A top mortgage professional says competition is being stifled by differing licensing standards between mortgage brokers and lenders who work at FDIC-insured banks.
“That’s probably my biggest axe to grind right now in the industry -- how the mortgage brokers and bankers have to be licensed, pay fees, etc., in each state,” said J. Scott Harris, vice president of business development and recruiting at Gold Financial Services. “Whereas the FDIC bankers, in four days, poof, they’re licensed in all fifty states.”
Currently, all mortgage originators have to be registered with the Nationwide Mortgage Licensing System – but license requirements for independent mortgage brokers vary widely from state to state, and brokers are required to be licensed and complete continuing education requirements in every state in which they are licensed. Bank loan officers, on the other hand, face no such requirements.
“It’s a barrier to competition, because if you work at a bank, poof, you’re good to go in all 50 states,” Harris said. “None of the banks or the big boys in the industry want to do anything about it, because it’s an advantage to them.”
Another barrier, said Harris, is the variance of licensing requirements from state to state. The licensing requirements in some states, Harris said, are onerous.
"As a mortgage banker, each state has different rules and regulations, and the NMLS rules were vague,” he said. “It’s harder to get a license in Texas than it is to get an FHA loan. There’s a lot of loan officers who’ve gone through rough times in the ups and downs of the mortgage industry … and they can’t get a license. They have to either leave the industry or go to work at a bank. It’s a huge travesty, and perhaps it’s an unintended consequence of the law, but it’s definitely not fair and it has hurt a lot of good people in the industry.
“It’s unfortunate that they did the national licensing system, but they didn’t go far enough to standardize the testing and qualification; the states decide that,” he added. “In either case it makes it rougher sledding for the mortgage broker while the bigger banks just have carte blanche to do whatever, whenever.”