Miami Herald: New Florida law spurs rush to get mortgage broker licenses
Dec 28, 2009
The Miami Herald published this article on December 28, 2009.
BY KIMBERLY MILLER
Palm Beach Post
Florida’s Office of Financial Regulation has received 4,600 mortgage broker licensing applications since July, more than double the amount requested for all of last fiscal year.
The increase is attributed partly to the recovering economy, but the bulk of the applications are more likely the result of a new law that adds licensing requirements to home loan professionals, including the nascent foreclosure rescue industry.
As of midnight Dec. 31, anyone who provides loan modification services in Florida must be a mortgage broker — a $240 license that requires passing a state test, as well as have a clean criminal record.
Lawmakers added loan modifiers to the statute governing mortgage brokers during the spring legislative session and at the request of the mortgage industry. Supporters hope the law will stem loan modification fraud complaints which often involve charging large upfront fees for questionable services.
The Office of Financial Regulation estimates about 685 loan modification companies operate in Florida.
The Florida attorney general has received 3,680 complaints about loan modification companies this year and has opened investigations into 53 companies.
“We worked a lot with the state attorney general’s office to incorporate loan modifiers into our lending laws,” said Valerie Saunders, president of the Florida Association of Mortgage Brokers.
“There needs to be some level of security for the consumer.”
Practicing without a license is a third-degree felony that carries up to a five-year prison term and a maximum $5,000 fine.
The number of mortgage broker applications in Florida has fluctuated with the economy, ballooning to 25,585 in 2006 at the height of the housing boom. They plummeted to just 2,037 last year.
While the growth in recent applications probably includes those from loan originators who also are newly required to be licensed mortgage brokers, that application deadline is not until Oct. 1 .
Stefan Sinn, a senior loss mitigator for loan modification firm SFG Loss Mitigation Service in suburban West Palm Beach, recently applied for his mortgage broker license.
He’s been doing loan modifications since April, when federal foreclosure mitigation plans under the Making Homes Affordable program took effect.
While Sinn said he understands the motive behind licensing loan modifiers, the classes he took to pass the mortgage broker licensing exam had nothing to do with helping delinquent borrowers avoid foreclosure.
“We learned all about requirements for filing for a mortgage application, but that’s not what we’re doing,” Sinn said. “Licensing is fine, but you have to go about it the right way and include something about modifications.”
Saunders said she’s concerned the public isn’t fully aware of the new law and that some people practicing loan modifications, such as attorneys, may believe they are exempt from obtaining a mortgage broker license. They are not, she said.
“My feeling is there is a lot of confusion regarding who has to be licensed and who doesn’t because you have all these things happening during such a short period of time,” she said.