Mortgage Daily Logo
mortgage news from industry experts

States Modify, Clarify New Legislation

States Modify, Clarify New Legislation

Recent state legislative activity

January 24, 2008


photo of Patrick Crowley
Loan originators in New York and California face new state regulations, while new legislation in several other states has created confusion or concern — leading some of the states to provide further clarification or make modifications.

California Mortgage brokers and lenders face new requirements under regulations that went into effect this month.

The regulations require license holders “to implement best risk-management practices with regard to nontraditional mortgage products,” according to the California Department of Corporations.

All nontraditional mortgages that are made must be disclosed to state regulators. In addition, borrowers have to be warned “of the potential disadvantages” of low document or no document loans; no income/no asset loans; stated income loans; stated asset loans; no ratio loans; and other similar loan products.

Also, all consumer complaints and responses made by brokers and lenders must be retained by the license holder and the terms of adjustable-rate loans must be disclosed to borrowers.

Lawmakers in Maine and the state’s governor, John Baldacci, have tweaked an anti-predatory lending law for fear it would prevent some qualified and legitimate borrowers from receiving loans.

According to a statement from Baldacci’s office, the law is “designed to fight excessive fees and abusive lending practices that strip home equity and put consumers at risk.”

Under the legislation, lenders had to prepare an analysis of each loan in an effort to reduce illegal property flipping. The law originally included conventional as well as subprime loans.

But the Maine Attorney General’s office found that state regulators went too far, so legislators added a better definition of subprime loans.

Concerns about over-aggressively legislation enacted in the wake of the credit crunch have been raised in Minnesota and Massachusetts as well.

Clarity was also used in defining a new mortgage broker licensing requirement in Colorado.

Like many states, Colorado passed a law last year that set up licensing requirement for brokers. But after some confusion arose over who should be licensed, the state’s Department of Regulatory Agencies Division of Real Estate issued a new interpretation of the law.

According to a statement from the department, a license is required for someone who directly supervises employees who will “negotiate, originate or offer or attempt to negotiate or originate for a borrower … a residential mortgage loan.”

“Individuals who perform purely administrative or clerical tasks do not fall within the licensing requirement,” regulators said.

And finally, in New York, loan originators must now register with the state under a new law that kicked in Jan. 1.

Originators must be registered by April 1. The requirements include fingerprinting, filling out an application and paying a fee. All mortgage bankers and brokers were required to submit the names of their originators to regulators by the end of last year.


Patrick Crowley is a feature journalist and blogger for He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at:

next story

back to current headlines

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts