Oh Sh*t! 40% Of Indiana's Mortgage Brokers Lose Their Licenses

40% of Indiana’s mortgage brokers have lost their licenses because they did not comply with a new law aimed at “raising the standards” of the mortgage lending industry. The law requires mortgage brokerages to “name a principal broker with at least three years experience who has passed a state exam and will oversee his company’s business affairs,” says BusinessWeek. Sounds reasonable, doesn’t it?

The Indiana Association of Mortgage Brokers worked with Rokita’s office and lawmakers in drafting the new law, said the group’s president, Mike Monaco of Merrillville.

“Make no mistake about it, we had one of the easiest entrance barriers in the country,” Monaco said. He said many of the brokers who have lost their licenses likely already had left the business because of the housing industry downturn.

The low standards likely were among the factors leading to Indiana consistently having one of the 10 highest foreclosure rates in the nation, Monaco said.

When you add in the 143 brokerages who voluntarily gave up their licenses, the total number of mortgage brokerages in Indiana has shrunk by half since July 1st.

If you’re interested in seeing a list of all the brokerages whose licenses have been revoked, you can click here (PDF).

40 percent of Ind. mortgage brokers lose licenses [BusinessWeek]
(Photo: stirwise )

Comments

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  1. snoop-blog says:

    Yeah for Indiana! We finally got mentioned on the internet!

  2. m4ximusprim3 says:

    @snoop-blog: I’m sure you have a wikipedia entry. Thats TWICE!

  3. m4ximusprim3 says:

    Btw, Steve Martin flashback:

    “I’m Somebody!”

  4. xnihilx says:

    I live in Indiana I have an aquitance who was a broker and her company was bought out by another company. They only wanted the managers and her. Apparently she was one of the only people who had been playing by the rules. She decided that with the market the way it is being a broker isn’t worth it. She’s back to being a waitress on the weekends.

  5. If it’s 143 who voluntarily gave up their licenses in Indiana, multiply by the number of states adjusted for population difference and……..

    …….um, holy jebus.

    That’s a lotta garbage brokerages out there. This would help reveal why the housing market is so screwed up right now. No one has a clue what they were doing.

    Fantastic.

  6. snoop-blog says:

    I’m sorry but I’m getting ready to buy a house in a year, and I’m pretty pleased that I should be able to get a good forclosure deal. Sheriff’s sale, here I come!

  7. BrianDaBrain says:

    It is definitely the time to be buying a house… and if you’re lucky enough to be living in Indiana right now, you can worry less about getting a loan through some garbage company. Yay reform!

  8. snoop-blog says:

    @BrianDaBrain: I was told that in about a year it would be an even better time to buy a house as the forclosure’s have just begun, and in a year there will be way more houses on the market than buyers.

  9. Well,
    as much as we make fun of Indiana….Where are other states lists of scumbag mortgage brokers?
    Your move Ohio.

  10. Meggers says:

    @snoop-blog: Have you read the article about the new “prime” crisis? I think Consumerist linked to it a few days ago.

    [www.slate.com]

    I’m not from Indiana but I had to read this law for work earlier this year. The requirements to be a mortgage broker are really quite easy.

  11. Meggers says:

    @gyroball: Atleast Ohio was able to do some significant anti predatory lending legislation this year. IMHO a lot of states will follow Ohio’s lead and there will soon be stricter requirements on predatory lending.

  12. snoop-blog says:

    @Meggers: That payday loan ban is crap. A $40 finance charge on a $300 loan for 2 weeks isn’t terrible. It may sound like a terrible interest rate, but it’s no worse than the overdraft fees banks get away with. They can make you pay a $30 fee on a $1 purchase, what kind of interest rate is that? I know they aren’t the same, but the overdraft fee is much more of a scam than a payday loan. legal or not.

  13. tedyc03 says:

    @snoop-blog: You better hope that the owner of the house you just bought at auction didn’t punch holes in the walls before you bought it…

  14. Meggers says:

    @snoop-blog: I have to agree with you on the absolutely crazy fees that banks charge but I still think that lenders (all, predatory or not) should be regulated.

  15. @gyroball: Ohio’s move is on the board…….

    …..Ohio has not answered. Will the last person out of Ohio please shut off the lights?

    “Congratulations Ohio for garnering four slots on the Forbes 10 fastest dying cities in the US list”

    [forums.fark.com]

  16. rachmaninov1 says:

    The requirement of three years experience is obviously an attempt by current brokers to use regulation to institute a hierarchy much like the one Realtors have — making it much harder for qualified new brokers to start their own brokerages competing with established ones.

  17. backbroken says:

    @gyroball: Wait, what? Indiana and Ohio are different states?

  18. backbroken says:

    @tedyc03: Don’t worry about the holes in the walls. That’s damage you can see.

    Worry about the damage you can’t see that doesn’t show up until 6 months down the line at 3 AM.

  19. masterage says:

    Hussein Panjwani dba Dream Home Mortgage?
    O.o

  20. snoop-blog says:

    @tedyc03: Holes? I thought those were in-wall t.v. mounts.

  21. maneki neko says:

    @backbroken: Watch out, or all the Hoosiers on the Consumerist are going to start chucking corn husks at you. Or basketballs. Or something. We’re sort of defensive about our state.

    That being said, this article doesn’t surprise me too much, considering all the foreclosures in our state…

  22. AlexPDL says:

    Ahhhh Indiana. America’s truck stop. It’s great that they are “raising their standards” … not hard to do when there were no standards.

