Many jeopardized by poor credit for NMLS renewals: Industry Leader Update

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NMLS license renewals may get dicey for reverse originators with challenged credit history

If the last few years have taught us anything it’s that mortgage and financial professionals suffered financially with other Americans due to the housing and economic crash. This leaves many qualified reverse originators at risk of not being able to renew their NMLS license due to a poor credit record. That’s right. Honest, hard-working reverse originators, having met educational requirements…many may find themselves unable to continue to originate loans. Should some allowance be made? Are doctors required to have above-average health and not smoke to receive their license to practice medicine? Must every nutritionist have an ideal height to weight ratio? It’s the after effects of the 2008 SAFE Act which sought to reign in mortgage abuse and prevent future problems from questionable loan officers. But have we gone too far? Those dedicated to the mortgage and financial services industry stuck it out to only see their incomes continue to drop and thus may have had late payments or foreclosures that marred their previously good credit scores. I’ve met dozens of such reverse mortgage professionals.

Background check aside (felony convictions, fraud, etc), this seems to be an overreaching requirement that will ultimately harm the seniors we serve. Bad credit does not equal an unethical loan officer just as some with good credit may have questionable ethics. Is this the one-sie-fits-all yardstick by which mortgage professionals will be judged as they seek to continue gainful employment and serve senior borrowers?

We’d like to hear your thoughts below.

 

16 comments

Donna Harrington August 31, 2011 at 3:47 am

Yes. That truly would be unfair and ridiculus not to be able to renew my NMLS license because of a poor credit history. How many people in todays economy have a perfect credit history? What parameters are they using to determine a poor credit history? If my current employer hires me with a poor credit history, what business is it of the governments on whether or not to renew my license. I thought the reason for NMLS licensing was to weed out the seedy loan originators! If this were to happen to me you better believe the senators in my state and my local congressman will hear from me!

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mike August 31, 2011 at 5:25 am

I believe the regulations have gone too far .
Not only have they dictated our pay, now they look at our credit. We need as a industry to start fighting back… Being in this business has put many people in financial hardship and the NMLS should make it a case by case and allow for any hardships that this economy has created.

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Frank Robinson August 31, 2011 at 5:49 am

The seniors won’t be harmed because there are plenty of banks without NMLS compliant people to handle their needs.

The issue is unreasonable infringement of the liberty to work in a job/profession.

How about adding filters for traffic tickets, divorces and poor report cards in school?

The regulations are overbearing and it should be unnecessary with properly written laws and enforcement of breeches.

Everyone is being punished to make a public/political showing under the guise of preventing crime in advance. Not to mention the millions of man hours and fees wasted on this type of compliance.

By the way, How was Bernie Madoff’s credit?

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Bryan August 31, 2011 at 6:36 am

It would be interesting to have congressmen, senators, regulators, state employees, etc be required to have perfect credit to retain their jobs. I suspect that there would be major fallout. I heard someone say that if an originator had credit problems that they should go to work for a federally chartered institution. Just another example of double standards for LO’s that don’t work for a federally chartered bank.

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Ken Lindberg, CSA August 31, 2011 at 9:40 am

Bryan- Look back to the House Banking scandal of the 1990’s: 450 members of Congress were writing bad checks there never had to cover!

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Shannon Hicks August 31, 2011 at 9:52 am

Good point Ken. It’s the pot calling the kettle black.

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EricM August 31, 2011 at 8:23 am

I agree with everyone on here. When is this over regulation going to stop? Why are we taking this? I am feeling more and more like we do not live in democracy. The unemployment rate is legitimately over 10% nationwide and they want to put more people out of work to make themselves look and feel better. All the testing we have taken and fees we have paid and now this? The message is clear, work for a big bank or get out of the business. Consumers should have no real options, pay the big banks or forget it. Someone please post the names, telephone numbers and email addresses of the people to contact to stop this action!

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Ken Lindberg, CSA August 31, 2011 at 8:25 am

My personal scores are still over 780 but I fell out of the “800+ tree” due the larger amount of debt I am carrying on credit cards. Nothing has been paid late; but I have elected to finance major purchases. I’m not in jeopardy of making my payments and I am not pyramiding indebtedness to the point of wrecking my credit. However, Mr. Hicks makes an excellent point: Medical professionals who smokes aren’t likely to admonish their patients using tobacco products. I am growing weary from policies promulgated by folks whose only knowledge of our industry came from a college professor teaching from a book authored by people who have never worked outside of academia.

