State Takes Hard Line On Mortgage Lending

A new licensing requirement for mortgage lenders not connected with a federally insured bank might end some of the fly-by-night mortgage companies moving through the state. And new limits on what mortgage companies can charge may also be aiding an exodus. r

The Fair Mortgage Lending Act of 2003 goes into affect Jan. 1, and the requirement that all mortgage loan officers be licensed will be effective July 1. The Arkansas Home Loan Protection Act, which went into effect in July 2003, protects borrowers from high points and mortgage fees from loans based on equity, rather than the borrowers ability to pay.r

The Fair Mortgage Lending Act authorizes the Arkansas Securities Commission to establish testing and continuing education requirements, and allows the commission to impose fines of up to $25,000 or revoke licenses of lenders who don’t continue to meet the requirements.r

Dee Dietz, Northwest Arkansas sales manager for Countrywide Home Loans Inc., said the new legislation won’t affect Countrywide’s business in Arkansas much, if at all. Countrywide made 125 loans last year in Washington County, totaling $12.1 million.r

“It will probably have absolutely zero effect on the way we do business at Countrywide,” Dietz said.r

Countrywide, he noted, is the second-largest mortgage lender in the nation and the largest servicer of mortgages, which means they buy more existing mortgages than any other company. r

“We’re extremely self-regulated,” Dietz said, explaining that Countrywide lenders have extensive continuing education and training, and should be able to meet any licensing requirements. r

“We welcome it,” he said. “The more regulation that everybody has to go through, the better.” r

Countrywide loan officers in other states are licensed to meet their state requirements. Until now, independent mortgage companies had to be licensed in Arkansas, but not the loan officers themselves. r

Charles Miller, director of government regulations for the Arkansas Bankers Association, said the law doesn’t apply to mortgage loan officers connected with federally insured banks. They have their own licensing requirements and aren’t regulated by the Arkansas Securities Commission, which came up with the new regulation and backed it before the Arkansas General Assembly. r

Miller said the legislation is a way to monitor “some lenders who probably don’t have any brick and mortar in the state, who are coming in and picking up what they can.” A few of the more established independent mortgage companies backed the legislation, he said.r

Dietz said the state is likely reacting to predatory lending practices by disreputable firms. Some mortgage companies, mostly based in the Northeast, have made a huge profit on high-risk loans — loans issued to borrowers with questionable or bad credit, he noted. Countrywide is an established independent mortgage company that has a company policy limiting the fees that can be charged to a borrower, Dietz said. r

Aaron Burkes, executive vice president of Moore Mortgage Inc., said the licensing requirements won’t apply to his company because it’s owned by a federally insured bank — Delta Trust & Bank of Little Rock.r

“It really affects more the small mortgage brokers that don’t actually back their own loans,” Burkes said. r

Moore Mortgage has operated since 1984. It made 173 loans, totaling $15.2 million last year in Benton County. r