Overbearing State Regulation Provides Opportunity for Some Mortgage Companies

Expansion costs depend largely on company size, structure and operations, not to mention licensing considerations when expansion includes the crossing of state lines. Sometimes, however, a challenge in expansion may actually provide an opportunity.

New York and North Carolina, for example, are states where licensing requirements are notoriously difficult.

“Most challenges are licensing and regulation related,” says John Lunde. “What we hear is that New York takes a really long time. North Carolina has a lot of requirements to get licensed to do loans there.” But, Lunde points out, there are relatively few lenders in the state.


The licensing is one major challenge, but not to the point where it is prohibitive, lenders say.

“If we have a compelling reason to go into a state, compliance probably isn’t going to keep us out of that state,” says Bill Trask, executive vice president/general counsel for Security One Lending. For example, Trask cites the high loan cost rule in Illinois, as an example. While Security One may recognize the increased difficulty and react accordingly, it won’t prohibit expansion. “It hasn’t stopped us,” says Trask, “but it does create a significant burden. Not only in time or in dollars, but in getting licensed, making sure all loan officers are licensed, and then the soft costs—making sure everything is taking place the way it’s supposed to.”

A recent move toward expansion for Net Equity Financial, however, actually saw the challenging environment as a place to grow.

“New York is a difficult state,” says Amanda Clinton, operations manager for New Equity Financial. Clinton says while it can take as much as two years to obtain licensing there, as compared with 60 days for some states, Net Equity Financial recently became licensed in New York in 10 months, which was a welcomed surprise.

“The licensing is so hard, I think there aren’t as many reverse mortgage companies there.” Net Equity Financial saw the lack of competition as a good reason to ramp up licensing efforts and expand north from its Nottingham, Md. headquarters, Clinton said.

For companies that tackle the challenge, says Lunde, there can be a payoff.

“If they go through the process of getting approved there, they expect the lower level of competition,” he says.

Written by Elizabeth Ecker

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  • While all of that may be true, well over 70% of the market is controlled by just ten companies.  The trend has been to see that control percentage go up, not down.
    For example, Urban announced it is “rebooting” the Robert Wagner campaign.  Now some may believe that its wholesale related companies will greatly profit from that but not even Senior Lending Network kept their arrangements with the buyers of their leads the same.  Eventually the goal was to use those leads solely in SLN retail.  While wholesale numbers drop, TPOs are taking an ever increasing portion of that pie.  
    Security One Lending, Inc. has the built in resources to expand into other states and are. RMD recently reported that S1L was hedging its situation by expanding into forward mortgages as well.  For sake of full disclosure, S1L is one of the top ten reverse mortgage lenders and last fiscal year was the third largest reverse mortgage lender in California per the RMD database.  Despite some early setbacks, S1L has moved decisively forward despite its humble beginnings at the time it entered into the reverse mortgage arena.

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