Mortgage brokers starting to register
To combat abusive lending practices, seven states have launched a standardized registry for mortgage brokers. Eventually, regulators nationwide will know about those who fail to register. Steve Tripoli reports.
A mortgage application (iStockPhoto)
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Doug Krizner: Here in the States, as we untangle from the subprime mortgages crisis, one thing seems clear: Much of the mess was created by abusive lending practices. This week, seven states from Rhode Island to Idaho launched a standardized registry for mortgage brokers. It's similar to one used for stockbrokers. Thirty-five other states have committed to joining. As Steve Tripoli reports, it's step one.
Steve Tripoli: Banks and credit unions used to originate most mortgages. But in recent years, non-bank brokers have grabbed most of the business nationwide.
Dennis Ziroli is a Rhode Island banking regulator. He says state-regulated brokers targeted by the new registry could be a slippery lot.
Dennis Ziroli: What we found was when you found a unethical loan originator in a company, they would leave that company and end up someplace else. And there was really no way to trace them.
By March 31, all brokers will have to sign up with the first seven states in the registry. And by next January, they'll have to be licensed and background-checked. Fail any of those tests and Ziroli says the registry will let regulators nationwide know it.
Ziroli: I think we all have the same goal, and that's to have a seamless supervisory process over originators in general so they don't move across state lines. That'll weed those people out that sometimes fall through the cracks right now.
There'll be penalties for both non-complying brokers and their employers. And congressional Democrats are pushing even tighter standards.
I'm Steve Tripoli for Marketplace.
