GAMB Voices Support for Individual Licensing of Mortgage Brokers

By Ronnie Rose

The Georgia Association of Mortgage Brokers believes that prospective mortgage loan borrowers should be treated fairly and honestly, and that the mortgage loan industry should do everything in its power to ensure that this happens. The majority of people who work in the mortgage loan industry are ethical individuals who want to help others achieve the American dream of homeownership. Mortgage professionals do this by working closely with each prospective borrower to learn as much as possible about the borrower's current financial situation and credit history; help the prospective borrower understand what, if any, mortgage options are available to them; and assist the prospective borrower in making an informed decision as to which option best meets their needs and resources.

Counseling is often an important part of a mortgage loan professional's job in working with prospective borrowers. On occasion, mortgage loan professionals must simply tell prospective borrowers that their current financial situation is such that they either cannot qualify for a mortgage loan at the time or, if they qualify, that the resulting monthly notes would place an undue strain on their finances. At times, mortgage professionals help prospective borrowers map out how they can improve their financial situation and/or a bad credit history and, over time, become a better candidate for a mortgage loan. Such counseling sessions may be performed over a period of days or weeks, and result in no immediate compensation to the mortgage loan professional. Nonetheless, many professionals consider counseling an important part of their jobs and perform it willingly on a daily basis.

Unfortunately, there are individuals in the mortgage loan industry who have not always treated prospective borrowers fairly and honestly. Despite the efforts of the industry and state departments of banking and finance -- which are statutorily charged with the responsibility of licensing mortgage brokers and regulating their activities -- there is concern that not all mortgage loan professionals are adequately trained to properly serve borrowers and meet all prescribed federal and state regulations. As a result, at least two members of the Georgia General Assembly believe that those employees on the front lines of the mortgage loan industry -- mortgage loan originators -- need to be licensed as a further step in protecting the consumer. Accordingly, legislation has been proposed and will be introduced during the 2004 general session.

GAMB supports the licensing of mortgage loan originators. Why? There are several reasons. First, we recognize that there are some "bad apples" in the mortgage loan industry. Although they are a small proportion of the industry as a whole, those bad apples cause problems for everyone and they must be weeded out. Licensing will give the Georgia Department of Banking and Finance another tool with which to protect the consumer by identifying these bad actors and either suspending or revoking their licenses. Second, licensing will promote increased professionalism in the industry by recognizing the need for formal training for new entrants into the industry, and continuing education for practitioners as a condition of license renewal. Other professionals in the financial community, such as real estate agents and insurance agents, have been licensed by the state for many years, which has helped those professionals maintain a consistently high level of professionalism. Mortgage loan originators can benefit from licensing in a similar fashion.

As a part of its ongoing effort to provide members of the mortgage loan community with timely and informative training on issues that impact the industry, Option One Mortgage and the GAMB Legislative Committee co-sponsored a workshop on November 20, 2003 to explain the proposal to license mortgage loan originators. This workshop was open to everyone in the mortgage loan community and most of the attendees were concerned mortgage brokers. Three GAMB Past Presidents were in attendance -- Jim Hope, Jim Somers and Bob Armbruster, who is also President-Elect of the National Association of Mortgage Brokers. Current GAMB President Steve Beecham, along with Robley Rigdon and Melinda Kinard of the Georgia Department of Banking and Finance, were also on hand. Following a presentation by GAMB Lobbyist Bill Roper that described the reasons why the association is supporting licensing and offered details of the proposal, there was a lively question and period between members of a panel and attendees. The panel consisted of representatives from all sections of the industry, including Bill Roper; Georgia Department of Banking and Finance Deputy Commissioner Robert Braswell; GAMB Director Rich Vosler, a lender with Option One Mortgage; GAMB Legal Counsel Loretta Salzano; GAMB Director John West, a mortgage broker with Home Equity Loan Products; and myself.

Inviting further government regulation in the form of licensure may seem totally foreign to those of us who value free enterprise so highly. Shouldn't we oppose all further government intervention into our lives? After careful study, GAMB has determined that licensing mortgage loan originators can be an important step in protecting the industry's clientele -- prospective mortgage loan borrowers -- and will ultimately benefit the entire mortgage loan community over the coming years. Accordingly, we hope that you will join with us in supporting legislation that will be introduced during the 2004 General Assembly.

It's your choice: become a part of the process, or become a victim of it!