Industry NewsMortgage

California mortgage brokers call for licensing all loan originators

Report offers alternative to new restrictions on nontraditional mortgages

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

A trade group representing California mortgage brokers says the best way to protect consumers from the risks associated with nontraditional loans is to license all loan originators -- and not place new restrictions on the loans themselves. In a report released Thursday, the California Association of Mortgage Brokers argued that so-called "exotic" loans such as pay-option and interest-only mortgages are a useful tool for home buyers who might otherwise be priced out of the market. The loans have come under increased scrutiny from regulators and consumer groups because of their potential to default if interest rates rise or home prices don't appreciate. Instead of passing new restrictions on the use of the loans themselves, the CAMB report urges California lawmakers to close loopholes that allow loan originators who are not licensed mortgage brokers to pitch such products to consumers without licenses or criminal background checks. Although some 485,000 mortgage brokers are licensed ...