LANSING – The Michigan House today passed a bipartisan package to bolster consumer safeguards in the face of the country's subprime mortgage crisis by increasing protections for families purchasing a home. The package of bills establishes a registration process for mortgage loan officers working in Michigan.
"Establishing a registration process for mortgage loan officers will protect Michigan consumers while also strengthening our state's mortgage loan industry," said State Representative Marc Corriveau (D-Northville). "We must do everything we can to support Michigan's working families during these difficult economic times, and that includes protecting residents from loan officers who engage in unscrupulous practices."
This plan — which amends the Mortgage Brokers, Lenders and Servicers Licensing Act to create a registration process — strengthens the oversight powers that the Office of Financial and Insurance Services (OFIS) has over individual loan officers. Under the plan, applicants must:
Go through a background check.
Successfully complete an exam on state and federal regulations governing residential mortgage lending.
Provide information ensuring they have never been convicted of a felony involving forgery, fraud, a financial transaction, or securities.
The plan prohibits anyone who is not registered under the new system to use "loan officer" or other similar terms to describe their position, and establishes a fine of $15,000 or one year of jail, or both, for violating these provisions.
By increasing transparency and safeguarding the reputation of those in the industry who do practice with professionalism and in an ethical manner, the plan has the support of the Michigan Mortgage Brokers Association and the Michigan Mortgage Lenders Association.
"Consumers should have peace of mind knowing that any loan officer they deal with in the state of Michigan has a strong grasp of state and federal regulations, and has never been convicted of financial fraud," Corriveau said. "Creating a registration process also protects the loan officers who conduct their business in a professional and ethical manner."
Last year, House Democrats unveiled the Home Loan Protection Act, which bans predatory lending practices, such as encouraging borrowers to default, and protects consumers from being steered toward high-cost loans when they would otherwise qualify for a traditional loan. Additionally, in December, House Democrats passed a plan to establish programs to allow homeowners saddled with risky adjustable-rate mortgages (ARMs), and those who have missed mortgage payments, to refinance and secure a fixed-rate loan.