Consumers Cautioned to Check Mortgage Broker’s License
Bank of Utah officials are cautioning consumers who may be seeking a mortgage loan to make sure that their mortgage broker is licensed. In mid-December, the Utah Division of Real Estate sent out a final alert to mortgage brokers, that they must meet new federal SAFE Act requirements that include licensing with the federal Nationwide Mortgage Licensing System (NMLS) by the end of the year and completing education and testing requirements.
The deadline has come and gone, and federal and state real estate licensing organizations are now compiling and updating the NMLS data base. It will take some time before consumers have access to an updated list of mortgage companies (outside of a bank or federally insured setting) that can legally process their loans.
The SAFE Act, passed in 2008, was created to protect consumers from fraud by setting standards for the licensing and registration of state-licensed mortgage loans. Utah was one of the first to create a law to enforce the federal mandate. As of May 31, 2010 only 5,200 licensees out of 9,200 existing Utah mortgage brokers had transitioned onto the NMLS database, and of those licensees, only 2,000 had completed the testing requirements.
According to a state Division of Real Estate news release in December 2010, those affected by the new regulations and requirements include mortgage loan originators, associated lending managers, branch lending managers, and principal lending managers. Officials have voiced their concern that unlicensed brokers may continue to do business in violation of the law. If they do so, their license will be permanently revoked.
Bank of Utah CFO Branden Hansen said although there may be a significant drop in licensed independent mortgage brokers that are available to process mortgage loans, the change does not affect bank mortgage loan officers and mortgage loan originators who work for federally insured depositories. He said bank loan officers have always been an excellent option for people seeking a mortgage loan, because they have their own set of stringent requirements that include continuing education and annual federal examinations.
“The new SAFE Act regulations were put into place in reaction to the unscrupulous lending practices of some brokers in the industry,” said Hansen. “The new federal system assigns a unique number to each licensed mortgage broker and tracks all their transactions, thus creating a pool of more qualified mortgage brokers.”
Hansen suggests that home or commercial property buyers can protect themselves from dealing with unlicensed mortgage brokers by getting their loan through a community bank to assure they’re dealing with a more experienced loan officer, and asking to see the current license of a mortgage broker outside of the bank setting.
The Utah Office of Real Estate offers additional dos and don’ts for homebuyers which partially include:
- Use the NMLS Consumer Access system or call 801-530-6747.
- Do make your mortgage payments only to your servicer or lender.
- Do make sure you understand the documents you are signing.
- Do file a complaint with the Utah Division of Real Estate if you think someone offering loan modification services is trying to scam you.
- Don't ignore mail from your lender or servicer.
- Don't pay an upfront fee to anyone for loan modification services until you receive a written contract with detail about the services you will be provided.
- Don't work with a loan modification company or individual that appears to be a government agency or government program. You can find government-sponsored mortgage modification and refinance programs at www.makinghomeaffordable.gov and http://portal.hud.gov.
- Don't sign documents with blanks.
- Don't sign a warranty deed or quitclaim deed giving your title to anyone. When you lose title, you lose ownership.
For a complete list of dos and don’ts visit http://realestate.utah.gov/