Tougher requirements for mortgage brokers might help Florida rid itself of unscrupulous loan originators.
License renewals have dropped more than 50 percent from the year before as stricter requirements take effect. The new requirements implemented last fall include state and federal criminal checks, a national test and submitting a credit report for regulator review.
Of the nearly 43,000 mortgage brokers licensed in Florida at the end of last calendar year, only 15,219 had applied for renewal with the state Office of Financial Regulation by early February. No applications have been denied yet in Florida.
The state attributed the drop in renewals to the bad economy and the new licensing requirements. The tougher standards could strengthen an industry criticized nationally in recent years for fueling the housing crisis by awarding loans to unqualified buyers, mortgage professionals said.
"That's a great thing if it is weeding out the shady ones," said Scott Chinchar, owner of Scott Mortgage in Clearwater. "That's good for everybody."
Previously, license renewal occurred every two years and cost about $200. Now it's annual. The renewal window was Oct. 1 to Dec. 31, though some paperwork deadlines were extended through the end of March. Meeting the requirements under the new Nationwide Mortgage Licensing System costs about $1,000, experts said.
The increased costs and added steps might have stopped many part-time brokers from reapplying, said Andy Wood of American Mortgage Services in Tampa.
He expects regulators to be tough on applicants to eliminate problem brokers and companies.
"They should set good examples," Wood said. "The market suffered because of these people."
The tougher requirements come from the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Florida gave current license holders an extension until March 31 to complete the extra steps as long as fees were paid by Dec. 31.
If the requirements aren't met by March 31, licenses will expire.
Richard Peek, the head of the Florida Association of Mortgage Brokers, supports tougher standards, but is concerned the added costs will be passed to consumers. He acknowledged the law will enhance the image of the profession.
"If an individual knew they had issues, it might probably made them not apply," he said.
Mark Puente can be reached at email@example.com or (727) 893-8459. Follow him at Twitter at twitter.com/markapuente.