An Interview with OAMB Immediate Past President Rod CraigTara EnnisOAMB, Rod Craig, HB 2764, Oregon Association of Mortgage Brokers The following is an interview conducted with OAMB Immediate Past President Rod Craig regarding HB 2764, the proposed broker educational requirement bill. Please provide a brief description of HB 2764. HB 2764 requires a minimum education level for both loan originators new to the Oregon mortgage industry and those who have been in the industry. It basically sets a minimum educational criteria for them; whereas none currently exists. Are there minimum educational requirement laws currently on the books in Oregon? No, there are none as of yet. HB 2764 also allows for a criminal background check for any individual entering the industry to become a loan originator. The primary intent of the bill is to protect the consumer. How will HB 2764 impact the Oregon mortgage industry? HB 2764 will undoubtedly have a positive impact on the mortgage industry in the State of Oregon. It has overwhelming support from the industry, as well as from real estate and escrow agents and the Department of Consumer and Business Services. Most in the industry feel this bill is long overdue. When was HB 2764 proposed? The bill has been worked on for approximately a year and a half; however, it has been in the works for more than three years. The Oregon Association of Mortgage Brokers has been working on this type of legislation for well over two years, gathering data and talking with a number of groups. The bill was finally drafted and introduced in January of 2001. What is the current status of HB 2764? To date, HB 2764 has passed the House Committee with a vote of eight to two. And it recently passed the House floor by a vote of 51 to seven. Who is the author of the bill and has HB 2764 received any support from other legislators? Rep. Bill Witt (R-Cedar Mill) is the sole author of the bill, and has been very supportive of it since its inception. Rep. Jerry Krummel (R-Wilsonville) and several other representatives have demonstrated some support; however, Rep. Witt has been the greatest help in the Oregon legislature so far. Was HB 2764 drafted entirely by Mortgage Brokers? HB 2764 was drafted directly from the mortgage industry with input from consumers. However, the bill has been primarily driven by OAMB. If HB 2764 is passed, when will it become effective? HB 2764 would become effective in January of 2002. Please describe the committee responsible for overseeing the continuing education curriculum. The initial draft of HB 2764 detailed the statutory establishment of an education committee that would oversee and control the curriculum. This was removed in favor of an advisory committee which is currently in the statute. The State of Oregon will certify programs, but consult the advisory committee regarding format and content of curriculum. The industry believes this is the most important component regarding education. We are the ones to best determine and control a curriculum that is meaningful, timely and relevant to the consumers and industry in which we serve. The current statute will utilize the advisory committee in lieu of establishing an entirely new committee. Who will the advisory committee be comprised of? The committee will be comprised of an equal number of brokers and bankers who are currently affected by the laws on the books. Mortgage Brokers would welcome consumer input since ultimately they are the people whom we are proposing this bill for. We would like to see representation on the committee from consumers so the education being offered actually benefits them. This is not only an industry bill, but is also a consumer protection bill and tries to balance the best interests of both parties. How will HB 2764 affect Mortgage Brokers outside the State of Oregon? Before out-of-state brokers could originate loans in Oregon, they must first read and understand Oregon laws. We believe that right now this is somewhat deficient in Oregon because individuals do not know the current laws. Before anyone can be held accountable, we must first make sure they are aware of our laws. By establishing education requirements, we have set a standard where you can hold someone accountable. The educational component really has to do with teaching regulations and core requirements. It has nothing to do with sales and marketing--what we call "fluff courses"--but nuts and bolts courses. Courses that teach what disclosures are required in a transaction and when they are required--these disclosures are primarily there for the benefit of the consumer in the first place. Will HB 2764 drive away brokers from conducting business in Oregon? I do not believe this will happen because one of the ideas with the educational curriculum is to adopt courses that can be taught in a variety of ways, whether it is a classroom environment, via the Internet, through correspondence courses or on a CD-ROM. For example, the Mortgage Banking Association course (CampusMBA) is long standing, has a great history, can be facilitated from anywhere in the world and is an overall fantastic course. It can be facilitated from anywhere in the world to gain the necessary education. I think the education requirements will change how individuals from outside Oregon conduct business in the state because it requires them to enter the industry and invest something into their business. In Oregon, you often run into individuals who can enter the industry with very few hurdles in their path. They then take a few refinances and eventually, hastily exit the industry. These individuals are not taking the time to learn the business and conduct business the right way. All we are trying to do is to basically tell people exactly how it needs to be done so it benefits everyone. How will the educational requirements apply to those who are currently in the industry, but did not previously have to adhere to educational requirements? If they come from states with similar requirements, these requirements can be adopted. If a person has been in the industry for three years, they will be grandfathered into the core curriculum courses, such as RESPA and TILA. However, they will still be required to pass the examination on the rules and regulations in the State of Oregon and be subject to a criminal background check. How many continuing education hours are required? Currently, 20 continuing education hours are required. The director has the authority, as established by rule, to decrease these hours to no less than 10, depending upon experience and qualifications, after the initial 20 hours have been completed. Who will design the curriculum? Courses will be certified by the State of Oregon Division of Corporate Finance Securities and the Division will be in charge of the content and delivery method. They will not be responsible for providing the courses. We believe that because there are so many education providers, competition would actually be created. Education providers will meet with the advisory committee to have their curriculum approved. Once their curriculum is approved, they can offer it at any cost they feel appropriate. Overall, how will consumers benefit from HB 2764? With the trends of different types of identity theft and fraud that exists today, consumers need a first line level of protection so they know the individual taking their loan application is not a convicted con man. Consumers also need to be assured that the individual taking their loan application knows more about the loan process then they do. Until an education standard is established, there is no way to know this. We feel that most consumers believe we are already trained and educated licensed professionals. As much as 80 percent of the business is being done by third party originators and 80 percent of the first mortgages made in Oregon are being done away from the office. There needs to be some type of accountability measure when they are out in the field, removed from the eyesight of the supervisor. The Department of Consumer and Business Services has communicated to us that "...the bill will enhance our ability to protect consumers against unfair and predatory lending practices." Are any consumer groups working with you to support HB 2764 or are any groups opposed to this measure? There has not been one particular group jumping into the legislative arena. There have been no objections even though OAMB has contacted numerous consumer groups. However, there is opposition from insurance lobbies, in particular, Prime America is the greatest objector. They want a new exemption to be established for insurance companies. The Oregon Mortgage Bankers Association has finally taken a neutral stance on the bill. HB 2764 allows loan originators to work with only one company. Please explain. Currently, there are problems with loan originators initiating applications in two different company names by sending them to two different places (by definition, this is truly a Mortgage Broker). They have been working unlicensed. Under HB 2764, FDIC banks, state-chartered banks, credit unions and finance companies are exempt. This bill will not allow an individual to work for an exempt and non-exempt entity at the same time--they will have to choose one or the other. This is directly for the benefit of the consumer. The consumer needs to know who they are conducting business with and the originator needs to explain this to the consumer. Will this cause any problems? No, it will not. One of the greatest problems in Oregon is that a broker may receive a complaint from a consumer about an originator and find that during the investigation process, the loan application was taken under a different company name. Is there a complaint committee? No, there is not a complaint committee. When an action is brought against an individual or company, a hearing process occurs. A grievance committee existed before HB 2764. No committee has been created specifically for this bill. For more information regarding HB 2764, contact OAMB Immediate Past President Rod Craig at (503) 682-1515 or fax (503) 682-0979, or association Lobbyist John McCulley at (800) 650-9076 or fax (503) 566-3420.