CONCORD, N.H. (AP) – New Hampshire’s banking commissioner says the mortgage meltdown sweeping the country shows it’s time to allow the state to license loan “originators”.
The state licenses mortgage bankers and brokers, but does not regulate the people who handle the mortgage applications from would-be home buyers. Doing so would allow the state to keep unscrupulous individuals from moving from one company to another, Commissioner Peter Hildreth said.
“Right now we have no way to keep a bad actor out of the industry,” he said. “Because we don’t license or register (loan originators), there’s nothing we can do about it.”
He said about two dozen states regulate loan originators.
Two sessions ago, the Legislature killed a plan to require licensing for loan originators, but Hildreth told the New Hampshire Sunday News he plans to bring it up again next year.
He believes a licensing measure would pass, given the increasing number of New Hampshire residents losing their homes to foreclosure as a result of the subprime mortgage crisis.
According to Real Data Corp., 132 foreclosures were recorded in New Hampshire in April and another 139 in May. A year ago, there were 61 in April and 69 in May.
Triggered in large part by adjustable rate mortgages that are resetting to higher monthly payments that homeowners cannot afford, the crisis hasn’t peaked yet, according to national figures Hildreth has seen.
In response, the Banking Department has stepped up enforcement against mortgage bankers and brokers. Its Web site lists 38 cases the department has investigated since the beginning of the year.
Some were triggered by consumer complaints, others by the department’s own examination of company records.
In New Hampshire, as the subprime mortgage crisis began to hit hard, Hildreth last November ordered the adoption of new state guidelines on “nontraditional mortgage product risks,” which were developed jointly by two national industry groups.
The new rules apply to all mortgage bankers and brokers doing business in New Hampshire. Companies are required to adopt stricter policies for verifying and documenting borrower income; notify borrowers of what their monthly payments will be after their adjustable loans reset; and inform consumers of any pre-payment penalties.
Under increasing pressure from state and federal regulators, many subprime lenders also have tightened their own practices. And some analysts have noted these corrections may only add to the problems for desperate consumers trying to refinance out of adjustable-rate loans: Because of the stricter lending guidelines, many borrowers cannot qualify for new loans.
Information from: New Hampshire Union Leader, http://www.unionleader.com