Mortgage Broker Ranks In Florida Down Almost Twothirds
By Zachary S. Fagenson
Only 36% of mortgage brokers statewide have reapplied for licenses under new state laws, according to the Florida Office of Financial Regulation.
Prior to last October, when new federal guidelines for mortgage brokers took effect, 42,663 were permitted to write mortgages. By Feb. 2, a mere 15,219 had sought to remain licensed.
Additionally, 2,021 businesses have sought licenses to write mortgages compared to the 6,957 that were licensed pre-October 2010 and 1,057 mortgage branches have applied for licenses compared to the 3,115 licensed before the changes.
The new laws aim to add transparency as to who borrowers are working with. They follow a federal mandate to pass such changes under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act, a section of the Housing and Economic Recovery Act signed in mid-2008.
Problems in Florida — widely considered ground zero for the subprime mortgage crisis — surfaced after reports that the state’s office of financial regulation licensed more than 10,000 lenders with criminal pasts.
The legislative changes in Florida, signed in June 2009, include:
nAll license applications must be submitted via the Nationwide Mortgage Licensing System and Registry, created under the Secure and Fair Enforcement for Mortgage Licensing Act.
nMortgage brokers and lenders — including those not employed by banks — must renew licenses annually rather than biannually and undergo background and credit checks.
nA Mortgage Broker Guaranty Trust Fund, funded through a portion of license-application fees, is to settle mortgage-fraud claims.
nEngaging in unfair, deceptive or misleading advertising is now punishable.
nLoans can’t be modified without the borrower’s awareness and written consent.
Applicants had to pay fees and file through the Nationwide Mortgage Licensing System before Jan. 1 but were recently given an extension to March 31.
The plunge in applicants may be just what federal lawmakers sought when they required thorough background checks on potential mortgage brokers.
"From what I’ve seen from some of the other states is they’ve pared down as much as 50%," said Greg Oaks, bureau chief for licensing for the Florida Office of Financial Regulation. "It’s possible we could see a 50% drop in our licensees, though certainly economy and market conditions right now could have an impact on that."
Many who didn’t reapply, regulators probably hoped, might have been those who helped precipitate the mortgage crisis.
This shakeup in who’ll be writing mortgages is expected to take at least a couple of years to settle.
"The days of the cowboys are kind of over and now there’s a little bit more order back in the game," said Condo Vultures LLC Principal Peter Zalewski. "As we hit a rhythm we’ll start to see financing become more readily available."
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