OK, I am bracing for the backlash from that title. Those who know me know that I am not a big government kind of guy. To the contrary in almost every case I believe in less government; unfortunately not in this case.
There have been several great blog posts written the last couple of days on similar topics. Rather than hijacking their posts I felt it better to write my own.
The mortgage industry has not stepped up to the plate and has done next to nothing to self-police.
In the past I have written on topics like licensing of loan officers and gotten more than a few on the lending side upset. The funny thing is that almost without question everyone from the REALTOR® and the public side completely agreed with me. What is wrong with the lending industry? Is it just pure greed or something else?
When a group of top real estate agents get together all we seem to talk about is raising the standards of our profession.
When loan officers join us all we speak about is which lender went out of business or what a mess the lending industry is in.
So why do the professional real estate agents want higher standards and the lenders want the Wild West?
Let me back up a bit. Not all lenders and loan officers feel that way. The professional loan officers I deal with on a daily basis feel the same way I do. They would like the standards raised and the bums removed from the industry.
Let me share a few examples of things that have really gotten my dander up.
- I deal with a lot of active duty military and VA eligible clients on a regular basis. On more than a couple of times I have run into vets that a lender claimed to be giving them a VA loan to find they were doing a bait and switch. A conventional loan with some similar name, (Veterans Choice, Veteran Select, etc.). Heavy points and heavy closing costs and who knows what else.
- I have seen many bad loan approval letters on offers sent in on my listings. One claimed the buyer's funds were verified. It fell out of escrow 5 weeks later because the buyer's did not have their cash. The loan officer was from out of state, leaving no recourse to the seller. Our state regulators have no authority over them and the loan officer just moves on, leaving the seller holding the bag.
- On more than a few occasions I have seen or heard of loan officers (mostly out of state) trying to promote loan fraud. Present an inflated offer with huge cash back from the seller. They claimed to have an appraiser who said they would bring in the appraisal, even though it was a stupid price that was nothing close to the true market value of the home.
- Recently a client of mine asked me about a friend's purchase. They said it seemed so different then their experience. The bottom line was they had a real estate agent who was also a loan officer and they wound up with a huge closing cost and a loan other than what they expected.
Dual services like real estate agent and loan officer or a real estate company also providing in-house lending should be strictly forbidden in my opinion. The conflict of interest is so obvious I am amazed that any professional would go there. There are many who will argue about how much money they can make or it is OK if you disclose the conflict. I disagree and not only will not do it myself, but would never hang my license with any company engaging in that practice.
In Hawaii if a loan officer is from out of state. We have to make a complaint at a federal level. Our state regulators have no authority in this matter.
If you are a reputable lender or loan officer, why in the world would you want these folks running around doing the dirty things they do? They not only ruin the reputation of the industry they hurt the public.
Back to my original premise:
- If the lending industry is unwilling or unable to better protect the public and raise their standards, than government needs to do it for them.
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Randy L. Prothero, REALTOR®, ABR, AHWD, CRS, e-PRO, GRI, SFR
Century 21 Liberty Homes
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.
Based out of Mililani, Hawaii. Randy services the island of Oahu (Honolulu County) and the Leeward Regional Chairman of the Honolulu Board of Realtors. To improve overall professionalism in his area Randy also offers classes for real estate agents.
www.HawaiiRandy.com * Oahu (Honolulu County) Property Search * Hawaii Military Relocations
Randy--I have no problem with having loan officers licensed. We should have had it set up years ago. I've
been a loan officer for 21 years and have worked with some real idiots that should have never been
allowed to take an application. thanks-mike
Randy, More regulation and stricter standards? It's my understanding there is currently NO regulation or standards for LOs. They don't have to be licensed. It is certainly one of the most foolish things I have ever seen.
I also agree you will hear from the "get rid of licensing" contingent in here as well. That's another thing I just don't get. I do agree that licensing does not a good LO make BUT at least it gives us someplace to complain to. There has to be some kind of a standard. Also, no licensing means no criminal check!!!!!
