State Licensing Efforts, Recession Wipe out 75% of Ohio Loan Officers

The number of loan officers in Ohio who do not work for banks has fallen sharply over the course of the last 10 years, down as much as 75% to a total today of 3,000. Ultimately, those who suffer are the consumers, a Cleveland.com article states.

“The eye-popping decline started because, 10 years ago this month, Ohio began requiring loan officers to pass criminal background checks. That swept thousands out of the industry. The financial crisis of 2008-09 squeezed out thousands more,” writes a Cleveland.com article. “The result: Consumers have fewer choices when shopping for a home loan and it may hurt them. Others say consumers are better protected because so many of the bad guys had to leave the business. And those who are left – including those at banks — must conform to stiff new layers of state and federal regulations.

…[Charles] Bromley of Ohio Fair Lending said it’s unfortunate for consumers that more than half of the mortgage lending in this country is financed by four banks: Chase, Bank of America, Citicorp, Wells Fargo. “There are fewer choices for the consumer to get a better deal on a mortgage,” he said.Historically, consumers could get more leniency and could negotiate fees and terms with a mortgage broker. Banks, on the other hand, have generally always been less flexible on terms and prices.

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Written by Elizabeth Ecker

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  • The problem is not because Ohio requires Loan Officers to have  a background check…We also had to do very difficult testing, credit reports and heavy fees. That prevented some LO’s from staying in the Business, but, the BIG problem was when the Dodd/Frank rule messed with our compensation!!! LO’s can’t make much money anymore and ad to that the fall out with real estate price declines…Then you can get a better picture of what the problem is.  Most LO’s are of good character and could care less about having a background check done!

  • Did it ever occur to anyone that the Obama adminstration with Dodd/Frank  and the new consumer portection bureau WANTS all the lending to be done through the big bailout banks that the Federal Government effectively controls. They control the compensation of LOs and Brokers pushing the majority out of business and layer after layer of complaince and complaince cost so only the big banks remain. Welcome to National Socialism.  .

  • why is it that the only sales industry…mortgage sales .. has their income cap.?  what about car dealers, real estate agents, financial advisors, hedge funds mgrs., etc, etc, etc,  this is discriminatory and our industry should be taking this issue to the supreme court.

    • I agree totally! we ARE being discriminated against.  Where is the Mortgage Bankers Associations that we pay to support?  I guess because it only affects the loan officers and not upper management’s income, no objections are being filed!!

  • Destroying lives and careers?  Was it really the intent of newly
    incorporated licensing rules ( credit and background checks ), to suddenly
    destroy the careers and livelihoods of those who have been in the
    industry, honorably serving the consumers and the profession? If an individual
    has committed himself to our industry, raises and supports his family through
    this career, has never had any complaints or actions filed against him from his
    work or consumer, is it fair to rip this individual from his career due to some
    historical event not related to his actual job function or consumer
    interaction? I know many that may not shine in their personal lives or may have
    some history they are not proud of, but who are amazingly dedicated loan
    officers and extremely professional, definitely pose no threat to the consumer
    or the companies they work for… they are raising family, own homes and rely
    on their career to do so… now, we create more unemployment, more foreclosures
    and families being torn apart? Those are individuals we should embrace and
    support and grandfather in if they have already been serving well in our
    industry for more than 10 years, regardless of background checks or credit
    challenges.  What do you think? 

  • Everyone who is going to be a mortgage originator should be governed by the same rules.  Forget grandfathering.  It stands for the concept that some are entitled to participate in the industry even if they cannot meet minimum standards.

    Seeing some forced out of an industry is nothing new.  If grandfathering should be used now, it should have been used when licensing first took place in 2010.  If it was not good then, it is not good now.

    BUT there is something going on in our industry (reverse mortgages) called partnering by some.  Licensed individuals are working with those who are not licensed when the ones who are not licensed for one reason or another (including felonies on their records) cannot obtain licensing or registration.  The joint work would be OK except these not qualified originators are doing the work limited to all of the work specifically reserved for originators — except signing documents; the licensed individual signs loan documents.  Then the qualified originator splits compensation in an agreed basis on an after-tax basis.  How deep this practice runs is unknown.

    The big difference is if the employer or management knows about the  situation or worse encourages it.

  • Did I hear someone say that Director Cordray is from Ohio where he was the state Attorney General?  I wonder if he brings to this job what it is which was accomplished in Ohio as to the “increase” in Ohio mortgages and Ohio mortgage originators?

    The President seems to think that the Director will accomplish everything which was accomplished in regard to mortgages in Ohio.  This Administration!!!!! 

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