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Finally, there is a House Bill 2320 that will require the licensing of most of Arizona's mortgage loan officers and originators and bring more accountability to the industry. As a Realtor, I am more often than not asked for the name of a lender that I recommend. I know from experience that the loan officer I recommend is on the ball, is honest, and will get the best deal for my buyer. On the other hand, as an agent that represents Sellers as well, I have no control over the loan officer selected by the other agent or by their client. From personal experience, this has been painful for my sellers (as well as for me) when the loan officer is uneducated or unfamiliar with all of the programs and presents a Loan Status Report (required to be included with any offer to purchase) that is bogus.
Recently, I had a contract for a seller of mine, the lender assuring us that the buyer qualified for a 100% loan, and not until the day of closing did we discover that he actually did not qualify - his credit scores were not high enough!!! Guess who the seller took out their frustration on? Yes, me!! Well, of course, that's part of my role as a seller's agent, to let them vent, but the bottom line is - the mortgage business has allowed inept, uninformed loan officers to "scam" or to "engage in mortgage fraud," and it's been difficult to hold them accountable. They have put consumers at risk by giving them the wrong loan with exorbitant interest rates and extra fees, and the buyers are literally stuck. In our case, no one would return our phone calls, and we eventually figured things out after many hours of telephone calls, etc. That company or loan officer shouldn't be in business. The loan officer was brand new, and apparently had no supervision or else they would not have provided a false verification of the buyer's ability to purchase this home.
If this legislature becomes law, mortgage officers and originators will have to take a class on the business, pass a test and pay a fee. They also won't be able to have any felony convictions anywhere in the country, and will have to report whenever they move to another lender so regulators can track them.
Complaints have literally soared from Arizona consumers getting mortgages with hidden fees and prepayment penalties and higher interest rates than promised. In the past only the official "broker" of the financial institution was required to be licensed. They could have multiple employees handling loans that were not licensed.
It is estimated that there are as many as 18,000 unlicensed people taking mortgage applications, negotiating rates and getting loan commissions statewide. Scarey thought!!!
Recently there was a cash-back scam that involved obtaining a mortgage for more than a home is worth and pocketing the extra money. The scam would inflate the home value and defraud lenders funding the loans. Separate legislation that would make mortgage fraud a felony subject to 10 years in prison also has been introduced.
According to an article in a recent newspaper, "the bad mortgage brokers who can't pass tests in other states have gone to Arizona, and some of them couldn't get licenses because they have criminal records." Wow!!! That speaks volumes of how badly our state needs this regulation. More than 30 states have laws licensing mortgage officers. It's time that Arizona did!
I have only scratched the service of this serious problem. If you are in the market to buy a home, and you have a Realtor that you trust, then they will more than likely have some experience with a lender and know their ethics and can recommend them. Remember also, that if you are coming from out of state and plan to finance any portion of your loan, you will need a lender that is "licensed in the State of Arizona." At least check them out. That's why you have a Realtor, so they can provide that service.
Have a great week - Our active listings as of today was: 46,069.
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