Written by Sarah Carson, NAI Norwood Group
In an effort to regulate the mortgage industry, the federal government passed what is known as the Secure and Fair Enforcement Mortgage Licensing Act, or the SAFE Act for short, in 2008. This requires all loan originators to be licensed. That sounds reasonable, right? If it were only that simple. The law has actually caught attorneys, real estate brokers and homeowners in a pickle.
In an effort to regulate the mortgage industry, the federal government passed what is known as the Secure and Fair Enforcement Mortgage Licensing Act, or the SAFE Act for short, in 2008. This requires all loan originators to be licensed. That sounds reasonable, right? If it were only that simple. The law has actually caught attorneys, real estate brokers and homeowners in a pickle.
What qualifies someone to be a mortgage originator?
Technically there are two tests, a credit check and a background check. This
sounds straightforward. How does this cause trouble? A person is considered a
mortgage originator the moment they interact with a mortgage company, licensed
or not. As attorneys and real estate brokers, one might contact a mortgage
company on behalf of a client. Once that call is made that person has become a
mortgage originator. Insert penalties here. It’s a misdemeanor to act as an
unlicensed mortgage originator.
How does this affect real estate owners? Well, it’s made
seller financing a scary phrase. Under the law it requires a homeowner selling
a non-primary residence to have a licensed originator in the transaction. The
homeowner is in violation of the SAFE Act the moment they become a go-between
for the mortgage company and the potential buyer. If there
is a question about whether or not a person is acting as a loan originator,
always look from the perspective of the buyer, to understand if that individual
from the buyer’s view has been negotiating terms of the loan with them. This
has made foreclosures and short sales an even more complicated issue. Not just
anyone can talk to the lender.
Even more frustrating is that HUD doesn’t seem to want to
take responsibility. HUD makes the rules as we all know, but both HUD and the
state Banking Department say the other is responsible for interpreting the
language. Without any real answers coming from either side real estate and
legal communities are chomping at the bit.
A New Hampshire attorney has already succumbed to new law
and was ordered to pay $330,000 in fines for helping his clients modify their
mortgages. While he thought he was doing a good thing for those suffering from
economic hardship he was actually violating the SAFE Act. What’s the saying
here? No good deed goes unpunished.
Until the gray becomes black and white, consult a
professional before you act. No one wants to be the guinea pig that changes the
law even though that’s what it’s going to take.
look for certificates and resume of a mortgage originator just to be sure they are what they are claiming to be.
ReplyDeletebuying a house Essex County