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Broker and banker double standard a travesty, says mortgage pro

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Mortgage Professional America | 24 Sep 2013, 06:00 AM Agree 0
A top mortgage professional says competition is being stifled by differing licensing standards between mortgage brokers and lenders who work at FDIC-insured banks
  • Tim | | 24 Sep 2013, 09:21 AM Agree 0
    Scott's comments are spot on. It's all bought and paid for by big banks through lobbying efforts. At the end of the day it is designed to reduce competition. At the end of the proverbial day banks do not want to work with brokers, they were forced to because of the presence of brokers in all the major markets. All of this is exacerbated by Frank Dodd and the CPFB who are going through all of these motions simply to justify their own jobs. The people who caused this crisis to begin with have all returned to trading stocks and managing hedge funds. You, the reader, may recall that we did not have a credit crisis until wall street got involved. Good times, good times........
  • Traci | | 24 Sep 2013, 09:23 AM Agree 0
    This is what we've been screaming about since the very beginning with this blatant disparity first began. Granted there are some wonderful LOs that work for banks and have taken it upon themselves to take the "licensing" exam(s). But the simple fact is that it is "not required", nor do they get fingerprinted, have an FBI background check done, have their credit reports reviewed, take 20 hours of prelicensing CE and 8 hours ever year thereafter, take the Federal and State exam!!! Now matter how the CFPB tries to say they are leveling the field...until there is one set of rules for every single person who originates mortgage (no matter your employer), then it isn't going to be fair, level, or competitive!!! It's just one more way the Government is pushing out the small businesses. Banks are still getting bigger and bigger.
  • Nancy | | 24 Sep 2013, 09:44 AM Agree 0
    Its really annoying to also know that most banks treat their mortgage divisions as correspondent lenders to the bank itself. All the while hiding under the FDIC veil. They should be held to the same licensing standards as us.
  • Julio | | 24 Sep 2013, 09:51 AM Agree 0
    Traci/Tim, While you are both completely right about Frank Dodd and the CPFB, you should also know the facts about working at a Federally Chartered or State Chartered Bank.

    We do have to register with NMLS, we do have to go for fingerprints and background checks. And we also do have to do some continuing education as well. While its certainly not as much or as tedious as being state licensed for sure.

    Yes you get to write mortgages in all 50 states, but that rarely truly provides much advantage as most LO's still write mortgages in their own back yard or only a few states.

    After running my own mortgage company for many years, I have to be honest, I do no know why any Loan Originator would still be working for a regular mortgage broker or state licensed banker?!?
  • Tim | | 24 Sep 2013, 09:54 AM Agree 0
    Don't like the CFPBs actions, go donate tot he NAIHP lawsuit. We are to the point of put up or shut up.
  • Brett | | 24 Sep 2013, 10:02 AM Agree 0
    I totally agree. What also bugs is the big broker lenders are not doing anything about it. The providents, the stearns, the flagstars, where are they? They are making money hand over fist yet I dont see them fighting any of these regulations.
  • Paulsmoney | | 24 Sep 2013, 10:06 AM Agree 0
    This is nothing new. There have always been (the Twenty years I was in the business) major discrepancies in lender-lending-originator licensing requirements (if any as in with platform originators in banks) and the least onerous (to use the author's terminology) have always favored the banks.

    Mortgage bankers got away with using unlicensed originators for awhile as they answered to the dept. of corporations I believe AND their disclosure to the client requirements were lower. Mortgage bankers priced mortgages in line with banks and screwed the originators out of the use or payment of premium pricing... Jeez, inequities in lending? Really? Transparency in lending? Oh sure.
  • Mark Dallas TX | | 24 Sep 2013, 10:12 AM Agree 0
    NMLS should be a true “National” license without all the extra hurdles and fee’s so I agree with the article. But Im a MLO that only originates in Texas and Im personally not bothered by the disparity between a broker and bank originator. I know LO’s that work for the big Banks and they do have ongoing training in house and the majority of these LO’s are very competent. On the other hand I have personally seen my old Broker and some other less “competent” LO’s go to a bank after they couldn’t get licensed. Use this info to educate your borrower on who they are dealing with. Embrace change & make it work to your benefit. Let’s face it brokers have had a lot of bad press, true or not, in recent years and so for me it’s an edge and I play that card every time I can. “Mr. Consumer, you wouldn’t have surgery without the Dr. being licensed would you?” In Texas you had to be licensed from day one so for me, as a MLO/Broker, not much has changed. One of the NMLS’s main purpose was to keep Joe the LO from going State to State committing fraud & I think it will do that. This is a win for a broker so let’s fight another battle.

