Regulation and Feeling Safer
To some extent this post is a personal rant, so if you want to just ignore it, no hard feelings. You might want to know that we mortgage broker charlatans are going through compliance and regulatory hoops like we’ve never seen. Our federal government has decided that this regulation will avoid the next mortgage meltdown and eliminate the bad apples from the industry barrel. But here’s my favorite part: My mortgage colleagues that are sitting inside banks don’t have to do any of this testing and compliance. Yet, about two weeks ago, there were 18 people arrested in Daly City, CA for alleged mortgage and real estate fraud. (http://articles.sfgate.com/2010-04-15/bay-area/20850150_1_san-francisco-mortgage-broker-loan-applications) Of those 18 people, there were eight real estate professionals involved—8 real estate agents, 3 former banking institution employees, and one lowly mortgage broker. ONE. Are you feeling safer?
The irony of the timing
Look, I’m not saying this is all bad, ridiculous, time-wasting, and frivolous. There are some states that weren’t licensing mortgage professionals at all. Buying a home and getting a mortgage are usually the two biggest financial transactions that anyone will make in a lifetime. The people who are involved in those transactions ought to have some sort of licensing and compliance control. If we choose as a society to regulate my hairdresser, then we probably ought to regulate people who care for people’s financial health.
Be aware: Securities and Exchange Commission did this, too, many many years ago. Decades later, the SEC failed for years to stop the biggest Ponzi scheme known to this country and its licensee. I’m not sure when ethics became defined as knowing which regulatory agency would fine you or put you in jail if you ripped off your client, but that’s what I studied. I’m not sure why it’s important for me to know that the Truth-in-Lending-Act is also known as Regulation Z or that the Real Estate Settlement and Procedures Act is also known as Regulation X. I do know that the exams that the SEC requires are not dissimilar in the rote memorization that is required to pass the exams that allow financial professionals to manage money. While the intentions may be good here, I’m not convinced it will have the effect it intends to have. Bad people find ways to do bad things and seemingly do it best when someone is supposedly watching.
So, feel safer, I guess. The bar to entry to this profession has been raised for sure. You’ll be pleased to know that’s true even for me. I have had to register with a national registration system, I’ve had to take a national test, I’ve had to take a state test, I’ve had my fingerprints taken (again), I’ve allowed someone to pull my credit report, and I will disclose my net worth. Nevermind that I’ve passed the Bar Exam, the Certified Financial Planner exam, two industry certifications exams, a state exam to get my salesperson’s and then my broker’s license, and maintained my state required 45 units of continuing education credit to maintain my licensing. I supposed DNA testing and electroshock therapy are next.
The silver lining (because I will always find one): It’s been good for the economy. I’ve spent over $1100 getting this done, which I hadn’t planned on spending this year. The facilitator at the testing site said that he had been closed three days a week for the last six weeks and things were picking up again. He was pleased to see all us mortgage people showing up to get tested. So it goes.
Okay, I’m done. Rant over.