OLYMPIA – Only 66 percent of previously licensed mortgage brokers and 42 percent of previously licensed loan originators have fully renewed and been approved to do business in Washington State. The Department of Financial Institutions (DFI) considers these numbers low in light of the numerous reminders and full year of leniency regarding testing, license renewal and continuing education requirements.
“The low number of renewals — compared to the number practicing prior to December 31, 2007 — is a concern,” DFI Director Scott Jarvis said, “particularly in light of the numerous notices issued.”
“We understand that the reduction reflects a dramatic drop in loan activity due to the downturn of the mortgage industry and a number of firms going out of business or dropping their state license,” Jarvis continued, “but the reduction is still a concern.”
In light of the decreased number of licensed loan originators and mortgage brokers, DFI advises consumers to verify that their loan originator and/or mortgage broker is currently licensed to do business within Washington. Consumers can verify licensing either online at www.dfi.wa.gov or by calling toll free at 1-877 RING DFI (1.877.746.4334).
DFI urges loan originators and mortgage brokers to take the test and apply for their license immediately or face stiff penalties.
“If loan originators or mortgage brokers transact business during a time when they are not licensed, they will be refunding fees and paying fines,” DFI Consumer Services Director Deb Bortner warned.
DFI records indicate that in 2007, 1,911 mortgage brokers and 13,722 loan originators (agents of mortgage brokers) applied for and received a license after the 2006 passage of legislation requiring loan originator licensing. The Department denied 170 licenses for criminal histories, bad credit, or character and fitness issues.
While 6,139 have passed the competency test, the number of completed renewals is only 5,720. DFI has processed all licenses with complete applications and the Department expects hundreds of applications to arrive in the first weeks of 2008.
As part of the 2006 legislation, loan originators are required to take a competency test starting in 2007. That test has been available since June.
Because the licensing requirement was new and the number of applicants was high, DFI practiced leniency, allowing applicants to do business as long as their paperwork was submitted and there was no evidence of grounds for denial. As of Jan. 1, 2008, however, all loan originators and mortgage brokers wishing to do business in Washington must be licensed.
The Department notified licensees numerous times in a variety of ways informing them they will not be allowed to do business in 2008 without a license and that they need to pass the competency exam prior to seeking renewal of their license.
DFI urges loan originators and mortgage brokers to take action immediately to ensure they are legally licensed to do business in Washington. Information is available at DFI’s Web site, www.dfi.wa.gov or by calling 1.877.RING.DFI (1.877.746.4334).