MORTGAGE LENDER AND BROKER LICENSURE
October 11, 2007
The area of Mortgage Regulation is a rapidly evolving one in which both state and federal legislators and regulators are
working with the various industries involved in this business to address the many problems which have arisen in the past
couple of years. The following a some of the most vexatious or prevalent problems in the current mortgage environment:
• Rates on Adjustable Rate Mortgages (“ARMs”) are resetting from initial teaser rates to much higher – and more
• Rates on ARMs are readjusting as frequently as every six months usually capping the interest rate in double digits
for the life of the loan.
• Onerous pre-payment penalties prohibit borrowers from refinancing these high-rate ARMs to mortgages with more
affordable fixed rates and terms.
• Use of “no doc” or “low doc” loan applications is so prevalent that many loans are based on unverifiable financial
and other information about the borrower;
Appraisals – arguably the most crucial part of the mortgage transaction – are often performed by individuals who
qualifications, knowledge and accountability are suspect.
With respect to the current regulation of mortgage companies, the following can be concluded:
• Effective regulation by both states and the federal government of participants in the mortgage transaction is
inconsistent (or non-existent) and has led to too low of a threshold for individuals to join the ranks of mortgage
• Of the 51 jurisdictions on which we have data, here are interesting data:
Number of Jurisdictions that regulate Mortgage Brokers: 51
Number of Jurisdictions that regulate Mortgage Lenders: