We are standing on a new playing field, two years from the credit crisis of 2008 and the SAFE Act. The old stadium has been replaced. We are charging out of new locker rooms, with new rules, brighter lines and tougher officiating. It’s a whole new game. A new league of mortgage professionals is emerging across the industry.
In the wake of the unprecedented financial crisis, it is reasonable to expect a period of unprecedented reaction. We are in a time of legislative mania. Regulatory activism and economic realities are driving a top to bottom reformation of the mortgage industry.
The old safety and soundness lending principles that were once solely the domain of the depository institutions are being pushed down into the non-bank channel, right onto the shoulders of the licensed loan originator. Mortgage loan originator (MLO) licensure is meant to create a family friendly environment where consumers and investors alike can come to a SAFE place to enter a mortgage contract.
A SAFE Foundation
The intent of Congress in passing the SAFE Act was to lay a new foundation for our industry that protects consumers, stabilizes the credit markets and provides for better oversight.
1) Consumer Safety is primary. The SAFE Act requires MLOs to act in the best interest of the borrower and provides consumers free access to the employment status and disciplinary actions against an originator.
2) Capital Safety is the objective. By requiring minimum competency standards and forcing responsible lending practices into the non-bank lending channel, we will again demonstrate to the capital markets our ability to produce investment grade product.
3) Accountability and Oversight is the methodology. The Nationwide Mortgage Licensing System & Registry (NMLS&R) database provides for uniform reporting, improves the flow of information amongst regulators and tracks MLO activity across state lines.
It’s our industry that was at the epicenter of the nation’s financial crisis. It is our responsibility to restore the lost confidence and credibility. The SAFE Act has elevated the playing field. It will be up to us to play by the rules. Competency, responsible lending and accountability comprise the new stadium where we will compete.
Profit is good. Profit builds the roads, the schools and it secures our family and measures our value. Profit inspires excellence, improves service and motivates us to be our best. The free market is brutally honest. Every day you compete for your share, and each month, your profits validate your work. Profit is good.
On the new professional field, a higher level of competition has been set. The good news is that you’ll no longer be playing against shortsighted opportunists with no commitment to professionalism. Those days are gone forever. It’s a better time; you’ll look back five years from now and see that we’ve built a safer place for borrowers to come to you.
As you close the books on this year, as you draw your friends and family near, celebrate all the good things you have done. To you and yours, I wish good health, peace and prosperity in the New Year.
Paul Donohue, CRMS is a 23-year industry professional and founder of Abacus Mortgage Training and Education. Paul served on two NMLS working groups, establishing the new national education protocols. Go to AbacusMortgageTraining.com to find out more about your obligations for testing, education and licensure, or call (888) 341-7767.