Mortgage Brokers Get Criminal Background Checks

NewImage.jpgBloomberg is reporting that California mortgage brokers are facing closer scrutiny as the state adopts a federal law aimed at curbing the fraud and abuse that helped decimate the housing market.

Brokers in the nation’s most populous state will be required by July 31 to have passed criminal-background and credit checks, as well as licensing exams. California, along with about a third of U.S. states, previously didn’t require mortgage sellers to have individual licenses.

Reverse mortgage will be assigned identification numbers to enable regulators and borrowers to track their lending histories.

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“When someone buys 100 shares of stock, they must go through a licensed securities broker,” said Senator Dianne Feinstein, a California Democrat and co-sponsor of the law, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. “Until recently, some purchased their home — a far more valuable asset — through an independent mortgage broker or lender who may have had a criminal background or no license at all. This lack of accountability enabled unscrupulous brokers to commit fraud at the expense of unsuspecting homebuyers.”

U.S. Mortgage Brokers Get Criminal Check, Tests Under New Rules

 

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  • rainmand,rnrnYou clearly have a limited circle of originators with whom you are acquainted. There are thousands of CFL originators in the state. I know some who are employed in branches which are dual licensed. While I am a California real estate broker, I am close to several owners of CFL licensed mortgage lending entities who are also real estate brokers.

  • >>California, along with about a third of U.S. states, previously didnu2019t require mortgage sellers to have individual licenses.rnrnThat statement isn’t entirely true. Many of us in California are licensed via the Department of Real Estate. Testing, fingerprints, and a background check are required prior to being issued a license.rnrnHowever, some Loan Officers fall under the Department of Corporations, and their companies originate via the Consumer Finance Lending structure, and those Originators aren’t subject to the testing, fingerprints or background investigation.rnrnI don’t know the split, but 98% of the Originators I know in California are DRE licensed.

  • Louise321,rnrnAs if anyone in this thread could know that answer!!!! What I read is a lot of empty claims about the infallibility and superiority of bank employees — full of nothing but smoke and mirrors.rn

  • Rm,rnrn”Let’s not forget….” I have been never employed by any bank and I certainly am not as familiar with the hiring practices of all banks as you make yourself out to be. rnrnSince you make this claim, please provide the evidence. You assume and present your assumptions as facts. “Let’s not forget” the difference between biased opinions and facts.rnrn

  • It is truly pathetic that Bloomberg is allowed to publish an article with so much misinformationrnTo address the Banks and other institutions, the Federal Register final rules appears to state that the MLO with these institutions must meet all of the requirements of the registration process. In other words no free ride.

  • Hey Samchrome! I am interested to know if all those “liar” loans that Countrywide and WaMu did were wholesale loans. A good portion of them had to be retail, right? Wouldn’t it be helpful for loan officers with retail units of major banks to get the education and testing required for the little guys as well as the criminal background checks? Wouldn’t it be helpful if retail loan officers for nationally chartered banks were required to learn and follow state laws such as providing counseling checklists and state mandated warnings to potential borrowers as required in CA?rnrnBecause so little is required of financial institution loan officers, I would say it may be a step in the right direction, but it is decidely a baby step, miniscule, almost unnoticable in the greater scope of things. I mean, surely the national banks already require criminal background checks on their employees. Right?

  • Let’s not forget that employees of banks generally go through a very thorough review process before they are hired. If very specific requirements aren’t met, they aren’t hired. rn

  • What are the requirements to be able to originate reverse mortgages while working for a bank? Most reverse mortgages are now being originated by the retail organizations of the large banks – the very same banks who created the negative amortization loan programs that ruined the financial foundation in our country by facilitating the sub-prime mortgage meltdown.

  • The reality is that originator fraud was more of an issue on the broker side rather than the bank side of the fence.rnrnThe requirements for financial institution loan officers was published on Tuesday. At this time they will need to be registered in the NMLS and have background checks (with fingerprints).rnrnThe brokers do have more stringent requirements but overall it is a step in the right direction for our industry. I see it as a positive for a loan officer to be able to tell a customer that they have met the industry standards for licensing.