  23. xredgambit says:

    I just hope that when I buy a house in a year or two it doesn’t look like the Iraq Mini Palaces.
    Yay for being in the #1 dying city. I think I live in the cancer of america.

  24. zigziggityzoo says:

    I don’t know about you guys, but I just want to see Disemvoweling happen just a little bit more often.

    -Josh

  25. t3rminal says:

    @rachmaninov1: Quality over quantity, right? Or was it the other way around? Im so confused!

  26. snoop-blog says:

    better than being in Delaware:

  27. timsgm1418 says:

    @snoop-blog: I couldn’t agree with you more.

  28. ShortBus says:

    @snoop-blog: Yeah, but in a year, interest rates aren’t going to be anywhere near as low as they are now. The Fed is going to start ratcheting it up to combat inflation.

  29. TomCruisesTesticles says:

    Left voluntarily? Makes me think of people who get real estate licenses “on the side.” See a booming industry, jump aboard, abandon ship.

  30. TechnoDestructo says:

    Hahaha….that was a requirement of opening a mortgage brokerage in AZ years ago, and 3 years experience was required to get a license.

  31. dragonvpm says:

    @snoop-blog: Just because banks do sleazy overdraft loans doesn’t mean that the payday lenders weren’t scumbags too. Banks take advantage of people being a bit sloppy and at times lazy (i.e. not checking balances and keeping track of purchases precisely etc…) and payday loans target people who are having tough financial times (a captive audience who often times can’t get more conventional loans).

    I’d say BOTH should be done away with.

    WRT Indiana, this isn’t a bad start, but if they really wanted to stop sleazy mortgage brokers they’d require pretty hefty commercial liability insurance along with some jail time for people who knowingly defraud borrowers or lenders (because that’s what the bad MBs did, they screwed both sides).

    I don’t care if someone has 1, 3, or 20 years of experience, I want to know that they have something on the line and I have something to go after if they try to scam me.

  32. rachmaninov1 says:

    @t3rminal:

    No, it’s about restricting the quantity of ALL new brokers — of both high and low quality. Old-time legacy brokers clearly benefit by the time requirement, limiting entrance into their field.

    Just how will the three-year restriction will provide higher-quality brokers? Even a person who aces the state exam, and is otherwise supremely qualified to be a broker, cannot start his own brokerage without being a lackey for three years.

  33. theutopian says:

    I live in Indiana. I had a cousin who was a mortgage broker. No college education, complete liar and untrustworthy person. Given a job as a mortgage broker with no experience. Screwed countless people. Most of the people I know who were dumb enough to work as mortgage brokers were driven by greed and stupidity as they worshipped the altar of real estate. Oh and that cousin? He’s unemployed now, occasionally works as one of those scam door to door salesman trying to sell you a ‘free alarm system.’ These people feed off eachother.

  34. snoop-blog says:

    @dragonvpm: As someone who gets paid bi-monthly, a payday loan has saved my ass a few times. The opposite could be said about the overdraft fees, they have never onced saved me from shit. They could have declined my card evertime, and it wouldn’t have hurt me. I’m a busy person, and I live pay-check to paycheck so yeah, my account dwindles to about nothing almost every day or two before payday. It’s hard out heer fo a pimp. Brothas are broke deez dayz!

  35. nerevar says:

    I’m from Indiana and have a mortgage.

  36. nerevar says:

    ^ really.

  37. Average_Joe says:

    @Meggers: The problem with payday loans isn’t the initial fee. It’s what happens if you hold onto that loan for a few months. The interest rate is insane.

  38. bluewyvern says:

    @snoop-blog: re New York: “Hey, we’re in New York! I got a gun, let’s go to a Broadway show!”

    That’s the New York experience all right. Hey, isn’t that the plot of GTAIV?

  39. t3rminal says:

    @rachmaninov1: 3 years might be too much, but being the best in your class does not qualify you as the best in the field. So having to work for someone else as a “lackey” may just benefit that person in the long run

  40. bria says:

    @AlexPDL:
    Oh, and I was just going to say there were no assholes in this thread! Just for a refresher, the US exists beyond the East and West Coast.

  41. Greasy Thumb Guzik says:

    @theutopian:
    @nerevar:
    We all pity you!
    Indiana is the mistake that I have to drive through from Chicago to get to Berrien County for the weekend!

  42. bria says:

    @Greasy Thumb Guzik:
    Hey, I’m in Berrien County right now!

    Indiana is just boring to drive through. Though the Amish populations have very interesting and beautiful land.

  43. Super1984 says:

    I have a confession to make. I have been the one disemvoweling people. Here is the guilty evidence: eaiooeeiuaeaeeoeiauaeieoeeaoueaoueioaooeiaeaaieaooieiieiesaioeoeoieeaaoeeiiaeaaiiouoeaouioeieouioeieaioieueioaoeieae

  44. elislider says:

    is that girl in the image trying to be the GTAIV girl?

  45. baraboo says:

    @snoop-blog: Hey, I’m in Indiana too…West Lafayette. Where r u? And I feel the same way when Indiana is ever mentioned in the news or on the internet…hey, we exist! Oh yeah, there is also Indiana Jones. :-)

  46. IndyJaws says:

    As the name suggests, I, too, am from the great Hoosier state. It’s great to see that we’re trying to do something about the mortgage crisis; hopefully it’s not too little, too late.

    And everyone can make as much fun of Indiana as they want. We still have Kentucky to pick on.

  47. backbroken says:

    @hurkon: I can outshoot Jimmy Chitwood 7 days a week.

    Really I can.

  48. backbroken says:

    @snoop-blog: Delaware isn’t a place. It’s a smell.