I also completely agree that real estate licensees doing loan at the same time is a bad bad thing. There is NO benefit to the consumer.
Well done Randy.
Well said.
You've got a fine idea.
Atta boy, Randy,
You hit another bulleye with this one!
Thanks, as always, and
Aloha,
Lucky :)
Randy... I guess I will chime in and this is just my .02 and opinion. I don't think licensing is the answer. BB talks about licensing and criminal checks. All of this are false unless they make it a federal case and every state follows the same rules. Example... in NC and Utah, you have to be licensed and with a background check/with fingerprints. In NJ, all I do is fill out a registration form and pay $100 and I am licensed to do business in NJ. For me to do business in MD and FL, I need to take an online test that could take me up to 3 hours. But, it's online, a chance for me to find answers which they lead me to, and I get up to 3 times to score 80% on each section.
So.....how does that make anyone more ethical or unethical? I could be a scum bag and know nothing about mortgages, but take my FL test and still pass it. Now I can write business in FL. As long as my broker or owner has passed everything else, that is all I need to do.
My opinion? Better education...mandatory.... and making penalties stricter that will affect the loan officer and not just the mortgage company. I think this is why you don't see loan officers on here agree as much. It's totally different then what realtors have to go through.
How about this.... let's knock out part timers first. Let's maybe take the same lead as the appraisers have to take. That they are apprentices, juniors, and have to work their way up, before they become their own appraiser per sey. If we make the entrance part a lot tougher, this might keep a lot out. And some where in between, let the market weed out the other pieces of crap. Having the entrance part tougher will mean that less will be getting back into this business then.
Overall, there are so many issues, so many wholes in any of these suggestions and the suggestions made by others in here. I definitely say that it is different than being a realtor. For an ending..... having some type of series 7 tests and others just like when you want to be a stock broker. Giving some sort of professional distinction. But will this still keep the non-professionals out? Nope... it's called greed. What about laws not allowing other types of industries to get into the business, such as accountants, stock brokers, financial planners, etc etc... Keeping it to one job and FULL time. I can possibly see a part time realtor that took the testing. But a part time loan officer? Or someone that is both a loan officer and a realtor? I would rather chop these ideas down first. Again, just my .02.
Sally - Waiting for what?
Jeff - I don't see how any of you ideas could even be possible without stricter licensing laws.
Gary - I agree, I do not believe it would have been nearly as bad.
Randy - I agree that even home inspectors should be licensed - great job - I too am not a huge fan of stupid regulations but this is an area where better guidelines is a must
I have a saying when I get an angered response:
I understand you are upset, but what part of what I said do you disagree with?
Randy,
If you and I ever meet...we probably will never run out of things to talk about. You and I seem to be labeled as some of the bullies to LO's. I agree that there should be licensing regardless of whatever other people on the old google alert says. I really do not understand why there always has to be complaining about it. The public is putting their trust in the hands of these individuals without any insurance that they are handling the deal in compliance. No regulation means they are open to do whatever they want without any liability.
I just don't understand it...no protection ...no education ...no nothing. Just as we have to abide by regulations then so should they....they are closer to the finances then we are. I'm just wondering why the anger on their side is there.....is there something they are hiding? If you are working in an industry especially where money and Real Estate is involved then there has to be something and obviously because of what occurred in the past ...this is even more of a reason to have something.
It seems when we talk about Realtors(R) that don't know their a-s from their elbows they seem to never chime in on those...only looking for our negative responses to their industry. Yet we never mention names or companies involved.
Randy,
I'm surprised they haven't had a visit here...I'm sure their google alerts didn't pop up yet. They don't need to expose it...most of the public is aware of it.
Neal - All I can say is amazing.
Jerry - I am seeing some of the dead wood finally leaving. I think their is an equal number jumping in the business. Hopefully the next crop will be better.