Licensed Minnesota mortgage lender ranks reduced dramatically
Saint Paul, Minnesota. Dec 2007: The number of licensed Mortgage lenders in Minnesota has dropped dramatically recently as a double wave of trouble has washed many lenders away. According to figures from the Minnesota Department of Commerce, the number of licensed mortgage originators has dropped to 1,202 as of the latest two-year license renewal date of Oct 30th, 2007. This is down from the previous license renewal count of about 4,000 in 2005. These numbers include all in-state and out-of-state licensed lenders.
While this number looks impression, it is actually a bit misleading. Many smaller companies, in an attempt to circumvent previous lending laws required their Loan officers to hold an individual license. Sweeping new legislation, which went into effect recently no longer allowed this loop hole. Individuals can no longer hold a license. They must incorporate as a company. A brokerage may previously have had 30 Loan Officers, who each held an individual license. They now will only be able to operate as a company, reducing the number from 30 to just 1. Other new rules require higher fees to acquire or renew a license, and companies now must maintain a minimum net worth of $250,000 or have a $50,000 surety bond.
Many other small companies were one or two man operations run out of the individuals homes. These smaller companies have simply vanished, or the Loan Officers have gone to work for larger companies. Many of the smaller companies also merge together or merged with banks in order to meet the new guidelines.
New educational and background requirements will sweep even more out of the business by March 2008, when the educational requirements go into effect. The requirements include out-state lenders who continue to be the biggest source of trouble for Minnesota homeowners.
So are there truly less Loan Officers and Mortgage Companies doing business in Minnesota? Yes. The severe housing slump and current credit crunch has sweep huge numbers of Loan Officers and companies out to sea. The initial wave of companies and people out of the business has been mainly people who lived off of refinance transactions, had little or no training, provided sub-prime loans, or those who worked at the high-pressure telemarketing or Internet type lenders.
For the most part, those still successfully providing loans tend to have been in the business prior to 2001, focused primarily on purchase transactions, and are dedicated to repeat and referral business. This of course was the intent of all the legislative action at the Capital in Saint Paul, to get ride of the bad and retain the good.
