Is Your Loan Officer Licensed?
Basics, Choosing A Lender, Misc. September 15th, 2009
Before you do business with a reverse mortgage lender it would be prudent to confirm that the loan officer who will be working closely with you is actually licensed to do business in your state. This might sound shocking but many loan officers have never been required to pass a formal licensing test in your state. Even more have never been vetted with either a criminal records check or a credit check. How do you know who you are dealing with? How confident can you be that your personal information is protected?
Different State Regulations
Up to now, licensing requirements for brokers and loan originators have been quite different from state to state. In some, all that is required is payment of a modest license fee. In other states, licensing requirements are both tough and costly. Massachusetts, for example, requires payment of a substantial annual fee ($500 for loan originators – much more for brokers), plus a criminal record information check (MA keeps a record of every criminal court appearance in its state courts), a comprehensive credit check, license application submission and tracking via the Nationwide Mortgage Licensing System (NMLS), basic education courses with annual continuing education requirements. It may be one of the toughest states to become licensed in and stay licensed in.
Nationwide Mortgage Licensing System (NMLS)
Massachusetts and a growing number of states throughout the U.S. have joined the NMLS system and more will follow in 2010. See map at beginning of this discussion. Tracking license information will be easier when details are collected and licensing is initiated through a central source. But each state continues to set there own rules and regulations. Eventually, NMLS will be opened up to consumers so that borrowers will be able to learn if complaints have been recorded against any licensed individual. NMLS helps states to standardize licensing requirements and add/track educational components. This is a good first step but thorough or not-so-thorough licensing supervision still depends on the location and varies greatly.
Loan Officers With No Licenses
If the loan officer works for a bank or a federally chartered institution, state licensing requirements may be completely avoided. This situation is changing, but right now you should know that you could actually be talking to someone who (1.) is not licensed in your state, who (2.) may have no specific education in reverse mortgage lending and who (3.) might be advising you on your finances while their own fiscal house is a disaster.
Solution
By year end some loan originators will be required to take the federal SAFE Act test. For others, the test may not be required until later in 2010. In the meantime, I would advise my own mom & dad to deal face-to-face with an originator who is licensed in the state where the home is located. I would specifically recommend that they avoid any lender that does not or will not come to the home. Who knows who you might be talking to?
Author – Robert H. Irving, CSA®
Senior Reverse Mortgage Consultant
November 14th, 2009 at 2:33 pm
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