Dramatic drop in number of licensed mortgage lenders in Minnesota
In 2007, the State of Minnesota tightened requirements for mortgage lenders in an effort to weed out some of the smaller and more likely to be fly-by-night operations. One of the big requirements forced mortgage companies to maintain a large "net worth" requirement, or a large surety bond.
These efforts, along with the general state of the mortgage business has dramatically reduced the number of licensed lenders from over 4,100 in early 2007, to fewer than 1,100 in May 2009.
Hidden in those numbers is the fact that while the number of licenses are down, the number of individuals working in the industry is a bit harder to guage.
Many companies previously required their individual Loan Officers to carry their own license. New Minnesota rules only allow companies to be licensed, not individuals. Many of these people still work in the industy, but simply folded their individual license under the corporate umbrella, or closed their own small company to merge with larger ones.
In related news, the State Commerce Department recently cited 92 mortgage originators for a variety of infractions, but most were for failing to maintain the above noted net worth requirements. Of the 92 cited, just 7 of the companies or individuals kept their licenses.