Minnesota Mortgage Industry Regulation Having the Desired Effect

by Alex Stenback on June 2, 2008

"We wanted to make tougher to be in this business, and it’s working,"
                            ~ MN Commerce Department spokesman Bill Walsh


Minnesota’s tougher mortgage industry regulation, passed into law last year, seems to be having the desired effect: Brokers are forfeiting licenses, and there is a fairly broad consolidation move afoot as smaller brokers and their employees are being absorbed by larger, more established local and national outfits.  From the Star-tribune:

The state’s 1,319 active originators last week were down from more than 4,000 last year at this time. Many of them surrendered their licenses after new state laws aimed at making it tougher to be in the mortgage business were implemented last year.

On thing to keep in mind here is that less originator licenses don’t necessarily mean less people in the business.  Assuredly, many marginal loan originators have simply left the business, particularly in the sub-prime and Alt-a space, but many of these folks simply have merged or consolidated with other lenders, or banks, and no longer needed a separate, stand alone license.

{ 4 comments… read them below or add one }

Jeremiah Arn June 4, 2008 at 12:39 pm

Yeh, its remarkable in this economy that these type of officials actually get elected to public office. Who would have thought that running on a platform of “Tamp down the economy” would do it?
Our company, for one, has a foundation of education and referral-basis. I think that’s the best medicine for an ailiing industry.

Teresa Boardman June 10, 2008 at 1:14 pm

saw a former lender the other day working at a batteries plus store.

Chuck June 14, 2008 at 10:11 am

Anyone with even a remote interest in real estate should read this, perhaps put the chart on his/her ‘fridge for a reminder:


“Many California homeowners, including some with $2 million homes, are simply making their minimum payment, waiting for the recast. Then they plan to walk away, even if it damages their credit, Bedard said.”

I guess they weren’t “$2 million homes” after all, were they? Duh.

BTW – this is true for the whole country, not just Calif.

LO's little woman June 15, 2008 at 1:48 pm

Just a side note for people to ponder. Are we really keeping the best of the best in a poor market with all these regulations being passed? Case in Point: We are a Realtor/LO husband wife team who follow all the rules and regs as issued and ethics that go beyond the avg joe’s out there. Hubby did all his education before we decided it was best for him to go back to accounting where he will be paid a better rate for his CPA/MBA for now in this market. However, we know of others in the business; highly unethical and ethical who have nothing else to go to.
The truth of this mortgage meltdown situation is that brokers have taken the brunt of all the blame. Some deserve it others not so much, but the real problem lies in lax lending parameters and lax reaction time for the key federal interest rate. The brokers did not decide to let FANNIE MAE lax their DTI %ages to 64.99% and squeeze out Subprime lenders market in 2003. FANNIE MAE was allowing 100% purchases with just $5.00 in reserves, so how is that a shady subprime wholesale broker related problem?

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