Indiana Secretary of State Todd Rokita announced today that more than two-thirds of its state’s mortgage brokers have failed to comply with a new requirement, putting hundreds at risk of losing their licenses next month.
In an effort to raise the quality of mortgage lending in the state, Rokita passed a law back in mid-2007 requiring all licensed mortgage offices in the state to assign a Principal Manager to supervise the business by July 1.
A Principal Manager is defined as a mortgage professional with at least three years industry experience who has passed a practice standards exam based on federal and state regulations, along with industry best practices.
But more than 600 loan broker companies, or roughly 70 percent operating in the state, have yet to conform to the new guidelines, let alone take the test, and are therefore at risk of losing their licenses if they are not in compliance by the newly extended “last chance” August 5 deadline.
Brokers received notice of the new law in June of 2007 as well as last May, and were also informed about the changes at town hall meetings conducted earlier this Spring.
“Mortgage brokers are being held to a higher standard, and they need to understand the importance of the new requirements they face” said Rokita.
“The mortgage and real estate industries are facing unprecedented and deserved scrutiny, and I intend to make sure Indiana homeowners have the opportunity to hire professionals that can do a competent job.”
It’s unclear if the lack of broker response is due to simple procrastination or the fact that many brokers may no longer be operating as a result of the current mortgage crisis.
The new law affects both Indiana-based mortgage brokers and companies located outside the state doing business in Indiana.
Consumers looking for a qualified mortgage broker will be able to search for compliant offices via a state database, with those not up-to-date dropped from the directory.