|The Commonwealth of Massachusetts has made it tougher to qualify for a mortgage license and handed out hundreds of orders to those who don’t comply. Out of nearly 8,000 license applications received by the state since July 1, 2008, nearly 2,000 of the applicants either gave up or were turned down.
New regulations in the state under Chapter 206 required mortgage originators to be licensed, according toCompendium of Actions Taken Relative to Foreclosures and the Mortgage Industry released Tuesday by the Commonwealth of Massachusetts Division of Banks.
The report indicated 7,747 loan originator licenses were received.
But only 5,979 were approved.
The state denied 183 of the applications because of either felony convictions or failure to meet financial responsibility requirements. Another 1,323 applicants terminated their applications “after correspondence from the Division demonstrated material weaknesses in their submission.”
The decline was impacted by a substantial increase in net worth and bonding requirements for non-bank lenders and brokers. Bond requirements were increased in September 2007 to $75,000 for brokers and up to $500,000 for lenders, while the minimum net worth was expanded to $25,000 for brokers and $200,000 for lenders.
In addition, education and experience requirements were boosted.
Another part of the new legislation requires lenders that originate at least 50 mortgages a year to be scrutinized under requirements similar to the Community Reinvestment Act. The first examinations are already underway.
The state has issued 377 formal and informal enforcement actions against licensees since 2006. Last month, 87 cease-and-desist orders were issued to lenders and brokers who had failed to provide proof of their bonds.
Massachusetts claims its legislation created “one of the strongest regulatory structures for mortgage lenders and brokers in the country.”
Several formal enforcement actions were announced by the division in September 2008 as a result of alleged unfair and deceptive practices relating to reverse mortgage loans. The state formally adopted the Reverse Mortgage Examination Guidelines in December 2008.
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