale over 8 years ago

Randy... good to see you around... it's been a very long time my friend.... okay, onto your post.

 

No banks should be exempt from the licensing requirements.

 

I will agree 110%....  but my problem even with the banks is that companies such as Wells Fargo and Bank of America not only have local branches, which will usually have your street loan officers that usually know what they are doing... but my bigger problem are those banks and even lenders that have a large set called "calling centers".  Even if you make these large banks get all loan officers to be licensed and take the tests, this still won't clear up the problems in my opinion. 

My reason to this is because many of these loan officers don't really know what they are doing or know half of the guidelines. A call center in my opinion, even if a large bank, is like a "boiler room".  I literally had one client last year call Wells Fargo 3 different times and got 3 different loan officers that gave her the same answer... and that answer was WRONG... it wasn't a lender overlay... it was just flat out wrong.  I will add to the licensing requirements below...Part 2 .. ;o)

 

 

Do these state and federal tests even help? 

 

In my honest opinion, NO....  here is why...  most of these tests consist of state and federal laws....  I hardly know what they are myself... meaning that some of these are detailed and are usually for your officers of the company.  These kinds of tests should be basic, to test ones integrity...  in my opinion, they don't.  And most of these tests aren't about how to do a mortgage or some of the basic 101 guidelines... I think the education needs to be stepped up in how to originate a loan and not the 'whys' or 'why nots'....  yes, this is important, but just the basics. I guess this is hard to explain, until you actually see one of these tests.  If you are ethical and know that you can't go over a specific percentage when charging borrowers... then the rest falls into place. Just knowing the basics of what can't be done and what can be done is the major issue in my opinion. 

 

Overall.. what I see in regards to why most of these loans that don't close when promises are made?  Because the loan officer doesn't know how to screen a borrower... or if they have questions, they don't go to their manager or underwriter to nip it in the butt now, and not later. SO MANY LOAN OFFICERS are afraid to lose a deal upfront, so they bring them into the door first and then worry about the problems.

These licensing and testing requirements, even if met, won't keep these kinds of loan officers off the streets.  So how do we fix this major problem, that is my opinion, but I see this happening a lot.. and a lot of misinformation from some loan officers... 

Jeff Belonger

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 8 years ago

I think that most faill to realize that the testing and background check is at least as stringent internally for larger banks than the NMLS.  I am surprised that any lender didn't perform due diligence such as a credit check, etc. for any real estate agent or mortgage professional.

That said, I think there should be 1 Federal Exam similar to a Series 7.

Posted by over 8 years ago

The move for licensure for LOs is long overdue (my husband is an LO for a broker & he is very excited about it).  It will thin the herd and remove some of the incompetents from the industry.

Of course BANK LOs SHOULD NOT BE EXEMPT & neither should their underwriters.  But why would you think that this type of regulation would impact those on business welfare.

DISGUSTING!

Posted by Jenna Dixon, Empowers You With a Better Real Estate Experience (DRA Homes | Cobb County Real Estate ) over 8 years ago

Randy - it's obvious, isn't it, the bigger banks (the one who took billions of dollars from our collective pockets to stay open when smaller companies, like mine, closed without a hope) have the more powerful lobby? I wrote several months ago (maybe a couple of years) that we all write from our own perspective. You write from the perspective of a real estate agent in Hawaii. I write from the perspective of a former national director of a mortgage lender (non-depository banking company) and now from the perspective of a Senior Mortgage Lender from a similar company. Depository bankers will tell you they should be exempt because they are subject to the FDIC and other federal regulators. HOG WASH. I would, from my perspective, would take issue that brokers cause(d) more problems than bank(ers). When I was a broker (all the way up through 2003) I fixed more "crap" from bank loan officers dropping the ball, misleading people about interest rates or closing costs, than I did from any broker. Working for a bank does not in any way preclude one from failing to understand and obey regulations AND to work ethically with customers.

Posted by Ken Cook, Content Marketer/Creator (Content, coding, marketing, host.) over 8 years ago

Right you are, Randy. The bar should be set higher for loan officers, no matter who they work for.

Aloha,

Robin

Posted by Robin Rogers, CRS, TRC, MRP - Real Estate Investment Adviser (Robin Rogers, Silverbridge Realty, San Antonio, Texas) over 8 years ago

Randy ... All registered reps who sell mutual funds, etc. have to be licensed by the SEC whether they work at a bank or brokerage house. If former used car salesmen who tried to make it in the mortgage business during the sub-prime years had beeen licensed, we wouldn't be in this mess today. Rick 

Posted by Anonymous over 8 years ago

I aggree 110%.  Banks & CU's should NOT be exampt.  And the system is long over due. 

Recently had a loan office come from severals years working for a bank.  After failing the SAFE test twice.........returned to the Bank.  I work with clients frequently who have been given the wrong information buy the Bank they do business with or just given the Shaft. 

Posted by Chuck over 8 years ago

Randy: Thank you. Someone referred to it as a thinning of the herd. I have no problem being licensed ( I have been since 2007). Personally, I think all loan officers should be licensed. Let's face it. The barriers to entry are or have been low. It shows when up to 1/3 can't even pass the test. Jeff Belonger makes a comment about if the tests were on ethics only. This is actually one of the required classes. In my opinion, testing and licensing keeps people up to date. It's important to always be learning and this is one way. Plus, the public is clamoring for it. I remember when we needed to get licensed in Washington State. The realtors were glad; it could be because they have to renew their license and take a lot more continuing ed. than we do. I was lucky enough to go to and graduate from college. Honestly, taking a days worth of classes or testing online pales in comparison. Again, thanks for the post. As with anything, the pendulum has swung all the way but, in this case, I'm not sorry. Now if the banks and credit unions would have their people get tested too! Take care.

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) over 8 years ago

The bar should be higher for both LOs (Brokers & Bankers, regardless of your classification) and Realtors as well.  Both sides of this business have piss poor barriers to entry which is the real crime foisted upon consumers.

While I know some may disagree, I find it shameful that even a college degree is not required to be a LO.  We handle the largest financial transaction of most people's lives, yet we do not have in place the very basic requirements that most PROFESSIONS or CAREERS do.

80% of Realtors and LOs really shouldn't be in the business at all.  Heck, only 20% of of us actually close and substantial volume anyway.

Big Banks do not want higher barriers to entry as it will make it harder for them to run their boiler room outfits.  Consumers also really don't want higher barriers to entry as they generally aren't willing to pay for expertise.

Posted by Russ over 8 years ago

Since the NMLS requires that every originator have a license number, why not require that a minimum standard of education and continuing education be required?  It doesn't really seem like that much to ask for.  Just about every profession out there requires some level of continuing education.  It doesn't seem like that much of a stretch to have this applied across the board for all orginators as well.  State regulatory agencies have no authority over Federal institutions so it's hard to really imagine that FDIC institutions will ever be subject to State regulations.

In Oregon, a credit report is going to be obtained for every licensed originator in the state.  Most originators are not going to have a real problem with this; however, there are a lot of people in the real estate and lending industries that have fallen on tough times.  It will be interesting to see how this plays out.  How many of you would like your participation in your industry to be linked to your personal credit history?  I can only imagine what some of the credit reports would look like. 

In Oregon we have gone from roughly 16,000 licensed originators to less than 5,000 in just a few years.  The statistics in Washington are similar. 

I'd like to urge all of us to be careful with historical revisionism - just a few years ago mortgage brokers were the cool kids on the blocks.  Banks were struggling to compete with what could be offered on a broker level.  The broker model was more cost effective and more profitable.  

I remember all too well how many consumers and realtors were clamoring for "creative financing" which is just another phrase for fraud in a lot of cases.  The media also was pushing people to use brokers.  Fast forward to today and suddenly the attitude is that "brokers are all crooks" and that brokers somehow single handedly caused all of this economic mess.

What I am trying to say in the previous two paragraphs is that it's very easy to paint the overall picture with too broad of a brush.  There are plenty of lousy lenders out there at both the bank and broker level.  And there are a lot of really good people in this industry as well. 

As for post #21, to blame the entire financial meltdown on the originator level is to do a disservice to all of us.  Everyone is to blame for the meltdown.  The government's push for unsustainable levels of homeownership, the lack of meaningful ratings for mortgage backed securities, the number of investors buying property for speculation purposes, the number of builders building non-supportable levels of housing stock, loan originators that pushed Option ARM products, realtors that pushed consumers to buy more expensive homes, consumers that pushed themselves into more expensive homes, financial planners that pushed interest only and deferred interest products as investment vehicles, banks that wanted a bigger piece of the profits being generated by riskier loans, private investors that wanted a more lucrative way to make money through CDOs and hedge funds, hedge fund managers, experts like Barry Habib saying "a housing bubble will never happen," CEOs like Angelo Mozilo - all of these and more played a role.

I am making an appeal to all of you that read posts here at Active Rain.  I have found you to be really intelligent, insightful people.  Don't oversimplify this economic fiasco.  There are a ton of factors that led up to the housing bubble. 

Will licensing and education help?  Absolutely.  When a national licensing system is in place it will make it harder for loan officers to work in any state if they have violated laws in another state.  It won't; however, keep people from taking part in unethical behavior. 

My advice - send business to your lender partners that know what they are doing.  Show your lending partners that you value their expertise and abilities with your referrals.  There is no right place to send your business but there is a right person.

Posted by Mark Aalto, NMLS: 116708 (Summit Funding Inc) over 8 years ago

Yes, you can be hired by a bank with no mortgage skills and be thrown in to the mix immediately. Silly.

Posted by Aaron Vaughn | Builder | Investor, If the deal makes sense, the cash will follow. (Conifer Homes) over 8 years ago

Nice, Randy! I reblogged this one.

 

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) over 8 years ago

I can't argue with you on this one.  In many ways, I feel every one in our or related to our profession should have more education, before and after the fact.

Posted by William Feela, Realtor, Whispering Pines Realty 651-674-5999 No. (WHISPERING PINES REALTY) over 8 years ago

Randy,

I actually agree somewhat as to what Jeff B said and that's a lot coming from me....will it help? Probably not in all cases but as someone else commented...it's all or nothing. If a person has any part what so ever being involved with lending money to a consumer or having any part of their financial needs or handling money in any form......I'd expect them to have a license and some form of education even if they never utilize it. If we as Realtors have to have the license and the education...then surely the people handling the financing should have one. I agree that education isn't that important as far as a Real Estate license goes but we still are required to have one and also do our continuing education even if it's stupid. Most people in our industry have the street skills more than the education. Anyone can say they have a PHD in Real Estate but can they really practice correctly..ethically instead of carelessly. I think it should be more of a wake up call and keep them on their toes. If an Realtor practiced Real Estate without a license and was caught doing so...you can bet they'd be reprimanded....the same holds true in the mortgage industry.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) over 8 years ago

Oh may I add that if you cut hair...you still need to go to school. You can't cut hair without some sort of license even if you work under the roof of the owner.

Posted by Neal Bloom, Realtor CRS-Weston FL Real Estate (eXp Realty) over 8 years ago

There were, and are originators in this business that shouldn't be here. I'm in full agreement with you on this Randy.   Why the doulble standard?  How does this help and protect the consumer.  Unlicensed LO's have no license to loose.  If I'm competing with a bank LO, I'll ask the borrower if the bank LO is licensed and if not why aren't they?

Posted by Ed Gillespie over 8 years ago

Aloha, Randy.  I think we are lucky that our local Hawaiian banking institutions had a better long-term approach to lending than did many of the mainland counterparts.  Great article.

Posted by Alex Cortez, R(S) (Island Sotheby's International Realty) over 8 years ago

Here in California as of the first of the year, the Department of Real Estate is enforcing new guidelines, that if not met will cost the mortgage broker $50.00 a day penalty for not updating his or her credentials to do loans.