  • We all knew this was happening with mortgage brokers but I wish to point out the CountryWide and WA Mutual and others were Mortgage BANKERS. Will their loan originators (swallowed up by banking giants BofA and JP Morgan Chase) and the overseeing bank managers be required to take education, testing, criminal background checks and credit checks? Scrutinizing only a very small percentage of loan originators in our state will not stop fraud and abuse. Scrutiny must be administered across the board or we will end up in the same place as we are now. Those who don’t know history are destined to repeat it. — Edmund Burke. Now he said that over 200 years ago. Have we learned from our recent history? It appears we are willing to let the major wrong doers (read nationally and state chartered banks) escape to repeat their wrong doings while the little guys (read regional mortgage bankers and brokers) are beat up on with major fees and legal and education barriers.

  • We all knew this was happening with mortgage brokers but I wish to point out the CountryWide and WA Mutual and others were Mortgage BANKERS. Will their loan originators (swallowed up by banking giants BofA and JP Morgan Chase) and the overseeing bank managers be required to take education, testing, criminal background checks and credit checks? Scrutinizing only a very small percentage of loan originators in our state will not stop fraud and abuse. Scrutiny must be administered across the board or we will end up in the same place as we are now. Those who don't know history are destined to repeat it. — Edmund Burke. Now he said that over 200 years ago. Have we learned from our recent history? It appears we are willing to let the major wrong doers (read nationally and state chartered banks) escape to repeat their wrong doings while the little guys (read regional mortgage bankers and brokers) are beat up on with major fees and legal and education barriers.

  • The reality is that originator fraud was more of an issue on the broker side rather than the bank side of the fence.

    The requirements for financial institution loan officers was published on Tuesday. At this time they will need to be registered in the NMLS and have background checks (with fingerprints).

    The brokers do have more stringent requirements but overall it is a step in the right direction for our industry. I see it as a positive for a loan officer to be able to tell a customer that they have met the industry standards for licensing.

  • What are the requirements to be able to originate reverse mortgages while working for a bank? Most reverse mortgages are now being originated by the retail organizations of the large banks – the very same banks who created the negative amortization loan programs that ruined the financial foundation in our country by facilitating the sub-prime mortgage meltdown.

  • Let's not forget that employees of banks generally go through a very thorough review process before they are hired. If very specific requirements aren't met, they aren't hired.

    • Rm,

      “Let's not forget….” I have been never employed by any bank and I certainly am not as familiar with the hiring practices of all banks as you make yourself out to be.

      Since you make this claim, please provide the evidence. You assume and present your assumptions as facts. “Let's not forget” the difference between biased opinions and facts.

  • Hey Samchrome! I am interested to know if all those “liar” loans that Countrywide and WaMu did were wholesale loans. A good portion of them had to be retail, right? Wouldn't it be helpful for loan officers with retail units of major banks to get the education and testing required for the little guys as well as the criminal background checks? Wouldn't it be helpful if retail loan officers for nationally chartered banks were required to learn and follow state laws such as providing counseling checklists and state mandated warnings to potential borrowers as required in CA?

    Because so little is required of financial institution loan officers, I would say it may be a step in the right direction, but it is decidely a baby step, miniscule, almost unnoticable in the greater scope of things. I mean, surely the national banks already require criminal background checks on their employees. Right?

    • Louise321,

      As if anyone in this thread could know that answer!!!! What I read is a lot of empty claims about the infallibility and superiority of bank employees — full of nothing but smoke and mirrors.

  • It is truly pathetic that Bloomberg is allowed to publish an article with so much misinformation
    To address the Banks and other institutions, the Federal Register final rules appears to state that the MLO with these institutions must meet all of the requirements of the registration process. In other words no free ride.

  • >>California, along with about a third of U.S. states, previously didn’t require mortgage sellers to have individual licenses.

    That statement isn't entirely true. Many of us in California are licensed via the Department of Real Estate. Testing, fingerprints, and a background check are required prior to being issued a license.

    However, some Loan Officers fall under the Department of Corporations, and their companies originate via the Consumer Finance Lending structure, and those Originators aren't subject to the testing, fingerprints or background investigation.

    I don't know the split, but 98% of the Originators I know in California are DRE licensed.

    • rainmand,

      You clearly have a limited circle of originators with whom you are acquainted. There are thousands of CFL originators in the state. I know some who are employed in branches which are dual licensed. While I am a California real estate broker, I am close to several owners of CFL licensed mortgage lending entities who are also real estate brokers.

  • rainmand,rnrnYou clearly have a limited circle of originators with whom you are acquainted. There are thousands of CFL originators in the state. I know some who are employed in branches which are dual licensed. While I am a California real estate broker, I am close to several owners of CFL licensed mortgage lending entities who are also real estate brokers.

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