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Residential Department: From the Editor: October 2008


From the Editor

In the age of RSS feeds and microblogging, already it seems as though July's Housing and Economic Recovery Act of 2008 could be old news.

After all, its mere $300 bailout for the housing market could (as of press time) be surpassed by similar life preservers thrown to the auto industry, government-sponsored enterprises and the Federal Deposit Insurance Corp.

But lost in the hubbub of the nation's growing financial woes and the upcoming presidential election is the fact that the housing bill likely is the most important piece of recent legislation to address the credit crunch — and mortgage industry — directly. Although with each passing day, new questions arise.

In this month's Scotsman Guide, we've replaced our traditional Lead Article with a special report on the housing bill's impact, its roots and just what it has set out to answer.

Part No. 1 of our Special Report examines what's likely the most salient aspect of the bill for brokers: the Secure and Fair Enforcement (S.A.F.E.) for Mortgage Licensing Act of 2008. Beginning on Page 19, Foster Pepper PLLC partner Douglas L. Davies and attorney Laura Marquez-Garrett detail just how the act will implement a national licensing system and what it could mean to the current "patchwork" of state-broker-license laws. States have as long as four years to meet the new licensing standard, though a number must comply by July or do meet guidelines already.

Go2Training's Ginger Bell looks at one state — California — whose licensing criteria do in fact fall near the new bar. In fact, Bell writes, many of the national guidelines come straight from the Golden State's standards.

A good thing? It remains to be seen. For example, the S.A.F.E. act only covers residential "loan originators" — leaving out or exempting numerous other key players in the mortgage game. Interpretation of other key parts of the bill could vary by state. Others have pointed out that the bailout bill specifies a pay-out for the primary-mortgage lender — but not necessarily for a lender holding a borrower's second mortgage.

In other words, just because the bill is now code doesn't mean its standards are set in stone. But understanding its effect on the troubled housing industry is an important first step in predicting what could be next.


Tony Stasiek was an editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail

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