Posted by Lorraine or Loretta Kratz, Certified Negotiation Consultants (Crescent Moon Realty, Inc. & Land N Sea Auctions.) over 8 years ago

Great Blog Randy, I cannot believe the lack of professionalism I still see in my industry today.

Posted by Bob Basmajian, Home Loans-NMLS# 557858 (Prosperity Home Mortgage) over 8 years ago

Good comments.  Yes, there is definitely a need for more education in the profession with all the new regulations coming out on a regular basis in light of the recent mortgage meltdown. 

Posted by Marc Iafrate, MBA - Wake County Real Estate Search (Capital City Real Estate Group, Inc. brokered by eXp Realty) over 8 years ago

Having worked as an MLO for both a broker and FDIC insured bank, I can tell you that there is no comparing the level of scrutiny that happens in the bank. As a broker, the state would show up for 3 to 4 hours once every few years.  Compare that to an FDIC audit.  We had one auditor going through the origination files of 6 MLOs for 12 days.

Tom

 

Posted by Tom Branch, Broker, CDPE, SFR, ACRE, Plano TX Ambassador (RE/MAX Dallas Suburbs) over 8 years ago

Tom

With all Due Respect............I was an Operations Specialist for Years IN BANKING............Taking Bank Offices that were in Shambles and getting them Back into A Rating as far as Audits were concerned.

The FDIC Audits were a " Cream Puff " compared to what Brokers are Now put through.

I am not sure how many years that you were in banking............I was Targeted By the Majors for My Expertise in Resolving Major Issues for many Years.........I Would take F Audit Branches and Turn them Around within 12 Months or Less.

Enough BS................the Feds are up to their //ZC/mZCZ<?MN is Politics and Political Posturing.

I had 12 Audits go from F to A in less than 12 months.

When the FEDS came in..................It was a Cake Walk compared to the INTERNAL Audits we experienced..

Stick to RE...................you might be better off.

I meant every word that I said above in my previous comments.

THIS NEW NATIONAL LICENSING IS A SHAM AND NOTHING MORE THAN FEE REVENUE GENERATION IN ADDITION TO COVERING THE BEHINDS OF OUR POLITICAL ENEMYS IN THE CONGESS AND SENATE..........................................

GET REAL OR STICK TO REAL ESTATE.

I FOR ONE WILL NEVER TELL YOU HOW TO DO YOUR BUSINESS AS I WON'T EVER PRETEND TO BE AN EXPERT IN AN INDUSTRY THAT I DON'T FULLY PARTICIPATE IN.

WITH ALL DUE RESPECT............YOU NEED A REALITY CHECK TOO.

BTW.......A CLOSE FAMILY FRIEND IS A BANKING LOBBYIST IN DC...............YOUR INDUSTY IS NEXT...........BELIEVE ME.

BEST REGARDS

Posted by Wayne L. Brown (Franklin Advantage Inc.) over 8 years ago

I support state licencing of any mortgage broker. Banks should not be exempt. I have seen some really incompetent loan people at Banks.

Posted by Wayne B. Pruner, Tigard Oregon Homes for Sale, Realtor, GRI (Oregon First) over 8 years ago

I'm not sure licensing will help as experience seems to help more than licensing.  It's an idea, but I think they also need the continuing education more than anything, especially as things keep changing.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 8 years ago

Randy, just hang onto your hat, 2/3 of mortgage lenders will be OUT of business within 3 years....

Posted by Regina P. Brown, M.B.A., Broker, Instructor (MBA Broker Consultants) over 8 years ago

The continuing education is more of a barrier than anything in my opinion.   It will weed out more people either from the standpoint of cost and/or time, intelligence, experience etc.  It's not a bad thing. 

As Wayne mentions above, there are plenty of ethics and RESPA violations on both sides of our industries being committed even today.  RESPA laws forbid kickbacks and yet they are rampant in the industry.  I have also had quite a few similar experiences to what Wayne mentions with agents asking for kickbacks, money to pay for advertising etc.  RESPA isn't enforced currently.  Some people are aware of the laws, some are ignorant - education requirements help those that are ignorant but not those that choose to circumvent ethics.  I think this is an important thing for everyone to consider. 

