An Oregon trade group defeated a bill that would have increased mortgage regulation in the state. But bills in other states passed, including one restricting trigger leads, one requiring mortgage brokers to have at least three years’ experience and another criminalizing mortgage fraud.
The Oregon Association of Mortgage Professionals used a traditional grassroots campaign — from letter writing to phone calling — to kill a bill designed to more tightly regulate the industry, according to an e-mail from Tom Hendrickson, chairman of the association’s legislative committee.
Senate Bill 965 could have harmed consumers more than helped them while creating a crisis in the delivery of affordable prime lending programs, he wrote.
Our Oregon, a consumer advocacy group, backed the bill, saying its regulations were necessary in a state where foreclosures grew by 20 percent last year.
“There is no excuse for expensive pre-payment penalties that trap people into high-cost mortgages, or shady underwriting practices that leave borrowers with exploding monthly payments they cannot afford,” the group says on its Internet Web site.
Even though mortgage regulation died in Oregon other states continue to pass laws that impact the mortgage industry.
Connecticut lawmakers have passed a bill restricting the use of trigger leads. A trigger lead is “a consumer report obtained by a mortgage lender or broker … triggered by an inquiry with a consumer reporting agency in connection with an application for credit,” according to Lotstein Buckman, a Washington-based law and lobbying firm that follows the mortgage industry.
Colorado mortgage brokers face a rash of new regulations and punishments under a series of new laws that went into effect June 1.
The bills are designed “to combat mortgage fraud and reduce future foreclosures in Colorado,” the Colorado Mortgage Lenders Association said in a statement.
The bills levee fines to brokers who arrange loans for people who can’t afford to borrow the money; prohibit brokers from trying to influence an appraiser with threats or bribes; requires brokers to be licensed; makes a broker’s violation of good-faith dealings with a borrower a deceptive trade practice; and requires the state’s Division of Insurance to post on its Web site the number of complaints and enforcement actions involving brokers.
In Indiana mortgage brokerage firms must have a principal manager registered with the state under a new law that went into effect July 1.
The manager must pay a $200 registration fee and provide evidence of at least three years of service in the loan brokerage or financial services industry, according to a statement from the Indiana Secretary of State.
The law also requires criminal background checks of managers as well as brokerage owners and employees, written exams for employees and managers and other licensing requirements for brokers and loan officers.
Owners must also notify the state within five days of a manager or loan originator leaving a brokerage.
State regulators in Indiana have also been given increased powers to revoke, deny or suspend licenses, and operators have new requirements on the amount and type of information reported to the state.
In North Carolina two new mortgage-related laws have been signed into law by Gov. Mike Easley.
“This is good protection for the home buying public,” Easley said in a statement provided to MortgageDaily.com by spokesman Seth Effron.
Under the new laws, mortgage fraud is now defined as a crime and perpetrators will be charged with a felony, Effron said.
According to a copy of the law, a person is guilty of mortgage fraud when intentionally using false information in a mortgage transaction or attempting to receive money not connected with a normal closing.
The state will also create a public database of every person who originates a mortgage so regulators have more information about who is making and brokering loans in the state.
In Georgia, First Choice Funding of Birmingham, Ala., has reached a consent order with state regulators “to resolve allegations” that the company broke state mortgage laws, according to a statement from the Georgia Department of Banking and Finance.
