New Hampshire Mortgage Reform Encouraged By Regulators
New Hampshire’s banking commissioner says the mortgage meltdown sweeping the country shows it’s time to allow the state to start licensing loan “originators.”
The state licenses mortgage brokers and lenders, 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. “We don’t license or register (loan origination) providers, so there’s nothing we can do about it.”
He said about two dozen states regulate home 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 bad credit 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.
In response, the Banking Department 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 bad credit mortgage crisis began to really hit hard, Hildreth in November ordered the adoption of guidelines on “non-traditional mortgage product risks,” developed jointly by national industry groups.
The new rules apply to all New Hampshire mortgage bankers and brokers doing business in the Granite State.
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 penalties as they apply to mortgage prepayments.
Under increasing pressure from state and federal regulators, many bad credit home loan 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 home loans, which has further slowed a sagging market.
SOURCE: Boston Globe