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| Mortgage bankers have announced their opposition to a New York bill that would require each individual originator to be licensed in the same manner as a mortgage broker originator.
In a letter of memorandum, the Mortgage Bankers Association said it is opposed to the enactment of S 7431 and A 10802. If enacted, the bill would increase the burden on mortgage companies operating in more than one state, the memo said. Federally-charted lenders, which are exempt from state regulation, would have a bigger advantage over state-chartered institutions. Diminished competition among lenders will cost New York borrowers more, according to MBA — which says its members originated $111 billion in mortgages during 2004 in the state. Countrywide Home Loans, Washington Mutual Bank and Wells Fargo Bank are reportedly among the group’s members originating in the state. MBA said its members place their loan originators through “rigorous background checks, continuous training, and ongoing performance monitoring.” Mortgage bankers should not be subject to the same regulations as mortgage brokers because “mortgage bankers are different than mortgage brokers,” the letter said. “Mortgage bankers underwrite applicants and lend their own funds or funds they have borrowed in a mortgage transaction. “From the moment a loan has closed, mortgage bankers assume the credit, interest rate, compliance, and fraud risk associated with the loan,” the statement said, adding that mortgage bankers maintain all of the quality, compliance and fraud risk regardless of subsequent secondary marketing sales. Some mortgage bankers are also subject to oversight by state regulatory agencies, government sponsored housing enterprises and the Federal Housing Administration, as well as audits required by private parties. But mortgage brokers, commissioned sales people who don’t fund, originate or service loans, “do not have capital at risk in a transaction and their responsibility for a loan typically ends when a loan closes and they receive their payment.” MBA recommends that FHA-approved lenders, Fannie Mae- or Freddie Mac-approved sellers and mortgage bankers with a net worth of at least $5 million be exempt from the New York statute. |
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Sam Garcia worked in mortgage lending for twenty years prior to becoming publisher of MortgageDaily.com, MortgageChronicle.com, FraudBlogger.com and CloserBlog.com. email:Â SamGarcia@MortgageDaily.com |
