The Florida legislature is looking at adopting new rules for mortgage brokers, some of them seem so common sense that one has to wonder why it is that they were nor enacted sooner.  Some of the regulations being looked at:

Require nonbank mortgage originators to undergo annual criminal background checks.

Require them to join a national registry of mortgage originators.

Prohibit them from originating mortgages that include prepayment penalties.

Require them to make sure their clients can afford the mortgages being offered.

Require them to contribute to a fund that borrowers can access if they can prove they have been defrauded.

Seems like pretty standard stuff for the most part.  Some of these items are just expansions on things that already exist in the industry though to a lesser degree than proposed.  We don’t want crooks originating loans?  Sounds like a great idea… one has to wonder why criminals were ever allowed to participate in an industry such as this from the start. 

Where there seems to be a real disconnect however is in the area of a fee cap.  While lawmakers seem eager to cap the fees charged by mortgage brokers, they do not seem similarly inclined to regulate banks and their loan originators.  Banks are every bit as culpable where it concerns the mortgage fiasco and consumers should be given “protections” from gouging across the board.  While I do not support a cap of 2% (I happen to believe it should be more in line with NY’s 4% cap), such a cap doesn’t effect the vast majority of deals done by Bayside Mortgage Services, Inc. as we rarely make in excess of 1% on any deal that we do.

Right now the Office of Financial Regulation for the state is coming off a terrible news cycle in which lax regulation was seen as a key factor in Florida’s soaring foreclosure rate.  Typical of politicians there has been an extreme movement towards stricter regulation, but these regulations need to make sense.  While mortgage brokers seem a likely place to start, banks cannot be overlooked in this matter.  Banks need to be every bit as vigorously regulated as brokers.  People need to remember that brokers sell the products offered by banks.  Allowing banks to offer products under different rules and fee schedules makes no sense and doesn’t serve to protect the consumer.  Loan originators in banks aren’t even required to be licensed in the state, does that make sense?

Common sense rules need to be implemented within the Florida mortgage market, of this there is no doubt.  We here at Bayside applaud any effort that levels the playing field.  Finally it seems that the competition will have to work within the guidelines that our morality has imposed upon us as a business engaged in LAWFUL and ETHICAL practice.  There’s nothing at all wrong with that!