Broker and banker double standard a travesty, says mortgage pro

by Ryan Smith24 Sep 2013

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.”


  • by Tim | 9/24/2013 9:21:26 AM

    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........

  • by Traci | 9/24/2013 9:23:20 AM

    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.

  • by Nancy | 9/24/2013 9:44:17 AM

    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.


Should CFPB have more supervision over credit agencies?