Before the passage of the new national SAFE Act standards for the mortgage industry, the State of Florida had set out to develop and implement stricter requirements for the purpose of licensing. The objective was to raise the professional standards to give the consumers better protection. Florida had developed its own checks including background, credit and finger printing. The state also established pre-licensing standards and continuing education along with testing. All of this was good but not enough to keep it from being one of the hardest hit states in the country with mortgage foreclosures. The main reason is the sharing of cross state information. Florida could not see originators’ history in the click of a button. This is a major benefit of Florida joining the National Mortgage Licensing System (NMLS). Florida was a target for reverse redlining which brought mortgage loan originators (MLO) nationwide looking to take advantage of its market. The state is proceeding, as now required by federal and state law, to raise the bar for anyone who wishes of working within the state’s mortgage industry to participate in the Florida NMLS.
Change has come with the bill passed in the Florida Legislature to implement new laws to allow Florida mortgage loan originators to use the national registry. Several changes have been made in relation to the SAFE Act. These changes were done with the intent of protecting the consumers and restoring their faith in the mortgage industry. These changes start with redefining the license types and the classification that goes with them.
To establish the new standards, all loan officers who are currently active in the mortgage industry need to reapply; this includes individuals, businesses and lenders. Furthermore, to obtain licensure status, a new set of minimum standards must be met. And to ensure safety and security, licenses are required to be annually renewed for continued licensure; this includes background checks, potential credit checks, and continuing education courses.
A brief look at the history of those with existing licenses shows many loan officers don’t possess the qualifications to keep their job which they have held for more than 20 or 30 years. This has continued and will continue to affect the growth and size of this industry, and has potential negative effects on competition. Existing and new loan officers will be required to take and pass with a score of 75 the national and state component test. Additionally, Florida originators will be required to successfully complete 20 hours of pre-licensing education and 8 hours of continuing education annually that follow the guidelines outlined by the NMLS and the State of Florida. To avoid a backlog for the transition, Florida allowed early applicants who applied to be granted temporary status while trying to complete the educational and testing requirements in 2010. Moving forward originators will have to successfully complete all requirements and be notified of licensure before beginning any origination activities.
Because loan officers are part of the national registry, state agencies, employers and federal regulators can view mortgage loan originator records. The registry allows verification of MLO status including successful completion of checks, education and tests to insure they are in good standing. Each step is done in order to attain high standards in mortgage loan originators obtaining or renewing their Florida license. This will be operated and reviewed by designated regulators.
It means that if an applicant did not have his licensing requirements met by the end of 2010, including successful completion of education and passing the National and State Component Tests, the applicant is getting a notice from the state licensing board asking him or her to get in compliance or to discontinue working. Like other industries, new regulations pave the way for change and alteration in landscape and in the players who participate.