Mortgage loan officers subject to new lending regulations


New regulations in New York ensure that your mortgage officer has a license. Image: Flickr/featherdtar

In New York state, and soon in many other states, officers that offer personal loan products such as mortgages are now subject to new regulations. These regulations are intended to help customers in need of large or small loans protect themselves from unscrupulous agents. These licensing laws were passed in 2006 in New York, and similar ones were passed federally in 2008.

New York state loan licensing

The newest regulations in New York state are intended to regulate not cash advance lenders that offer mortgages, but their agents. As of July 31, anyone who wants to work as a mortgage loan officer must be individually licensed. In order to get this license, an agent must complete a 20 hour training course. Consumers also must pass tests, criminal background checks and financial background checks. Similar laws are set to take effect all over the country in the next few years.

Addressing loan job jumpers

The New York law and the Secure and Fair Enforcement for Mortgage Licensing federal law passed in 2008 address a specific problem. Many of the bad loans and fast cash advance products that contributed to the economic downfall came from a unique subset of lenders. While mortgage businesses were licensed, the lenders who worked at them were not required to be. This meant that some mortgage loan officers would make bad loans or no credit loans, push unneeded loan products, then jump from job to job when they got fired.

Questions about licensing requirements

While the reform that has been implemented as of July 31 addresses many issues in the mortgage business, some are questioning the requirements. Most say that the required 20 hours of training simply isn’t enough. In most states, licensed professions require a minimum of 75 hours or more of training. Either way, the Nationwide Mortgage Licensing System & Registry is now providing a search for borrowers to identify whether they are working with a licensed mortgage lender.