Almost Half of Indiana's Mortgage Brokers See Licenses Yanked
More than 40 percent of mortgage brokers in Indiana no longer have a license to do business in the state, after Indiana Secretary of State Todd Rokita said Tuesday that his office had revoked licenses for 393 of the state's 950 mortgage brokerages for failure to comply with a new state law. To be sure, some of the firms are simply out of business -- the Indianapolis Star reported Wednesday that 79 of the state's notices to offending companies were returned as undeliverable -- but the fact that so many of the brokers operating in the state literally failed to meet basic licensing criteria introduced by a 2007 law should be eye-opening. Rokita worked with leaders in the state's General Assembly to pass a law last year requiring each licensed mortgage office doing business in the state to employ a so-called principal manager to supervise the business affairs of the office and the staff, defined as a mortgage professional with at least three years experience in the industry. Furthermore, the reforms mandate that each principal manager take and pass a practice standards examination based on Federal regulation, Indiana statute and industry best practices. It's not rocket science, clearly. But then again, given that Florida's licensing authority allegedly allowed more than 4,000 convicted felons to work as mortgage brokers in the state (an allegation hotly contested by Florida's Financial Services Commission), it's clear that at the very least that some minimum business entry hurdles can help clear out the worst offenders. "Mortgage brokers are being held to a higher standard, and they need to understand the importance of the new requirements they face," said Indiana's Rokita. "The mortgage and real estate industries are facing unprecedented and deserved scrutiny, and I intend to make sure Indiana homeowners have the opportunity to hire professionals that can do a competent job." The Indiana Association of Mortgage Brokers has supported the licensing exam and standards, which it worked with Rokita to develop. A list of companies who have seen their licenses revoked is available by clicking here.