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Shannon Hicks August 31, 2011 at 8:32 am

The NMLS has their own guidelines for credit criteria to determine if an originator is a risk. Where it gets more strict in many cases are states who have even more stringent criteria in many cases.

Your comments are spot-on. Recent credit issues do not mean an originator is an ethical risk alone. This where bureaucracy hurts the consumer in the end and those who attempt to serve them. We will keep you posted with any updates on this topic.

Thank you for being part of the discussion.

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Ed Boyd August 31, 2011 at 11:38 am

I have high scores 790-800 and have never been late for lunch! I was against NMLS even requiring the right to look at my credit report and am still against it because it has nothing to do with nothing! So, I am asking where the analysis of one’s credit is required by law. Surely we can’t give Barney credit for that? In my 34 yrs in the business, I’ll tell you a group of people (as a stereotype) that have the worst credit rpts…Realtors! Since 20% of the realtors do 80% of the deals, it stands to reason that those others are living above their means. If we had a lobby as good as the Realtors, Barney Frank would have been a non-entitiy. So where are our associations now when we need them!?

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Mad August 31, 2011 at 5:21 pm

Since the US credit rating has been down graded – I guess that means all of congress should be denied the reamining terms in office !!!
This whole issue is ridicules. Credit has nothing to do with someones honesty or integrity. Criminal records maybe. Govt should have stepped in when the large investment houses collaterialized those mortgage back securities 30 times their value. When does that make sense? Then to have the Govt bail out those firms with tax payer money, so they can pay the large bonuses incurred by that reckless behavior – ???? Who is minding the hen house ??? Its crazy

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Bill September 1, 2011 at 3:32 am

I agree with all of the comments. And, I’m one whose credit card debt has increased dramatically in the last few years due to a lack of income.

Question? Is there a mention of a cut-off score?
Or, how bad does your credit have to be, to not get a license?

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Raymond Denton September 2, 2011 at 5:15 am

>>I heard someone say that if an originator had credit problems that they should go to work for a federally chartered institution.

I’ve heard that too, and it’s simply ridiculous. Every Federally Chartered Institution I’ve worked for reviewed my credit as part of the hiring process. And every RMLO I’ve hired has had their credit reviewed by my Institution. The primary difference is “we’re reasonable”. A lot of Originators had good credit, until recently, and we’ll hire a RMLO with inferior credit if they have have reasonable explanations.

>>Just another example of double standards for LO’s that don’t work for a federally chartered bank.

I’d agree, if it was true.

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juror #6 December 19, 2011 at 9:21 am

All comments posted are no brainers and we are all in agreement but the problem is, WHO is listening that can correct this aberration of intelligent thinking? If someone has stuck it out for years in this very challenging career and served the community well, has a family relying on them to raise and support them, has developed a stellar and documented reputation but for personal reasons has poor credit… is this a person that warrants being suddenly banished from the only CAREER they have known and served? The very thought is offensive and has REAL LIFE impact on hard working individuals that will now likely add to our disgraceful unemployment numbers. The fair resolution would be to at least “grandfather” in those that have shown a history of professional standards and peer respect during their many years DEVOTED SOLELY to a career in originating… if a dedicated originator has miraculously managed to continue devoting the arduous hours and weekends it takes to weave their way through such a highly regulated profession, serve their employers and the borrowing community well and all of this while on “commission”, this is someone who garners respect and accolades, NOT a punishment and a ban from the very profession this person and their family rely on to put food on the table and a roof over their head… shame on those who have made such a broad brush stroke in destroying lives of many that will now likely be treated as criminals in their profession! Enough!!!

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killer58 August 22, 2013 at 3:11 am

How is it that I can pass the federal and state tests allow to work with an NMLS# assigned but the state does not allow me a physical license for something they called approved deficient due to past credit problems out of my control and go as far as to make me review my credit and explain to them every 6 months as to why – Major flaw at the state level . What do we do ? Consult legal help to turn it around this is hardly fair…

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K June 21, 2017 at 9:31 am

Well hate to break it to you folks who really don’t deserve to have the regulators poking around in your credit file but I know of a criminal (white collar) loan officer in Ohio who should not have a license, and with VERY poor credit, and with a criminal and civil court record (very shady) just as bad if not worse. Yet the state apparently completely overlooks that and issued a license. I am also aware of a few stolen identities but that also mean nothing, I guess.

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