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I was meeting with an influential Real Estate Professional the other day at our Club Drive Operations Facility to discuss support of a worthy organization.
What I realized was Real Estate
Professionals and consumers know little about the types of Mortgage Companies
in Georgia and or the difference in a Licensed Mortgage Originator versus a
Registered Mortgage Originator.
It is important that everyone engaged in the selling and buying of residential housing in Georgia be aware of two important federal laws, The Secure and Fair Enforcement Act, S.A.F.E Act, and Dodd-Frank Act. The laws were created to protect consumers in mortgage transactions.
There are fundamental differences in the types of Mortgage
Companies that operate in Georgia and the Originators they employ. These differences may increase risks for
Real Estate Agents and consumers.
Most consumers shop mortgages based on rates, closing costs, or a friend’s referral. In the past, consumers did not worry about
the mortgage they were getting because they were told all mortgages were the
same and sold by everyone. The reality
was risks were there; however, rising home valuations hid the cracks in loans sold
that were only visible once the recession took hold of the economy. Everyone knows what happened next…..
Now that the financial crisis
is mending, all Real Estate Agents and consumers are fully aware of the devastation
that mortgages sold the wrong way can create on people and their families. Education and knowledge is a Real Estate
Agent’s and consumer’s best friend in the complex world of mortgage lending.
There are four types of
mortgage service providers in Georgia. Lowest
to highest certification and licensing.
Mortgage Broker
Type: Operates as a middle
person in the transaction between client and Lender
Loan Recourse: Limited
Recourse for mortgages sold
Licensing: Compliant with S.A.F.E
Act and Dodd-Frank Act. All Mortgage Originators are licensed with Georgia DBF
and NMLS
Type: Works on behalf of another Fannie Mae / Freddie Mac seller
servicer or a Bank.
Loan Recourse: Recourse for
mortgages sold
Licensing: Compliant with S.A.F.E
Act and Dodd-Frank Act. All Mortgage Originators are licensed with Georgia DBF
and NMLS
Bank
Type: Sells various financial products through sales force
Loan Recourse: Full Recourse
for mortgages originated
Licensing: Operates under a Federal Exemption - Mortgage
Originators are Registered, not regulated by DBF, do not take the State or
National Competency Exams set forth by Washington.
Direct Non-Bank Lender
Southeast Mortgage is Certified in this Category
Type: Certified by Fannie Mae and Freddie Mac, GSEs, as Seller Servicer. Delegated Unsupervised Title II with HUD. Can sell direct to GSEs servicing its mortgages. Specializes in Mortgage Products.
Loan Recourse: Full Recourse
for mortgages originated
Licensing: Compliant with S.A.F.E
Act and Dodd-Frank Act. All Mortgage Originators are licensed with Georgia DBF
and NMLS
Banks use their Federal Bank Exemption to employ Registered
Mortgage Loan Originators. The S.A.F.E ACT and Dodd-Frank Act were designed
to protect consumers. Once the
requirements were unveiled, many Mortgage Originators left Broker and
Correspondent companies to work for banks due to their concern over licensing, character / fitness requirements, and financial responsibility.
Brokers, Correspondents, and Direct Non-Bank Lenders like
Southeast Mortgage employ State and Federally Licensed Mortgage Loan
Originators that comply with S.A.F.E ACT and Dodd-Frank
Act requirements regarding standards for character / fitness, and financial
responsibility.
Understanding your mortgage service
provider is important for the following reasons:
1.
Working with a
Licensed Mortgage Originator is a protection set forth by your government. Would you buy stock from a non licensed stock
broker? Licensed Mortgage Originators
are individually licensed and passed State and Federal competency tests.
2.
Choose a mortgage
company that has good operational controls and separates the sales and
processing functions. Why? This ensures what you put on a mortgage
application is verified independently.
If the application is not handled properly, the applicant could have
their loan called for reasons unknown to them.
This scenario can cause credit score issues, legal bills, and jeopardize
the applicant’s home.
3.
Realtors: Happy Client
= More Referrals. If something goes
wrong after the closing, who will the client blame? Use licensed Mortgage Loan Originators and
protect your clients while reducing risk to your referral base.
The mortgage industry has changed. Consumers are
now aware of the importance of getting the right mortgage. It is not just a mortgage; it protects your
family and personal finances. Real Estate Agents rely on referrals and great service.
Choose your mortgage company
based on who employs Licensed Mortgage Originators. Ensure they focus on the right mortgage
suited to your particular needs. This
will eliminate risks to your family’s home and financial security after the
closing.
The Consumer
Financial Protection Bureau (CFPB)
is currently looking into ensuring all Mortgage Originators are held to the
same standard and eliminate the differences noted above.
Cal Haupt
President and Chief Executive Officer
Southeast Mortgage of Georgia, Inc.
Serving our client's trust since 1993
770-279-0222
