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   ARTICLE   |   From Scotsman Guide Residential Edition   |   December 2006

L.O. Licensing: The Lowdown

In just a few years, the number of states requiring loan-officer licenses has grown from 3 to 31

L.O. Licensing: The Lowdown

In recent years, more states have implemented loan-officer-licensing legislation in an effort to protect borrowers from abuse by predatory lenders and officers. Although only three states required loan-officer licenses just three years ago, 31 states now have license or registration regulations on the books.

Despite the increased legislation, noncompliance is rampant. Many mortgage companies are ignoring the laws. Some are openly defying them, funneling all loan officers’ loans through the company’s one licensed loan officer.

The goal of state legislators and predatory-lending groups is to hold loan officers and lenders responsible for predatory-lending behavior. State-agency enforcement departments are issuing cease-and-desist orders, revoking licenses and levying fines in an effort to promote compliance with these laws.

Ultimately, mortgage companies are responsible for getting all their loan officers registered or licensed. The best way to stay in compliance is to file for loan-officer registration or licenses for each loan officer who brokers or makes mortgage loans in the one of the 31 states. The other option: Risk violations for failure to supervise the licensing of your loan officers.

Here’s a state-by-state look at U.S. loan-officer regulations and their impact.



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