During the go-go days of lending in California (and Nevada, and Florida, and...), people who could prove they had a pulse were hired as mortgage brokers or loan officers.
They made loans to other people who could prove they had a pulse, even if they didn't need to prove income.
It did not turn out well.
Now, as of this last weekend, two years after the federal government passed the SAFE Act, many mortgage brokers and lenders have to be licensed.
Not all of them.
More than a dozen states had a July 31st deadline for brokers to either be licensed, or take the test necessary to get a license. Applicants also need to pass a criminal background check. This is completely new in California, the epicenter of crazy lending. However, a license eventually will be needed for every state in which you want to make loans, which conceivably means that some people may need to take 50 different tests (and pay the fee!), plus a national test. After being licensed, brokers must prove annually that they've had eight hours of continuing education, and they may also need to prove they have not been sanctioned in any state.
Here's the catch. Loan officers at federally chartered banks are exempt from getting a license. So while independent brokers and non-bank lenders have to spend weeks or months paying for test prep courses and then taking tests, people making loans at, say, Bank of America or Wells Fargo do not.
Many states have been so inundated with requests for testing that they are extending the deadline. American Banker reportsthat New Jersey and South Carolina have pushed back to Halloween the requirement to have a license. Five states, including hard hit Florida and Nevada, have extended the deadline to the end of the year.