Previous versions of RESPA and TILA were sufficient.  The problem is that they weren't enforced.  The same thing applies to what Wayne mentioned in post #36.  Enforcement is always going to be "flavor of the day" - whatever is sexy or trendy is what is going to get the headlines.  Right now it's trendy to blame everything on the Loan Officer which again, is a complete oversimplification of a very complex problem.

Education and licensing are not a bad idea; however, were they in place, the things that led up to the meltdown still would have happened. 

As per comment #42, both of our industries will thin out.  We will see a lot of Realtors exiting the industry as well.  There are too many of all of us currently.  The up side is that our market share does increase but it's not a very fun way for it to do so.

Posted by Mark Aalto, NMLS: 116708 (Summit Funding Inc) over 8 years ago

I agree that their should not be any exemptions.  It would make everyones life easier if everyone was on the same page.

I have talked to a Mortgage Broker recently that did not have any idea how to do a first time buyer loan.  Everyone shoould be required to have training not only in the federal guidelines but the state level loans and guidlines.

Posted by Denise Allen, Realtor@ Chesapeake, Hampton Roads (Resh Realty Group) over 8 years ago

It is important for all of us, realtors, loan officers, home inspectors, etc to keep up with our continuing education - some unfortunately don't do that..........

Posted by Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional, Palm Harbor, Dunedin, Clearwater, Safety Harbor (Charles Rutenberg Realty) over 8 years ago

Lenn - $5 if you go to Starbucks.

Jay - There seems to be a big hole in Florida.

Tere - I see the NAR sent a letter to the HUD about seller financing.  I have mixed feelings on that one.  Seller financing has been used as a tool for the scammers.

Morgan - CE is a start for sure.

Rodney - That was not the case in a couple of the loan officers I ran into.

John - Just remember that a broker still has to take the loan to a bank.   The bank is the one we the tax payers are insuring.

Joe - States should always have the right to make stricter standards than the Feds.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

Kyle - The banks have a stronger lobby.  In the past they fought toughening the licensing for brokers also.  They are now throwing the brokers under the bus.

Jeff B. - The one thing a state license would do is allow the consumer to have a local source to file a complaint and to get resolution to a problem.  Also it would give the state the ability to get them off the street.  The education part will make a difference.  We have so many loan officers here that can't even spell FHA.

Michael B. - It happens all the time!  The one guy I mentioned his license revoked from the state.  That takes a lot under the current laws.  Two banks hired him after that.

Jenna D. - I couldn't agree more.

Ken C. - FDIC does nothing for the individual consumer who is in a transaction.  You are right on the money.

Robin R. - Thank you

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

Rick - You make a point.

Chuck - Ditto!

Paul M. - The license requirements for real estate agents has gotten tougher and is getting tougher.  The folks handling the money are exempt.  That does not make any sense.

Russ - I agree with almost everything you said.  It is much, much lower than 20% who do any real volume.

Mark A. - I can't argue with anything you said.

Aaron - You are right.

Erica- Thank you for spreading the word.

William F. - My wife works for an insurance company.  She had to take 7 extremely tough license exams and acquire 7 licenses.  That was to be a secretary.  A loan officer at the bank does not have any requirements.

Neal B. - Practicing without a license.  That should be the title of my next article on this subject.

Neal B. - To cut hair you need more education than any of the disciplines in real estate.

Ed G. - The ones I work with all have license, even though they are not required to have one.  Many do not.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

Mariah - You are correct, most of our bad loans came from out of state lenders and not the local banks.

Lorraine and Lorretta - That only covers brokers, but it is a good start.

Bob B. - That lack of professionalism is a problem in many industries.  Our is an extreme problem because of the level of harm being created.

Marc I. - More education would be a great start.

