n Move was part of new testing requirements
Staff and wire reports
Indiana Secretary of State Todd Rokita warned last month that mortgage loan brokers who hadn’t met new testing requirements in a 2007 law would lose their license. He followed through on that promise this week as a nearly half of the state’s mortgage brokers — more than 360 total, including five in Boone County — had their licenses pulled.
The impacted Boone County brokers include AAA Mortgage Co., Lebanon; Capital Lending Advisors, Lebanon; Jacobsen Financial, Zionsville; Miramar Mortgage & Financial Services, Lebanon; Investor’s Mortgage Services Inc., Zionsville; and IQ Financial, Zionsville.
The issue stems from a change to license testing requirements in the 2007 Indiana Loan Broker Act. The exam is called the principal manager assessment. Brokers were to have passed that test by July 1 or risk losing their licenses.
Jeff Schroeder of Miramar said that because he has tried to pass the test by the deadline, he has until Sept. 1 before his license revocation will be enforced. Secretary of State Communications Director Jim Gavin office confirmed that Miramar’s revocation will not be enforced until Sept. 1, unless Schroeder fails to pass the exam by that time.
“There are a few in that situation,” Gavin said. “They were attempting to comply.”
Calls to the other four brokers were unsuccessful.
As of noon Wednesday, 361 of Indiana’s 950 brokerages had failed to meet a Tuesday deadline for complying with a 2007 industry-backed law that requires each brokerage 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.
Another 143 brokerages have voluntarily surrendered their licenses, Indiana Secretary of State Todd Rokita said in a teleconference with reporters.
That means only about half of the 950 mortgage brokers licensed by the state on July 1 remain in business five weeks later.
The new law also requires background checks on brokers and raised their annual fees to $400 from $100, Rokita said.
Not all local brokers were negatively impacted. At least one, Aaron Byers, owner and operator of Sagamore Mortgage in Lebanon, remains in operation.
“Those of us left have had to go through rigorous standards of state and federal background checks, testing and fees,” Byers said in a written statement. He said brokers can give home buyers lower interest rates and better service than other lenders, such as banks or credit unions.
About 40 percent of the state’s brokers failed to meet Rokita’s deadline. This latest problem comes at a time when the mortgage industry is already slumping.
The low licensing standards likely were among the factors leading to Indiana consistently having one of the 10 highest foreclosure rates in the nation, Indiana Association of Mortgage Brokers President Mike Monaco said.
Rokita, however, downplayed the brokers’ standards role in Indiana’s high foreclosure rate.
“I don’t think that was a very big piece of that,” Rokita said, explaining that talks on the new law began before the subprime mortgage crisis began.
Karl Berron, chief executive officer of the Indiana Association of Realtors, said the license revocations could cause loan problems for a few prospective buyers, but he expected only minimal impact from Wednesday’s action.
“The loans are still there for folks that want them,” Berron said.
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