New state legislation is changing the way many brokers and lenders will conduct future business, as there have been numerous changes in 2008-2009 timeframe which will affect mortgage brokers and mortgage lenders.
First, a primary change will be the increased required bond amounts along with tighter regulations that will be imposed on business transactions and pre-licensing certifications. Although some of this new state legislation has passed, it seems like many states are set waiting critical decisions from Congress, which is expected to jump start the weakened economy. Many states are taking a back seat to changing regulations until they see how the new president’s economic stimulus package will affect the mortgage industry, as well as being afraid to move too quickly to adopt new legislation, since remembering the demise of the sub-prime mortgage crisis which left many small mortgage brokers and lenders out of business or severely crippled. In addition, many states are looking to the government for their proposed solution to the housing crisis. The combination issues of the current economy & housing crisis may result in a decrease of licensing for brokers and lender in this upcoming year.
New legislation passed that went into effect mid 2008 and are effective for all renewals in 2009 & introduced in the following states: Connecticut, Iowa, and Maryland which have all increased the required bond amounts.
• Connecticut has increased their required bond amount from $40,000 to $80,000 effective August 1st, 2009.
• Iowa increased the required bond amount from $50,000 to $100,000 effective 12/31/08.
• Maryland has made increases in the bond amounts based on the volume of loans. Their $25,000 requirement has increased to $50,000, the $50,000 requirement has increased to $100,000, and their $75,000 requirement has increased to $150,000.
In addition, four (4) other states attempted to pass legislation that would increase the required bond amount and impose tighter requirements for mortgage brokers and lenders in 2008. Those states included Hawaii, Missouri, Oregon, and South Carolina, all which rejected the proposed increases and thereby postponing any decisions at this time. These states have concluded to revisit this legislation in 2009 once the economic situation is further determined for 2009. The state of Alabama had a proposal on the table to enact legislation requiring a bond for mortgage brokers and bankers for the 2009 license period. This legislation did not pass and will be revisited in mid 2009.
It is further expected that we will see many changes in 2009 to the legislation and bond requirements that affect mortgage brokers and lenders. The primary focus of the state legislation is expected to reduce the amount of claims and keep business owners working honestly and ethically. Keep in mind, that with the economy in crisis there will be many changes in the future that will affect your license and your bond. To remain best advised of these current changes, keep in contact with your state licensing agency.
Due to these recent changes, there are some added subjects that are expected in the state legislation in 2009 that have either been created or revitalized from the recent political and economic state of affairs. These subjects are listed below:
Regulation of Credit Default Swaps (CDS) Given the position that credit default exchanges played in the meltdown on Wall Street, a few state insurance regulators may try to regulate CDSs as insurance, or as surety or financial guarantee, depending on the descriptions and other licensing and capital and financial regulations in their insurance code. A CDS is a contract under which the supplier guarantees the consumer to pay upon the event of a credit incident, usually a failure to pay, at an exact entity.
Most law governing the regulation of creation and administrative duties of trusts in the United States have become statutory at the level of the state. The Uniform Trust generally involves three parties in its creation as well as its regulation of administrative duties. The first is the grantor or settler who is the individual that has created the trust; a trustee who oversees and manages the trust and its assets; and a beneficiary who, much like the title suggests, receives the benefit of the administrated trust.
The Beneficiary as defined by the Uniform Trust Code is the person that has a present or future beneficial interest in the trust. These individuals are the holders of equitable title of trust assets and receive all the benefits of the trust property. The Beneficiary is also subject of the Trustee’s legal title ownership as well as control under the terms and conditions of the trust agreement dictated by that of the Grantor.
These include the surety’s financial strength, the requirements that must be met for the renewal of the bond, as well as attentiveness from the agency that will be writing the bond.
loss statements, credit reports as well as personal financial statements for the owner’s of the company. These updates are used for the guidelines that are established by the bond companies themselves, if at any time the requirements are not met, the bond will simply be terminated despite the how long the bond has been continuing.
