Brian Short meeting with TDFI Commissioner Greg Gonzales in Nashville. I have participated in meetings with Tennessee Department of Financial Institutions Commissioner Greg Gonzales off and on for nearly 6 years. My leadership positions within the the Tennessee Association of Mortgage Brokers (www.TNAMB.org) have afforded me the responsibility and opportunity to receive an open door on many occasions in Nashville and Washington, DC with regulators and legislators who have influence over our industry. Each time I have been with the Tennessee Commissioner my consistent call has been for the need to increase the level of professionalism among those in our industry by requiring licensing, entry-level testing, background checks and continuing education. It has been my firm resolve that this kind of legislation and increased regulation would be good for all Tennesseans. I have been in favor of this kind of professionalism for all of my industry peers long before Rep Barney Frank and Sen Chris Dodd in Washington, DC ever got on this most recent - "shut down the predatory lenders" band wagon. Those of us in the mortgage industry have known that there were scoundrels among us. We knew that many who were originating mortgages really knew very little about the industry and even less about the harm that "short-sighted" loan programs could bring to a borrower's family, neighborhood or community. We knew that "interest-only", "no-doc" and "negative amortization" loans may have helped a desperate/greedy builder or Realtor sell a house, but in reality, those loans, very seldom were the best solution for any borrower who was stretching his or her monthly cash flow simply to buy more house than they could afford. In many cases, those who were leading the band wagon of "creative", "innovative" or "exotic" loan programs were simply pushing our industry toward risky loans which were not a sound or long-term lending solution for a unprepared borrower's housing dilemma. It has been my rallying cry for the past 6 years that the girl who cuts my hair for $12 every six-weeks undergoes more testing, licensing and continuing education than those in the mortgage profession in our state who are responsible for arranging the financing for the largest single lifetime purchase resulting in the greatest amount of debt for over nearly one-half of the remaining years yet to be lived by any first-time home buyer. Every other professional involved in the Real Estate transaction is licensed, tested and required to take continuing education - Appraiser, Home Inspector, Realtor, Insurance Agent, Home Improvement Contractor, and Title Attorney - every one, that is, except the mortgage professional. We are professionals whose work and expertise will have the longest-lasting effect on the home buyer - for better or worse! And yet, until 2009, no licensing, testing, background checks, fingerprints or education was ever required by the state of Tennessee!Last week I met, again, with Commissioner Gonzales and about 20 other mortgage professionals as we listened to him and others explain how laws that we had helped them pass earlier this year were going to result in new background checks, fingerprinting, entry-level education and testing being required for all mortgage professionals in the state of Tennessee beginning in 2009! These new laws will, undoubtedly, weed out some of those who have been "hiding" in our industry and have damaged the reputation of a very noble and difficult profession. I contend that the process of thinning out our ranks because of these "barriers to entry" into the mortgage profession will be good for those of who remain and especially good for Tennesseans who will know with confidence that the originator working with them will now have had to complete a background check, taken over 20 hours or initial classes and passed a test covering a set of basic information about the process of originating and closing a mortgage loan. All Tennesseans will be assured that their mortgage professionals will be keeping up on the changes in the state and federal laws and be reminded or what are ethical and unethical business practices because they will continue to take eight hours of additional classes EACH YEAR to keep their license current. This is great news for all Tennesseans!Brian Short meeting with a member of the US Senate Banking Committee, Tennessee Senator Bob Corker in Washington, DC earlier this year.
The new laws will also require that any mortgage professional working in any state across the country will be required to register in a National Mortgage Licensing System (NMLS) database to prevent a law breaking loan originator from simply moving across state lines to keep from being found-out and shut down as he or she cheats others, gets caught and then hopes to slip away to set-up these illegal practices in another part of the country without being found out.
Most of these new laws were being proposed and debated around the country long before our recent financial crisis and I’m not certain that any of these laws would have prevented the financial melt-down we have experienced over the past 2 years. The “exotic” mortgage loans which have proved to be disastrously risky for many who have now experienced foreclosure were not the “brain child” of mortgage originators. These programs came from the imiginations those sitting in the back offices of New York investment houses who were looking for creative ways to sell more mortgages to borrowers who were not qualified to buy home under the original guidelines.
Did government agencies and politicians pressure these investment houses and banks to offer these loans to give the appearance that certain socio-economic groups within our society were making headway or that lenders were not “discriminating” against minority groups or protected classes across the country? I guess the “investigation” to be launched by many of those same politicians might actually discover some truth but it is highly unlikely that the real fault will be publicized for the sake of preserving the political future of those doing the “investigation” in the coming months.
The good news, however, in Tennessee, is that all mortgage professionals will now be held to a higher standard in the coming months and years. Each of these standards, this author has proudly far surpassed by aquiring and maintaining the nation’s highest level of certification in the mortgage industry for the past seven years. Many Tennesseans have already experienced the benefits of working with a highly qualified and ethical mortgage professional who has taken (and taught) the classes, passed the tests and remains on the cutting edge of what is happening in the mortgage industry. It has been my pleasure to work for those borrowers who desire and deserve that caliber of mortgage professional.
The author, Brian Short, is the nation’s only thrice certified mortgage professional.(Certified Mortgage Consultant, Certified Residential Mortgage Specialist, General Mortgage Associate)