  • Jeff | | 24 Sep 2013, 10:13 AM Agree 0
    We simply should insist that all originators for brokerages and correspondent lenders join NAMB or whatever other organization available and in doing so, finally have a collective voice with some power. This is all worthless discussion until we do.
  • Mark Dallas TX | | 24 Sep 2013, 10:13 AM Agree 0
    NMLS should be a true “National” license without all the extra hurdles and fee’s so I agree with the article. But Im a MLO that only originates in Texas and Im personally not bothered by the disparity between a broker and bank originator. I know LO’s that work for the big Banks and they do have ongoing training in house and the majority of these LO’s are very competent. On the other hand I have personally seen my old Broker and some other less “competent” LO’s go to a bank after they couldn’t get licensed. Use this info to educate your borrower on who they are dealing with. Embrace change & make it work to your benefit. Let’s face it brokers have had a lot of bad press, true or not, in recent years and so for me it’s an edge and I play that card every time I can. “Mr. Consumer, you wouldn’t have surgery without the Dr. being licensed would you?” In Texas you had to be licensed from day one so for me, as a MLO/Broker, not much has changed. One of the NMLS’s main purpose was to keep Joe the LO from going State to State committing fraud & I think it will do that. This is a win for a broker so let’s fight another battle.

  • Eric M | | 24 Sep 2013, 10:18 AM Agree 0
    And don't forget about the fact that brokers have to disclose everything, all fees and YSP but banks do not. Banks do not fall under the 3% rule starting Jan 1, brokers do. Where's the transparency? Where's the level playing ground?
  • Frank OBrien | | 24 Sep 2013, 10:29 AM Agree 0
    The article tells it like it is! It isn't a fair playing field, and it's probably going to stay that way. I have owned a small mortgage Co. for 23 years, always did the right thing for the client, but I feel like Washington is treating all of us brokers like we're a bunch of crooks. We, that are still standing aren't.

    Dodd and Frank were asleep at the switch. I didn't cause the mortgage melt down, but I certainly feel like I'm being treated as such. Level the field and give us a GFE to work with that a client can actually understand.

    Why can the banks pay a borrower's closing costs, but the broker can't. Oh that's right, it isn't a level playing field.

  • Drue Jordan | | 24 Sep 2013, 11:17 AM Agree 0
    Don't forget. The Treasury, which represents the banks, wants all mortgage brokers out of the business. Timothy Geithner, when he was Secretary of the Treasury, stated in a TV interview, that he wanted all mortgage brokers out of business or working as mortgage officers in a bank.

    I don't think it will ever be a level playing field.
  • Travis | | 24 Sep 2013, 11:29 AM Agree 0
    Or, you can all join a fantastic FDIC Mortgage lender like ENG Lending
  • Michael | | 24 Sep 2013, 11:30 AM Agree 0
    The NMLS licensing and TESTING needs to be required of ALL mortgage officers, period. It should also be required for real estate agents to be NMLS licensed. But that is another issue.

    Next, the CFPB and all other agencies need to get out of our wallets! The broker requirement to have lender paid agreements with their wholesale lenders is stupid and must go! No other industry has this requirement.

    LO compensations should be allowed to be whatever is agreed upon by the LO and the employer! A flat fee, basis points, or a percentage. Again no other industry has this requirement placed upon them.

    The idea that once a GFE is issued the broker can NOT lower their fees is stupid. Is the CFPB going to place these same requirements on every other industry that lowers their price or price matches.

    As stated by others here... until ALL originators get off their CHEAP rear ends and join NAMB and their state associations, and help the rest of us fight their battles for them, we will never win against the big banks and the people in Washington that they have in their back pockets.
  • Steve | | 24 Sep 2013, 11:37 AM Agree 0
    in the common interest of the consumer, all MLO personnel should be educated and licensed the same. otherwise, the consumer will pay again and again. also, Wall St gave the industry the programs that led to the melt down through the products they provided for in the market.
  • The Commish | | 24 Sep 2013, 11:57 AM Agree 0
    IRONIC - Brokers are always absent at the State and Local Broker associations. If there's such an injustice, where is their financial and political support???

    Mr. Harris, as you are well aware, all prudent banks follow the NMLS standards in regards to training and credit qualifications given banks are regulated by the FDIC, OCC and differing bank examiners whom hold banks to a higher standard than brokers are held to.

    Bank employees do have to be finger printed and pass a credit check.

