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Arizona Finally Gets Loan Officer Licensing Law

Jon Laird

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Even with some rather ugly stories about mortgage broker and mortgage banker loan officers in the last couple of years to point out industry problems, the Arizona Association of Mortgage Brokers had to force through legislation to license individual loan officers in Arizona. (Only companies are licensed now. ) For all the finger pointing that has been going on during the current lending troubles, the AAMB was required to do a political end-run around an Arizona Senate Banking Committee chair who felt the law was too much regulation and set too high a bar for entry.

In previous years, we have had stiff opposition from the Arizona Mortgage Lenders Association. (previously “Mortgage Bankers Association"). They felt they shouldn't be compelled to license their loan officers because they were “too well trained, etc. " As late as last year, I felt they had secretly opposed the legislation even after being called on the carpet by our new Superintendent of Financial Institutions for not supporting the AAMB's effort. This year, there were damned few bankers left to argue about it. FDIC insured and federally chartered institutions will remain exempt. Arizona does not license or supervise them.

DFI Superintendent Felecia Rotellini is a brilliant attorney with experience in prosecuting financial crimes at the Attorney General's office. Honest lenders respect and support her and the crooks have learned to fear her, just as it should be. There is a new “Sheriff" in town and we like her willingness to work with those of us who see this industry as something more than a job.

Having helped to found the AAMB 28 years ago, we think this legislation has proven to be its finest effort. It has taken 10 years to pass a law that is sorely needed. As employers, we have suffered for years with companies not being willing to tell us that they fired a loan officer for cheating, stealing, or fraud. So the “bad apples" never got taken out of the business. They just went from one company to another. Now the prospective hire will either have a license that requires education and background checks or they won't be allowed to work. Individual loan originators will start to bear some individual responsibility for their actions even while their employer remains ultimately accountable for their actions. Arizona Home buyers and home owners should have a much higher level of confidence when dealing with mortgage loan originators in the future.

It was the mortgage broker industry, not the banks or mortgage bankers that fought the good fight for this important piece of consumer legislation. Study after study has shown that it is less expensive to get a loan through a mortgage broker than any other type of lender and now it will be safer, too.

This is our personal view of the legislation and its players and doesn't represent the official position of the Arizona Association of Mortgage Brokers. Even with the new law set to go into effect by January 2010, you can never go wrong by dealing with a company of good reputation and long standing in the lending community.

Jon Laird is co-owner of Sterling Mortgage Corporation, one of Arizona's oldest licensed mortgage brokerage firms. Sterling Mortgage Corporation has specialized in manufactured home loans for more than 24 years. Jon has more than 33 years experience in home lending and is a state certified continuing education instructor. He frequently teaches manufactured home financing classes for real estate agents renewing their licenses. To read more from Jon visit:


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