Mortgage Brokers Must Be Licensed Soon

The State of Colorado now requires all mortgage brokers to take 40 hours of training, and pass a test on the material to do business as a mortgage broker in Colorado.

This and other important topics are critical to your success if you’re involved in a real estate transaction. If you want to talk to a real estate expert, call or email me today.

The new rules for mortgage brokers take effect on January first 2009. I heard recently that of the 9402 licensed mortgage brokers in Colorado, only 1166 have taken the training and passed the test.

That’s an astonishing low number at barely over 12%! What does this say about those mortgage brokers and their professionalism. Would one of these brokers be your first choice to handle the financing on one of the largest financial decisions you’ll ever make?

The State of Colorado has implemented this mandatory training and certification for a good reason. Have you read anything in the last year or two about bad lending practices. If you, or someone you know bought a house in the last couple years, have you heard any stories about the old “rate switcheroo” at the closing table?

There are professionals and amateurs in every profession. I think you deserve to get the best level of service and honesty when you complete your next real estate transaction.

I was just on the phone yesterday with someone who told me a story about this very thing. She is a very smart, driven, and knowledgable person, and a lender tried the same thing on her. She had her good faith estimate, a rate confirmation in writing, and everything she basically needed to move forward. When she arrived at the closing to complete her transaction, the lender’s representative told her the rate had changed, said there was no time to talk about it, and that she should just take the higher rate because it “wasn’t that much difference anyway”.

That paraphrases the basics of the story, and you get the idea. One of the most common tactics unprofessional lenders take is to do a bait-and-switch where they offer you one rate to get you entrenched in their process of application and approval, then switch the rate, or even the whole loan product, at the closing table.

I’ve seen people go into foreclosure because of this. In the last few years, many people bought houses with loans they didn’t originally agree to when they started the process, but under pressure at the last minute, took a loan product that had terms which put them in a very bad situation in a short time with things like adjustable rates.

Foretunately my friend in this story was savvy enough to reject their high pressure tactics and insisted that they honor the original offer. She even walked on one transaction before she found a deal that worked for her.

What’s this all mean? It certainly doesn’t mean that you should panic. Just consider that there’s more to choosing a lender than shopping the lowest rate they promise when you call them on the phone.

Why not pick a mortgage professional that takes their profession and career seriously. Do you want a Realtor or mortgage broker that got into the business because it gives him time to go fishing, or gives her time to hit the slopes?

Just like Realtors, there are hobbyists, and opportunists in a booming market, and then there are serious career professionals who are dedicated to your needs during this important financial decision for you.

If you choose the wrong mortgage broker, now that classes, testing and licensing are mandatory, that person may not even have the authority to handle the transaction, and the purchase of your home may not go through… even at the last minute.

This is important for sellers too. You might want to know how you can protect yourself as a seller, when you’re considering an offer from a buyer on the home you’re selling.

Want to talk more about what your plans are, or get answers to your real estate questions? If so, please call or email me now, so we can figure out what you think your next step is in your real estate future.

-Zachary Epps, full-time professional Realtor® and EcoBroker®

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