The number of loan officers licensed to do business in Ohio has fallen by nearly 18 percent since more stringent licensing requirements went into effect on Jan. 1.
Ohio has seen an even steeper 21.9 percent decline in the number of licensed office locations operated by mortgage brokers since the first of the year, with 1,749 main and branch offices remaining as of June 4.
The state’s new Homebuyers’ Protection Act, which went into effect on Jan. 1, is believed to be a factor in the decline, said Dennis Ginty, a spokesman for the Ohio Department of Commerce.
In addition to requiring 24 hours of live classroom education for loan officers, the Act requires a passing grade on a state exam before originating any loans. The Department of Commerce had previously allowed the exam to be completed within 90 days of being licensed, Ginty said.
But the fallout in subprime lending is another possible issue, Ginty said. Some mortgage brokers are closing down branch offices, slashing employees or ceasing operations altogether, Ginty said. Some loan officers may have also decided they no longer wish to work in the field, he said.
At the beginning of the year, Ohio had 8,888 licensed mortgage officers, of whom only 6,414 had renewed by a May 1 deadline. The picture has improved somewhat since then, with an up tick in new applications and loan officers taking advantage of a late renewal period that ended May 31.
The number of licenses issued in May increased in part because some who applied in April asked that their licenses be issued after May 1 to avoid having to pay renewal fees right away, Ginty said.
As of Monday, Ohio had licensed 7,302 loan officers, down 17.8 percent since the year began.
Intended to combat predatory lending, the Homebuyers’ Protection Act expands the application of Ohio’s Consumer Sales Practices Act to residential mortgages and title insurance. SB 185 bars lenders from charging prepayment penalties or attempting to influence real estate appraisers, and strengthens licensing requirements.
The Act requires criminal background checks on all applicants for real estate appraiser certificates or licenses, mortgage broker certificates of registration, and loan officer licenses.
To obtain their licenses, loan officers must pass an examination and complete at least 24 hours of state-approved classroom instruction, including four hours on state and federal mortgage lending laws, four hours on Ohio’s Consumer Sales Practices Act, four hours on the loan application process, two hours on the underwriting process, two hours on the secondary market for mortgage loans, four hours on the closing process, two hours on basic mortgage financing concepts and terms, and two hours on ethics, including confidentiality and consumer counseling.