The Washington Association of Mortgage Brokers has stepped up efforts to regulate its industry to protect those seeking mortgages.
Because of the efforts of the brokers association, a new law was passed in the state Legislature that makes mortgage brokers the only state-licensed loan officers as of Jan. 1.
“In states with similar legislation they have removed people with felonies,” said Adam Stein, legislative chairman and president-elect of the brokers group.
Ohio removed 10 percent of loan originators from the state-approved list because of felony convictions when it began regulating mortgage brokers. In Utah, 25 percent never passed a basic compliance-skills examination.
Stein acknowledged that some people don’t like the plan. But most in the industry approved.
“We had 83 percent approval,” Stein said.
Stein, after the idea had been discussed for about five years, took it to the Legislature. “We are raising the bar on our industry,” he said.
To get the license, loan originators will have to have a background and criminal-history checks, and not just for felonies but for any crime linked to fraud, Stein said.
A basic compliance-skills exam will be required of all current mortgage brokers and those wishing to become one, and continuing education will be required annually.
The test is being developed; if it is not ready by Jan. 1, applicants will be issued an interim license. This license and the permanent one can be revoked for unethical or illegal practices.
“If we take some of the people out of our industry who might not be able to supply our products and services, that means there is more business for those who remain,” Stein said.
Licenses won’t be automatic for current brokers. Those already in the industry will have to become licensed just as a newcomer would.
“That was a bit of a fight, but the reality is that if you’ve been doing it wrong for 20 years does that matter?” Stein said. “If you were arrested for fraud last year does that matter?”