Regulatory Agency for Mortgage Brokerages in Place

Jan 1st, 2008 @ 8:52 AM by MortgageMentor

It comes as no surprise that seven states in the US have joined in creating a mandatory process for licensing and as tracking mortgage brokers. As the housing market has weakened, all mortgage brokers have been put under a microscope. It seems that even people with criminal records were able to operate a mortgage brokering business. It may be a case of too little, too late – but now steps have been taken to make brokers accountable.

Now, if you live in Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York, or Rhode Island, mortgage brokers will fall under stronger scrutiny. Called the Nationwide Mortgage Licensing System, there are benefits for borrowers besides protection from unscrupulous lenders. Once you have completed and submitted an application, it will be available through a centralized database system. that means the same system that shares information in order to inform state regulators to help with enforcement will also provide your application through companies with whom you might want to do business.

The system is somewhat like the one used for regulating securities brokers and dealers. Besides the states that are already committed to the system, there are 40 more states with agencies that intend to eventually join the NMLS. This appears to be the beginning of “real” mortgage regulatory reform.