REGULATION OF OHIO’S MORTGAGE BROKER INDUSTRY STRENGTHENED

 
Senate Bill 76 Goes Into Effect on Thursday  

Ohio’s regulation of the mortgage broker industry will be strengthened tomorrow when Senate Bill 76 goes into effect.  The bill was unanimously passed by the Ohio General Assembly and was signed into law by Governor Bob Taft last year.   

“This law benefits Ohio consumers by ensuring that qualified and licensed people are serving as brokers for their mortgage loans,” said Ohio’s Supertintendent of Financial Institutions F. Scott O’Donnell.   Mortgage brokers bring borrowers and lenders together and charge a fee for their services.   

Effective tomorrow, loan officers who work for mortgage brokers will need to be licensed by the Ohio Department of Commerce’s Division of Financial Institutions.  Due to the high volume of initial loan officer applications being received, loan officers will be permitted to work while their application is pending with the Division. 

As of today, there are approximately 1,100 mortgage broker companies registered in Ohio with about 2,000 loan officers licensed and nearly 4,500 loan officer applications pending.   

The loan officers will need to pass a knowledge test within 90 days after becoming licensed.  The computerized test is being offered at locations across the state with test results available immediately.   

Operations managers, who are responsible for the day-to-day operations of the mortgage broker business, will continue to need three years experience in the mortgage-lending field.  If they were registered before May 2, 2002, they will need to pass a knowledge test by April 30, 2003.  If they are registered after May 2, 2002, they will need to pass the test before becoming registered.   

In addition, Senate Bill 76 requires loan officers and operations managers to complete six hours of approved continuing education each calendar year. 

Both the mortgage broker’s certificate of registration and the loan officer’s license must be renewed by May 1 of each year.   

In addition to the new licensure and registration requirements, Senate Bill 76 provides the following consumer protections: 

• Prohibits an individual who has been convicted of theft, forgery or other financial crimes from holding a mortgage broker’s registration or loan officer license, unless the Superintendent of Financial Institutions believes that the person will not commit such a crime again. 

 

• Subjects loan officers to criminal background checks.  Existing law only required the registered operations manager to undergo a criminal background check. 

 

• Requires a written agreement between mortgage brokers and their customers that clearly discloses how the fees are computed for the services to be provided and the time frame in which they will be completed.  

 

• Requires disclosure of the actual services to be performed and that the consumer is not bound to complete the transaction with the broker.  The new law also prohibits a broker or a loan officer from making, proposing or soliciting false or misleading statements on mortgage-related documents. 

 

• Increases the surety bond for mortgage brokers from $25,000 to $50,000.

 

• Reduces the number of licensing exemptions available to nondepository lenders. 

“With these new disclosure requirements, Ohio consumers will have access to more information about the services provided by mortgage brokers and the fees being charged for those services,” Superintendent O’Donnell said. 

 

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The Ohio Department of Commerce’s Division of Financial Institutions regulates Ohio’s state-chartered banks, savings and loans/savings banks, and credit unions.  The division also regulates consumer finance companies.  In addition, the department regualtes securities, industrial compliance, fire codes, unclaimed funds, liquor, and real estate, among other industries.  The department’s internet address is www.com.state.oh.us