Some States Still Scrambling to Pass New Mortgage-Broker Laws
Coming up on two years after the federal SAFE Mortgage Licensing Act was passed, many states are still in the process of implementing new laws that more tightly regulate mortgage brokers. To comply with SAFE, states must craft new laws that require licensing, testing, and ongoing broker education.
Each state also sets their own rules on whether mortgage brokers must meet minimum net-worth requirements, secure a surety bond, or pay into a statewide recovery fund to guard consumers against broker fraud.
In some states, to add to the general confusion, brokers needed to comply with some components of the law shortly after passage, with other requirements phasing in later.
Some of the states where new mortgage-broker laws are still slowly rolling out:
• In Montana, even though the state enacted its new SAFE law in July 2009, some loan originators have until May 2010 to comply, depending on when their license expires.
• Massachusetts grandfathered in established mortgage brokerages and gave them until this coming December to meet the requirements of the state’s new SAFE law. Newer companies have rolling deadlines from July to October 2010 for compliance.
• Colorado’s surety-bond requirement took effect back in April 2009, but state-licensed loan originators had until January 2010 to comply with the education and testing rules.
There’s a compilation of more states and their SAFE Act implementation timelines here.