The April 1 deadline to register with the state as a mortgage loan officer is fast approaching, and yet just more than 400 people have become registered to write mortgage loans in Michigan.
Mona Pappas, a mortgage broker with Sistar Mortgage Co. in Shelby Township, started the registration process by taking the examination in December. She said the state exam should weed out a lot of people.
"It was very difficult, very hard," said Pappas, who has not yet completed the application process. "It is going to sweep the state of people who should not be writing loans."
That was the intent of the law signed last April by Gov. Jennifer Granholm.
Unscrupulous players in the mortgage industry have taken a share of blame in the housing crisis. Michigan was particularly hard-hit and ranked third nationwide in 2007 for mortgage fraud.
The state's insurance commissioner, Ken Ross, was so alarmed with the low number of registrants that he sent letters to mortgage companies on Feb. 24 trying to shake the trees for more loan officers. At that time, just 55 loan officers were registered.
He had expected 10,000 people to register, based on annual reports filed with the state by lenders, servicers and mortgage companies, according to the letter.
As of Thursday, the state had 403 completed loan-officer registrations and 1,457 applications from those who have passed the state exam, said Jason Moon, spokesman for the state Office of Financial and Industry Regulation.
Another 700 loan officers are scheduled to take the test, he said.
"We are expecting more. We are prepared and staffed accordingly to have a quick turnaround for any applicants," Moon said.
All loan originators, except those working for banks, are required by the new law to submit to a background check, pass a proficiency test and other requirements to be registered with the state.
Drew Sygit, president of the Lending Edge at Allied Home Mortgage in Rochester Hills, said a number of loan officers he has spoken with seem to think the new law is "not a big deal."
Sygit said another reason that the state's registration figures seem low could be that many loan officers went to work for banks and are not required to register. His application to register is being processed, according to the state.
In 2004, there were 35,000 loan officers and 7,000 mortgage brokers in Michigan, according to the Michigan Mortgage Brokers Association. By 2008, there are 8,000 loan officers and 2,582 brokers.
The lower number of applications can somewhat be explained by the drop in mortgage business overall.
Mike Paige, 49, a senior loan consultant for Amera Mortgage Corp. in Taylor, said he finally took the test two weeks ago and is now registered as a loan officer.
The law also requires each loan officer to be registered under one broker similar to how real estate agents are licensed. Unregistered loan officers can face a misdemeanor and be subject to $15,000 in fines and penalties and up to a year imprisonment if convicted.
