| Refinancing to the wrong residential loan could cost | | | | database that monitors a loan officer or |
| you your home, ruin your credit and disrupt | | | | company’s history of complaints and their license |
| family. In an attempt to combat faulty lending | | | | status. In the quest to facilitate responsible behavior |
| practices, earlier this year, lawmakers passed the | | | | in what remains of the residential 1-4 family loan |
| Secure and Fair Enforcement Mortgage Licensing Act | | | | market, there are new mandates for comprehensive |
| "SAFE Act." It establishes a national standard | | | | training and examination prerequisites. |
| mandating consumer protection against fraud and | | | | |
| misleading lending practices. Crafted to abolish shoddy | | | | Still of concern, however, are the Act’s |
| residential lending, SAFE primarily institutes a system | | | | gaps. Not all loan officers are required to |
| for licensing and registering loan originators. California | | | | complete pre-license training and to pass a |
| must comply with enact requirements by the end of | | | | comprehensive licensing exam, enabling the use |
| 2010. | | | | of legislative loopholes. |
| | | | | |
| While many of the prior deceptive loan programs | | | | Here’s how: |
| have been eliminated, vigilance is still needed when | | | | |
| choosing a lending expert to ensure you’re not | | | | Loan officers who work for Federally chartered banks |
| being mislead or signing up for a financial disaster. | | | | or credit unions DON’T have to take the exam or |
| | | | | the pre-license training. So unless your loan officer |
| Formerly, loan officers, also known as “loan | | | | works for a certain type of company, you’re really |
| originators,” were often just commissioned | | | | no safer. Lawmakers decided to trust the banks to |
| salespeople with no special training to help borrowers | | | | properly screen and train their originators. Hmmm, do |
| understand and select the right loan. Worse still – | | | | you trust the banks? |
| in many cases, loan companies hired “ loan | | | | |
| specialists” who had no license at all. | | | | To find out if your loan professional is really |
| | | | | qualified, has undergone required training and passed |
| The ensuing “mortgage meltdown” paved the | | | | the exam - a little due diligence may be necessary. |
| way for this new bureaucratic oversight. Hence, | | | | |
| the SAFE Act increases transparency and ethical | | | | First, ask for their license number and what agency |
| reporting standards for mortgage loan originators. | | | | they’re licensed by. If they work for a bank or |
| These provisions include: Criminal history, record | | | | Federally chartered credit union, they might tell you |
| information checks, Federal originator I.D. numbers, | | | | they don’t have to be licensed. If they tell you |
| credit reports, tracking of consumer complaints, national | | | | what license they work under, you can check on that |
| testing, national pre-licensure and continuing education, | | | | licensing authority’s website for their license |
| bond and recovery fund requirements, and greater | | | | history. |
| accountability to the public provided free of charge via | | | | |
| the internet. | | | | But be careful. Whether you’re buying foreclosed |
| | | | | homes, looking for home refinancing, or you’re a |
| Policymakers have further engaged safeguards in | | | | first time homebuyer, you need to speak with a real |
| establishing requirements. They include reducing | | | | financing expert. Sure, the SAFE ACT makes it a |
| regulatory burdens, streamlining licensing while providing | | | | little safer – but.... |
| increased accountability such as the maintenance of a | | | | |