Tom B. - I have received several bad loan approval letters from banks.  I have seen bait and switch loans from banks and I have seen credit union require borrowers to loan docs without seeing a HUD-1.  I was banks who funded the toxic loans around the country.  I do recommend that my clients use banks and not brokers, but even then it can still be the wild west when a consumer shops for a loan.

I have written many articles criticizing mortgage brokers and bad real estate agents also.  I am an equal opportunity criticizer when it comes to rpote4cting the public.

Wayne B. - You sound a bit angry.

Wayne P. -You are right, they shouldn't.

Christine D. - The license would require they get training first and then the state could regulate their activities.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

Regina B. - Bad for them, I am not sure if that is bad for the consumers.  Many should not have been in the business to start with.

Mark A. - Many of those who are leaving the industry were not doing any transactions or only 1 or 2 a year.  They are the most dangerous, as they are not proficient and should not be allowed to prey on an unsuspecting consumer.  It is not a bad thing to collect those licenses.  In the lending industry, here in Hawaii there was no way to get those dead licenses off the streets.

Denise A. - That is a big problem with out of state lenders.  They have no knowledge of local laws or customs and don't care.

Barbara Jo - CE would at least get them to learn of the new law changes.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

Randy

Yes, I am angry.  Certainly not at you, but the corrupt politicians who have almost bankrupted me with all this financial mess that started in August 08....the same month that I finished incorporation of two new companies.

With credit lines immediately shut off by all banks, knee jerk reactions by banks and Regulators, it has almost put me out of business,

I had a life time dream crushed as politicians made my industry a " Scap-Goat " when Banks do not have to comply with the same National Licensing Requirements that I do, plus the New GFE which Banks and Mortgage Bankers do not have to disclose the same income that I do to clients.

Again, I mean no disrespect, but if you had to go through the hoops many like me do, it would drive you crazy as we are singly being blamed for this mess.  HVCC is a shame with banks owning the AMC companies ordering appraisal with costs increasing 25% plus to borrowers............I could go on for hours, so Yes I am angry at our politicians Dems or Repubs for this mess.

Best Regards, and thanks for your response.

Posted by Wayne L. Brown (Franklin Advantage Inc.) over 8 years ago

Wayne - You make some good points.  Bank and bank employees should be treated the same as brokers with how they deal with the public.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) over 8 years ago

I am looking into the continuing education of the 20 hours for the SAFE act in California.  I am seeing the cost of $399-499.00. 

Has anyone found it for less money?  I am trying to get the best deal, just like my customers!  Shoot me an email.

http://www.bigredloans.com

Posted by J Hansen over 8 years ago

Bullshit!  I work with a bunch of kids who are making more than your average surgeon.  All you need is to take a bullshit course any one could do it what a joke.  This is why our economy is falling apart.  Loan officers should at the very least have a four year degree, if not more.  Government needs to step in and do it themselves.  No reason a high school student should be making 35+K a month.  Think about it!

Posted by Rob about 8 years ago

Our economy isn't falling apart because of Loan Officers making money or not making money.  If you bought a car that was made by Chevy and the automakers went bankrupt was the bankruptcy of the automaker the fault of the car salesperson?  Your comment doesn't make any sense.

Consumers, regulators, politicians, average citizens etc - everyone played a part in what has happened.  To state that what has happened in the economy is related to the education or lack of education of Loan Officers is an ill-conceived notion.  The idea that the government can step in and improve things isn't realistic.  They've already stepped in and written legislation, created new forms, etc. 

When the Government imposes laws and regulations they have to actually enforce them.  This is one of the biggest factors the contributed to what has happened.  Proper enforcement of RESPA, Reg Z etc hasn't ever truly been committed to.  Current regulations and policies will not prevent the next crisis unless they are actually enforced.  And, even so, there will still be consumers that make bad decisions and markets will rise and fall even with the most educated Borrowers and Loan Officers.  If a consumer doesn't have a job, it doesn't matter if their interest rate is 4.5% or 4.75% etc. 

