It’s not as if we are walking into a clinic and demand to know that the doctor is a licensed practitioner of medicine.
But for some reason, it is really disturbing should one find out that the loan officer attending to your mortgage concerns is actually moonlighting from Walmart.
The truth is that that conclusion is only partly true. Most moonlighters will be moonlighting from somewhere else.
But the good news is that the relevant government authorities make it a priority to have lenders, brokers, and loan officers attend structured courses and take exams so that they are licensed.
This ensures that whoever is dealing with a home loan applicant is competent and knowledgeable in the field.
The bad news is that enforcement is very difficult. And you can bet that lenders and brokers will be exploiting loopholes to save time and resources.
Staff costs is one of the biggest operating cost any business has to contend with. So no employer would be more than happy to pay their employees to attend classes to sleep in when they could be closing million dollar loans each day.
It should go without saying that every state would have it’s own laws regulating mortgage lenders.
But regulations concerning individual loan officers specifically are hard to come by.
Banks can hire staff and give them the title of salesperson and easily deny them as bankers.
When all they do is sell… it’s hard to argue that they are not salespeople.
Mortgage brokers are even tougher to regulate. Pure brokers who have not become correspondent lenders are not lenders. This means that they are not under scrutiny like financial institutions and lenders.
While the NAMB and MBA play their part in trying to make the industry a friendlier and better place for consumers, there is little to stop brokers from hiring part-time or contract staff who attend to inquiries and walk-ins.
There is really very little barrier to stopping someone who’ve just finished his office job at five and stepping into the office of a broker to attend to potential mortgage borrowers.
So the onus to find qualified brokers really depends on how much effort a borrower puts into finding one.
But then again, why would a home buyer need a licensed broker?
The risks solely points down to being a victim of predatory lending.
The thing is that a person who is buying a house can be assumed to be a grown adult. After all, the legal age to buy a house is 18 in most states.
So why is it that a home buyer can make a decision buy a house with advice from friends and family who are not qualifies real estate agents, but cry foul when attended to for a mortgage by just a sales staff?
In the most part, people are just trying to find someone or something to blame for their own mistakes.
If you are able to judge that someone is not trying to take advantage of you, and is in fact genuinely trying to help you find the cheapest mortgage you can qualify for, there’s no need to deny yourself of that assistance.
If you must, the simple solution is to call up the NAMB or MBA and ask for references to locate a licensed broker.
But even then, you might be met with one of his staff at the office. And who is to say that a licensed broker would not push you towards an expensive loan?
The only way to navigate yourself in the treacherous waters that is the mortgage industry to take decide to take responsibility and be well-informed.
Ask questions to clarify any subject that is unclear.
Inquire with lenders and brokers.
Get a feel of what are the interest rates available in the market.
Conduct research on the internet.
This alone should be enough to give you a detailed breakdown of how closing costs are tabulated.
By this time, when you already know the market more than the average Joe, if you find that the costs associated with accepting the loan is unfair, you can only blame yourself for signing up anyway.
Should the terms be expensive and unfavorable, a borrower is within his rights to walk away… and into the doors of the lender next door.
In any case, I hate to see borrowers get fleeced, or even think that they were cheated somehow.
One of the biggest satisfaction a loan officer or broker should is to see their customers smiling from ear to ear because they have obtained the home loan that has helped them purchase their dream house.
And while I cannot condone unethical lending behavior, a huge part of preventing borrowers from being victimized is for them to play an active role in helping themselves.