“The challenges we face on the regulatory side as a mortgage brokerage company is our ability to hire people from banks that might want to leave the bank but it takes a long time for them to get licensed on the broker side,” David Lichtman, president of DML Mortgage, told Mortgage Professional America. “So there is an inequity in the licensing on the regulation side that prohibits us from perhaps achieving stronger growth.”
Licensing requirements for brokers and originators varies from state-to-state. In Lichtman’s home state of New York, for example, aspiring professionals must take a number of courses, which include lessons on ethics and federal law.
The courses require over 30 hours of lessons and a fee of $1,500 for brokers and $319 for originators. Further to that, aspiring brokers must provide a $10,000 Surety Bond.
Quite the obstacles to overcome – especially considering the low barrier of entry for bank reps.
“That being said, if you work for a federally chartered institution such as Chase, Wells, you don’t need to take those tests,” Lichtman said. “So the theory behind it, which maybe made sense in 2007 when everything was crashing, was that the lenders would self-regulate and there is no need and the brokerage community needed to be reined in.”
Lichtman argues the stringent requirements may no longer be necessary.
“There was no doubt that was the right move to make, but now here we are almost ten years later and now there’s an unequal playing field and America is all about that middle class and the small business ability to grow. We’re definitely hindered by that.
Discrepancy between licensing requirements for originators and bank specialists are discouraging bank reps from going independent and helping to grow the industry, according to one veteran.