Everyone needs to take responsbility for what has taken place.  The blame doesn't rest solely with Realtors or Loan Officers or Congress or Fannie Mae or Freddie Mac or FHA or Indy Mac or Washington Mutual etc.  To reduce a very complicated economic disaster to the education level of Loan Officers that took loan applications from consumers is to greatly simplify what really happened. 

Posted by Mark Aalto, NMLS: 116708 (Summit Funding Inc) about 8 years ago

J. Hansen - Hawaii will have every two years, 10 hours of CE for loan officers starting next year for the first time and 20 hours for real estate agents from 10 this year.

Mark - The Federal government can't enforce things in every community, that is where the local regulatory agencies need to step up.  With state licensing, consumers have a local agency they can go to when ripped off.  Someone with a license will be required to have training.  Currently to be a loan officer in my state you need $35 and nothing else.  There are idiots running around with zero training or experience handling millions of dollars worth of complicated transactions and jamming up or ripping off unsuspecting consumers.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 8 years ago

Randy-

My point is that regulations (State or Federal) don't mean anything without enforcement - whether that be the State or the Federal government that is responsible for overseeing the regulations.  As a company, we see violations constantly and the State and the Feds don't have sufficient resources to deal with the violations.  In Oregon we've had continuing education requirements for several years and it sounds like Hawaii is taking similar steps. 

I am not sure what constitues "jamming up" or "ripping off unsuspecting consumers" in Hawaii but only state licensed Loan Officers will be monitored by the State here in Oregon and soon there in Hawaii.  In other words, FDIC originators won't fall under their jurisdiction.  There are a lot of Loan Officers that take their trade seriously just like there are a lot of Realtors that do the same.  And, just as there are some really unscrupulous and unethical Realtors, there are unscrupulous and unethical Loan Officers as well.  There is a lot of money in our respective industries and not everyone will do things in the best interest of the consumer. 

In any case, I don't see education or regulation as a bad thing.  What I do think is that it's naive to believe that education in and of itself or regulation in and of itself will fix human nature itself.   

Posted by Mark Aalto, NMLS: 116708 (Summit Funding Inc) about 8 years ago

Aloha Mark - I don't think that education the complete solution, but it is a great start.  The licensing requirements will remove about 70% of the people walking around with a license in their pocket who have had no training and are not in the business.

There was legislation introduced at our state to remove the exemptions for bank and credit union employees.  Hopefully it will get another shot next year.  But even those folks will have to be part of the national registry.  If the do something bad in one state they can't just jump to another. 

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 8 years ago

Aloha Mark - I don't think that education the complete solution, but it is a great start.  The licensing requirements will remove about 70% of the people walking around with a license in their pocket who have had no training and are not in the business.

There was legislation introduced at our state to remove the exemptions for bank and credit union employees.  Hopefully it will get another shot next year.  But even those folks will have to be part of the national registry.  If the do something bad in one state they can't just jump to another. 

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 8 years ago

I agree Randy.  Continuing education and testing will to help to a certain extent.  There will be a basic knowledge level needed and that's a good thing.  And as you said, the bar will be raised a bit.  Statistically, something along the lines of 70% of those who take the test pass the test so I don't think it's quite as much of a barrier to entry as you'd like it to be.  Being from a State that has had continuing education required for the last 7 to 8 years I can tell you that it does help somewhat. 

Education is always a good thing.  But it won't keep people from breaking the law and I think that is all I'm trying to add to your post.  Without the proper enforcement of the rules and laws that we are teaching we only have 50% of what is needed. 

Thanks again for emphasizing the education piece.  It is a positive element to the whole mess we are in right now. 

Posted by Mark Aalto, NMLS: 116708 (Summit Funding Inc) about 8 years ago

Mark - Just getting a few thousand people off the street that are not actually doing business is a great start here.

 

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 8 years ago

Universities in USA - What you say is correct in many cases, but not in many others.  There are several national lenders who use inexperienced salaried employees and call them loan officers.  I have had several painful transactions over the years, where that was the case.

Posted by Randy Prothero, Hawaii REALTOR, (808) 384-5645 (eXp Realty) about 6 years ago

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