Dallas Auditor .com

Refinancing to the wrong residential loan could cost you your home, ruin your credit and disrupt family. In an attempt to combat faulty lending practices, earlier this year, lawmakers passed the Secure and Fair Enforcement mortgage act “SAFE Act.” It establishes a national standard mandating consumer protection against fraud and misleading lending practices. Crafted to abolish shoddy residential lending, SAFE primarily institutes a system for licensing and registering loan originators. California must comply with enact requirements by the end of 2010.

While many of the prior deceptive loan programs have been eliminated, vigilance is still needed when choosing a lending expert to ensure you’re not being mislead or signing up for a financial disaster. Formerly, loan officers, also known as “loan originators,” were often just commissioned salespeople with no special training to help borrowers understand and select the right loan. Worse still - in many cases, loan companies hired ” loan specialists” who had no license at all. The ensuing “mortgage meltdown” paved the way for this new bureaucratic oversight. Hence, the SAFE Act increases transparency and ethical reporting standards for mortgage loan originators. These provisions include: Criminal history, record information checks, Federal originator I.D. numbers, credit reports, tracking of consumer complaints, national testing, national pre-licensure and continuing education, bond and recovery fund requirements, and greater accountability to the public provided free of charge via the internet.

The requirements under the SAFE Mortgage Licensing Act are backgrounds checks using fingerprint cards, credit history checks using credit reports, pre-licensing education, passing a written test, and net worth, surety bond, or fee that goes into a state fund. The Background check will verify that the loan originator has not had a felony in the last 7 years, and it will verify that the loan origiantor has never had a felony involving an act of fraud, dishonesty, a breach of trust, or money laundering. The credit check will verify that the loan originator is financially responsible.

Here’s how: Loan officers who work for Federally chartered banks or credit unions DON’T have to take the exam or the pre-license training. So unless your loan officer works for a certain type of company, you’re really no safer. Lawmakers decided to trust the banks to properly screen and train their originators. Hmm, do you trust the banks? To find out if your loan professional is really qualified, has undergone required training and passed the exam - a little due diligence may be necessary.

In addition to the new requirements for loan originators that each state must meet, every state must begin to use the nationwide mortgage licensing system. There are currently 15 or more states on the new system, and there have been even more states transitioning on to the system each month. It is expected that by 2010, every state will have transitioned on to the nationwide mortgage licensing system (NMLS). The hope is that this system will streamline the process, but until the states start to make their regulations similar, everyone will still need to supply each state with different items making the process very burdensome and far from streamline.

Learn more about Obama Mortgage Relief Plan Qualifications.