    Not happy, get involved.
  • Landon | | 24 Sep 2013, 12:16 PM Agree 0
    Having worked for both a big bank and now a mortgage banker, the banks have it easy! Yes we got finger printed, background check and now they are registered but the internal "CE's" are a joke. If you don't get the answer correct, it just keeps asking until you do get it right. Multiple choice at its finest! Let's talk about fines. Licensed LO's are being set up to fail and walk a tight rope everyday. A fine for every advertising infraction even if it is not your error. Don't call a referral unless you've been in contact with them in the last 18 months, it's a hefty fine too. The banks do NOT educate their LO's nearly enough and fines are never passed onto LO's.
  • Steven Sheasby | | 24 Sep 2013, 12:24 PM Agree 0
    I am the owner of a licensing consultant company, and I completely agree with this article. The main 2 problems are: 1) The few states that implement onerous requirements especially in regards to credit background for LOs. 2) The banks should be required to have their LOs complete education and testing, which I have heard may be implemented next year.
  • Jim in CT with little sympathy | | 24 Sep 2013, 02:24 PM Agree 0
    Quit whining about the basics, the insurance and securities business have had individual licensing and upfront training/testing for DECADES, I have no respect for individuals who think you oughta be able to sell a six figure debt to someone without licensing or continuing education. That's why we're in the situation we're in. The multi-level Primerica rep selling insurance on the side has more money invested in licensing than many mortgage pros. Focus on the fairness RE banks: ALL originators should pass the same licensing and testing. Again, that is the way insurance and securities have worked for decades. Banks don't get a pass there, and they shouldn't for originators. And those who can't pass that test don't belong in the business working for anybody, they need to get out before they do any more harm to consumers.
  • Anne E James | | 24 Sep 2013, 02:45 PM Agree 0
    Richard Cordray forgot the three 'C's': Credit Bureaus, Consumer Financial Protection Bureau and Cordray! The credit bureas, Eperian, Equifax and Transunion charge $130 per incident to 'cure' with proof during the mortgage process! There is NO ONE to talk to at the bureau level for consumers and for the 'Free Annual Credit Report' they do NOT give out a FICO score unless paid about $45 each. That is what needs to be addressed. They're all on the take from the consumer as Cordray is paid by taxpayers and the bureaus are in control of the consumer.
  • rd | | 25 Sep 2013, 01:05 PM Agree 0
    Come on people. Taking a federal or state licensing test does not make a mortgage officer good or bad. I have spent most of my 40 year career with banks, but I also spent a few years with a non-bank company. I took and passed both the federal and state test to get licensed. I have managed LO's for 30+ years and I have had the pleasure of working with some of the finest people in our industry. Our business is about INTEGRETY, you either have it or you don't. Taking a test will not give you Integrety, will not MAKE you do the right thing, because you either do the right thing for people or you don't. The reason bank LO's don't have to be licensed is becasue we are regulated by so many agencies. This was not a choice I made or other bank LO's make, it is what it is. I have no problem licensing LO's across the board, but I get so tired of this and other forums slamming all bank LO's because they work for a bank. I will tell you why I am here. This bank have been in business for over 100 yrs, we are not one of the banks that are being sued for making/selling/packaging bad mortgages. We have a retirement program that the bank pays for, I don't put in a dime as well as a 40lK match up to 6%. I work for a bank that cares about our clients and employees. Quit assuming that if someone works at a bank it is because they cannot pass the test. I agree with those who say, don't complain about the industry, either get involved to solve what you feel are the problems, or find a new career.

    Traci, you are incorrect in your statement that bank LO's do not get fingerprinted or have FBI bankground checks. My bank does both of these, as well as pull credit reports. You need to check your facts.
  • Gordon Schlicke | | 26 Sep 2013, 09:40 AM Agree 0
    Hooray for rd! I too have worked 40 yrs. for all types of lenders. For those who are whining, I heard that Jiffy Lube is hiring.
  • Mike Crouse | | 26 Sep 2013, 10:35 AM Agree 0
    I operate American Mortgage Licensing, so I deal with this on a daily basis. I just don't see the laws changing to level the playing field. It would be great, but is isn't likely to happen.... Make sure that your company has a great process in place to streamline the amount of time and cost for MLO and company licenses/renewals; be that internally or by outsourcing the process. Be sure to take advantage of the Uniform State Test which has now been adopted by over 30 states. This will open up more opportunities and reduces some of the cost, but more importantly it will reduce the amount of time for new state licenses.... Target some of the less expensive states that still have high mortgage volumes. For any broker or lender that is looking to grow, a little planning will take you a long way and help minimize the disadvantages of state licenses.
  • Bayview Mortgage Inc. | | 26 Sep 2013, 11:18 AM Agree 0
    Its 20 freaking hours. The test is the basic items needed to originate a mortgage. Anyone that can't get a passing grade a 75% test score. Should have to work at a bank . Let The banks supervise these idiots. Didn't anyone read the marketwatch article on the most declined mortgages. If Wellsfargo only originated 400,000 home purchases in 2012. And 80,000 were declined. This shows the brokers do a hell of alot more work than the largest banks. This is why the Banks buy the brokers mortgages. With these numbers. The banks should drop all their originators. http://www.marketwatch.com/story/the-bank-that-rejects-the-most-mortgages-2013-09-25
  • MJS | | 26 Sep 2013, 02:51 PM Agree 0
    If you want to discuss a double standard between banks and brokers, then lets discuss the unfair advantage that brokers have in that they only need to take a test every couple years and ongoing education once a year, they need no internal audit or compliance department, and rarely even get audited. Banks, on the other hand, require monthly testing and education courses (usually 2-4), spend millions on compliance in salaries, procedures, consultants, attorneys, etc., and must host regular audits by the OCC, CFPB and various other required vendors who often park in your operations center for 3-6 weeks.

