Mortgage loan officers get new licensing requirements

The state banking department today released details of a long-awaited licensing system for mortgage loan officers and expects to process about 40,000 applications within two years.

New York will join about 40 other states in putting names of licensees onto the National Mortgage Licensing System, set up by the Conference of State Banking Supervisors and the American Association of Residential Mortgage Regulators. Starting April, consumers will be able to look up brokers and employees allowed to offer mortgages, an effort at tracking employees who have been fired, unbeknownst to potential borrowers and employers, and try to jump from company to company.

The lack of licensing in a profession that can affects borrowers’ savings and credit has been under a microscope during the subprime collapse, in which loan officers and lenders have been blamed for some of the problems.

Under the licensing law passed last year in New York, applicants will have to attend 18 hours of classes, including three hours on ethics. The licensing process will covers a federal and state criminal background check, credit history and copy of applicants’ fingerprints.

The banking department will require current “mortgage loan originators” to send in applications by July 1 and those hired next year to send in paperwork as soon as possible. New hires will have priority in processing, while current employees are expected to be licensed or turned down by January 2010.

The banking department has hired extra workers to cope with the deluge of paperwork.

Although a state banking department spokeswoman said mortgage banking and broker groups have been kept up to date on details, some in the industry have worried about lack of details and the work involved in complying by the deadlines. For example, mortgage bankers and brokers will have to send in the names and addresses of each loan originator employee to the department by Jan. 15.

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source: newsday.com