Notes and Opinions from one of Arizona's Most Trusted Loan Teams

The issue of Loan Officer Licensing has been in the papers frequently in recent months. As problems in the Arizona real estate market continue, everyone is looking for someone (else) to blame. We hear a lot of talk about the loan officer licensing issue as though all the recent problems were caused by a huge mob of "rogue" loan officers ambushing the unwary borrowers of Arizona.

Nothing could be further from the truth. Here are some points that don't seem to get into the newspaper very often:

1. ALL loan officers in Arizona are required to work under their own individual license or a corporate Mortgage Broker or Mortgage Banker's license. Corporate licenses are overseen by a "Responsible Individual". The Responsible Individual (or RI) is liable for every action of every employee of the licensee, including the loan officers, processors, closers, etc. (Federally chartered banks are exempt, but covered under strict federal guidelines, and the FDIC, FSLIC, etc.)

2. EVERY effort to license loan officers in the past 10 years was sponsored by the Arizona Association of Mortgage Brokers. Time and again, this effort has been stymied by poor support from the State of Arizona and/or some politico in the state legislature. Period, end of story.

3. Almost every broker, banker, or loan officer in Arizona is completely honest and works hard for their customers. The bad ones are a vanishingly small minority, but they get a lot of press.

That said, why do we in the business feel the need for an individual loan officer licensing program? The answer is simple. We need the licensing bill to make sure the bad actors can't just move from one corporate license to another. If the  Department of Financial Institutions suspends or revokes their loan originator's license, they will be completely unable to work in Arizona for any lending institution. Under the current situation, its hard to tell who may have had a problem on their last job. Chances are, the previous employer isn't going to say anything about it for fear of being sued.

Times are changing. Like every other responsible member of our industry, we are hoping the recent problems will strenthen our efforts to pass a Loan Officer Licensing bill in the Arizona legislature in 2008. I'm sure there are plenty of politicians out there who will be willing to take credit for our efforts to regulate the industry more thoroughly. (Now that it's front page news!)

Felecia Rotellini, the new Superintendent of Financial Institutions, is pro-active on enforcement and supportive of the industry's attempts to pass a licensing bill. Her strong leadership has been sorely lacking under earlier administrations and is good news for the companies she regulates. The good guys are cheering every time she takes out another bad individual or bad company. Superintendent Rotellini continues to support the industry's efforts to put reasonable checks and balances in place.

Hopefully, the time is ripe for improvement.

Jon Laird is a Past President of the Arizona Association of Mortgage Brokers and has been with the organization since its founding in 1980. Carolyn Drake is also a Past President of the association. No other broker in Arizona has had its owners share this accomplishment.