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August 2007
Index of all
past
Affiliate Corner columns
Mortgage bankers versus mortgage brokers
By Ann Bagwell
National City Mortgage Corporation
In Colorado, several newly-passed laws affect mortgage brokers. Some wonder why not the mortgage bankers, too.
Mortgage bankers fall under all federal rules which take precedence over state rules. Most all are under the Office of the Comptroller of the Currency (OCC), the Federal Reserve Board, the Federal Deposit Insurance Corporation (FDIC), the Federal Trade Commission (FTC) and the list goes on and on. These regulators follow rules that have been tougher than the mortgage brokers’ rules have been in the past. Most mortgage bankers can do mortgage loans in all 50 states.
Before being hired, mortgage bankers are required to complete a full background check. Once approved, the manager can continue with the hiring process. Employees are required each year to take a series of compliance tests, which include topics like appraisal fraud, OCC regulations, RESPA, HMDA, fair credit reporting, the Bank Secrecy Act, Anti-Tying and Inter-Affiliate Transactions, etc. Mortgage bankers are also required to take a series of training classes. If these tests are not completed in a given time frame, or a passing grade is not received, it means termination. Each class can take one to three hours to complete. This has gone on for many years with the mortgage bankers.
Now under the new Colorado regulations, mortgage brokers are required to submit to full background checks before they can receive a license. The next step is that they will also be required to take educational classes each year. Hopefully, this should in time level the playing field between mortgage brokers and mortgage bankers. It should weed out the past convicted felons who should never have been in the business to begin with. It could also change the way that several “dot com” companies have been doing business in Colorado.
The most important thing to remember, whether you are a mortgage banker or a mortgage broker, is to be honest; to listen to what your customers’ needs are; and to guide them to a product that is safe and will work best for them. In doing so, you will have your customers for life.
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