The Mortgage SAFE Act: Safe, or an Act? Check Your Mortgage Expert Carefully
Refinancingto the wrongresidential loan could cost you your home, ruin your credit and disrupt family.In an attempt to combatfaulty lending practices, earlier this year, lawmakers passed the Secure and Fair Enforcement Mortgage Licensing Act "SAFE Act." It establishes a national standard mandating consumer protection against fraud and misleading lending practices. Crafted toabolish shoddy residential lending,SAFE primarily institutes a system for licensing and registering loan originators. California must comply with enact requirements by the end of 2010. While many ofthe prior deceptive loan programs have been eliminated,vigilance is still needed when choosing a lending expert toensure youre not being mislead or signing up for a financial disaster. Formerly, loan officers, also known as loan originators, were often just commissioned salespeople with no special training to help borrowers understand and select the right loan. Worse still in many cases,loan companies hired loan specialists who had no license at all. The ensuing mortgage meltdown paved the way for thisnewbureaucratic oversight. Hence, the SAFE Actincreases transparency andethical reportingstandards for mortgage loan originators. These provisions include: Criminal history, record information checks, Federal originator I.D. numbers, credit reports, tracking of consumer complaints, national testing, national pre-licensure and continuing education, bond and recovery fund requirements, andgreater accountability to the public provided free of charge via the internet. Policymakers have further engaged safeguards in establishing requirements. They include reducing regulatory burdens, streamlining licensing while providing increased accountability such as the maintenance of a database that monitors a loan officer or companys history of complaints and their license status. In the quest to facilitate responsible behavior in what remains of the residential 1-4 family loan market, there are new mandates for comprehensive training and examination prerequisites. Still of concern, however, are the Acts gaps.Not allloan officersare required to complete pre-license training and to passa comprehensive licensing exam,enablingtheuse oflegislativeloopholes. Heres how: Loan officers who work for Federally chartered banks or credit unions DONT have to take the exam or the pre-license training. So unless your loan officer works for a certain type of company, youre really no safer. Lawmakers decided to trust the banks to properly screen and train their originators. Hmmm, do you trust the banks? To find out if yourloanprofessionalis really qualified, has undergone required training and passed the exam - a little due diligence may be necessary. First, ask for their license number and what agency theyre licensed by. If they work for a bank or Federally chartered credit union, they might tell you they dont have to be licensed. If they tell you what license they work under, you can check on that licensing authoritys website for their license history. But be careful. Whether youre buying foreclosed homes, lookingfor home refinancing, or youre a first time homebuyer, you need to speak with a real financing expert. Sure, the SAFE ACT makes it a little safer but.... About the Author:
Joffrey Long provides mortgage lending and real estate advice and insight for homebuyers, real estate investors and investors in mortgage loans. Hes a mortgage lender and real estate investor himself, and has been in the industry for 34 years. Hes also called upon to testify as an expert witness in mortgage related litigation matters.