LANSING – The House today passed a bipartisan plan championed by State Representative Shanelle Jackson (D-Detroit) to strengthen consumer protections in the face of the subprime mortgage crisis that is hitting Detroit especially hard by establishing a registration process for mortgage loan officers working in Michigan.
"This is a plan I have been fighting for since day one, because we've got to be at the forefront of protecting families and letting them know who is handling their money during these tough times," said Jackson, who sponsored key legislation in the package. "Mortgage loan officers have access to Social Security numbers and other vital personal information. They also have a lot of power to persuade homebuyers to make decisions that may go against their best interests. Consumers need to be able to trust that these individuals are properly licensed and trained."
This bipartisan 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 from using "loan officer" or other similar terms to describe their position, and sets a penalty of a $15,000 fine and a year in jail for violators.
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.
ast year, Jackson and her fellow 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. That "Save the Dream" plan is awaiting action in the Senate.
The plan that the House passed Wednesday now also goes to the Senate, where it is expected to pass.
"I was very proud and heartened to see the bipartisan support for the plan that the House passed Wednesday, and we also need the Senate to step up and pass the 'Save the Dream' plan," Jackson said. "I want to let all Detroiters know that I am here for them and that I am fighting to get more legislation like this passed. The laws of our state should exist to serve our residents and look out for their well-being – including their financial interests. The more we hold people involved in the lending industry accountable, the faster we can put a stop to the foreclosure epidemic that is hurting so many Detroit families and neighborhoods."