    If a bank could get away with operating under the same level of scrutiny of a broker, they would save millions per year. The fact is they are held to a standard that is so far above a broker due to their volume, that the same methods of governance would be completely ineffective.

    Yeah…banks have it easy alright. Good grief…how about a little journalistic integrity and research before posting such a ridiculous, insulting and uninformed piece of literature.
  • CT Mortgage broker | | 01 Oct 2013, 10:35 AM Agree 0
    I have mortgage officers apply who cannot pass the state tests and cannot get licensed. Where do they go????? The are working at the banks doing the same job!! Talk about an unfair playing field. We are either licensed to this job or not. Not 2 sets of rules for the same position.
  • Michael | | 01 Oct 2013, 04:40 PM Agree 0
    Okay MJS....Let's get a few facts straight here. Mortgage brokers MUST NMLS re-license every year, take continuing education classes and pass a test EVERY YEAR, not every two years as you so state. In California, where I am from, we must also re-license with the state every four years with even more continuing education and testing. This is NOT required with the BANKS. Many of my mortgage officers who could not pass the NMLS testing went to work for a bank. To become a mortgage officer for a mortgage broker the applicant must take a 40 hour NMLS class and pass a federal and state test. That same individual desiring to work for a Department of Real Estate licensed mortgage broker must attend a real estate licensing course and pass a very rigorous test which most will fail multiple times before passing. All of this will cost the possible mortgage officer a lot of money before he or she will even be able to start working. UNLESS he or she goes to work for a bank. That individual could have been flipping hamburgers on Friday and working for a bank as a mortgage officer on Monday!

    The biggest complaint that we receive is from borrowers who started a mortgage application with a bank and 90 days later still did not have mortgage approval! That same borrower then goes to a LICENSED mortgage broker, an EDUCATED mortgage broker, a skilled technician that knows what he or she is doing, someone who can review the borrower's documentation and in 15 minutes give the borrower an educated pre-approval. Unlike the bank mortgage officer who takes an application and then sends it off to a mortgage processing department is some other state and hopes his mortgage processing department can make the mortgage a reality.

    And on the subject of audits... I don't know what cloud you live on but in my state we brokers get audited all the time by our licensing bureau. And the CFPB, yes they audit us also.

    And please MJS.... let's remember, even though we mortgage brokers originated 65% of all mortgage applications nationwide, the banks were the ones who were sued and prosecuted for doing the public wrong! Also remember that we mortgage brokers do NOT develop mortgage programs, the banks do; we mortgage brokers do NOT underwrite the borrowers, the banks do; we mortgage brokers did not package bad mortgages up and sell them on Wall Street....the BANKS did!

    And least we forget.... we mortgage brokers did not ask Chris Dodd and Barney Frank to provide an unfair market by requiring mortgage brokers to disclose YSP, by requiring mortgage brokers to earn commissions only from the borrower or the lender, by requiring mortgage brokers to not pay their mortgage officers a percentage commissions; yet NOT force these same requirements on the banks. The banks in a ploy to take over the origination market place did all of this to the mortgage brokers.

    I could go on and on here but you know the truth as to what really happened so there is no need. And if you don't know the facts you need to educate yourself.
  • Jim Hodge | | 10 Nov 2013, 02:55 PM Agree 0
    At Allied Home Mortgage Jim Hodge has some very detailed information that expands on the theme of educating consumers on the mortgage process. Jimhomedgemortage.com si where we list topics such as credit risk, fundamentals of origination, interest rate risk, primary and secondary mortgage markets
  • Baby cry killer | | 09 Aug 2014, 10:49 PM Agree 0
    Bunch of baby cries
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