Missed deadline will cost mortgage brokers business

by Chris Casacchia Phoenix Business Journal June 25, 2010

More than 2,000 mortgage loan officers operating in Arizona will not receive their licenses by the state’s July 1 deadline.

The industry has had more than 18 months to meet the state’s new mandate for loan originators to get accredited hours, pass written state and federal tests, provide criminal background information, and submit fingerprints to law enforcement and National Mortgage Licensing Services.

Because it is a state law, no extensions or delays will be granted.

“The mortgage loan officer cannot do business as usual after July 1 if they do not have a license,” said Lauren Kingry, who was appointed superintendent of the Arizona Department of Financial Institutions in April.

The state regulatory agency oversaw nearly 3,700 licensed businesses before the law was passed. As of press time, it had processed 2,600 applications and approved 1,500 of them. The rest are awaiting additional information.

Kingry expects at least 1,000 more applications to be filed after July 1.

By statute, ADFI has 120 days to review a completed application, but turnaround is averaging about 60 days — a remarkable feat, considering the agency is underfunded and understaffed.

Roughly 45 brokers are licensed out of the 60 employed by Scottsdale-based Home-owners Financial Group — the sixth-largest mortgage broker in Maricopa County, according to the Phoenix Business Journal’s 2010 Book of Lists.

HFG President Bill Rogers, a licensed real estate instructor, likes the new law because now he will know the work history of future applicants.

“Instead of just references, it adds some accountability to the originator,” he said.

Paul Klimke, president of the Arizona Association of Mortgage Professionals, estimated that 65 percent to 70 percent of the state’s brokers and originators are licensed. With the mortgage industry still struggling, he doesn’t expect any problems to arise because of the backlog, as most companies have at least one licensed broker.

Klimke estimates 3,000 mortgage bankers and brokerages are operating in Arizona.

“None of us are so busy (that we don’t) have the capacity to handle it,” said Klimke, a branch manager at Amerifirst Financial Inc. in Mesa. “I don’t think the consumer will be affected at all.”

The only problem he has with the law is that it doesn’t require national banks and savings and loan institutions to go through the same process because they are supervised by federal regulators.

“Who were the guys getting all the bailout money?” he said. “Go figure.”

JPMorgan Chase & Co. generally supports efforts to ensure lenders meet professional standards, said spokeswoman Mary Jane Rogers. She said lenders at the New York financial giant complete rigorous, ongoing training.

Rex Duffin, a 30-year industry veteran who has spent 25 years with Sun American Mortgage Co. in Mesa, said the law will weed out some undesirables and those with criminal records, but big banks are hiring brokers who couldn’t get licensed through normal channels.

“It’s a big step to policing the industry, (but) there’s a big loophole,” said Duffin, who serves as senior vice president of Sun American.

Fifteen of Sun American’s brokers are licensed, and many are waiting for approval. Duffin isn’t a fan of the cost associated with getting a license here, which can run $1,000 to $1,200 for the state accreditation and 20 hours in the classroom.

Chris George, CEO of CMG Mortgage, called the loophole associated with big banks “astonishing.”



Missed deadline will cost mortgage brokers business