It has been reported by nearly every media outlet in the state. It has been the talk of the real estate and lending communities for months. So it comes as no surprise that the current mortgage crisis will likely be a hot topic when the General Assembly returns to session in 2008.
Obviously, legislators will make at least some regulatory changes in an attempt to battle the current crisis while simultaneously attempting to stave off a recurrence years down the road.
For mortgage brokers and lenders, their efforts will be focused on convincing the legislature to merely fine-tune the system instead of making radical changes that could cause more harm than good.
Marshall Collins will be at the forefront of these discussions as the lobbyist for the Connecticut Association of Mortgage Brokers (CTAMB), which is one of the two main organizations for brokers along with the Connecticut Society of Mortgage Brokers.
More than two months before the new session starts in February, Collins said mortgage brokers and CTAMB officials had met with state banking officials about the recommendations laid out by the Governor’s Subprime Mortgage Task Force.
“There has been talk of increasing the net worth requirements for brokers, and we don’t have a problem with that,” he said. “They want to include more education and an exam to pass course work, and that’s fine with us.”
However, mortgage brokers are concerned that simply increasing the necessary time spent on education could lull consumers into a false sense of security.
“They’re calling for continuing education for brokers, but I’ve been to those courses and they can be an absolute joke,” he said. “You just have to physically sit in the room. You don’t have to answer any questions, and you listen to someone drone on for three hours.”
Collin suggested that a more reasonable solution would be to require a more intensive education about regulatory changes, since most brokers are already well-versed on the current laws. Even with more education, that does not necessarily equate to preventing mortgage problems.
“Florida has one of the toughest continuing education programs for brokers, and they have the highest foreclosure rates,” said Collins. “There doesn’t seem to be much of a correlation.”
Another recommendation is to require more disclosure from brokers and lenders about exactly what homebuyers and consumers are getting into at the time of a deal. The problem, at least from the brokers’ perspective, is that it could make the process an easier target for fraud and predatory lending.
Simplify And Clarify
“One of the objectives is that we have to be careful when we talk about more disclosure,” said Collins. “The real answer is to simplify and clarify. The goal should be to streamline the process or provide more information in plain language.”
Brokers are concerned about the possibility of new legislation coming down too hard or making life difficult for hard-working companies in an effort to prevent the criminal predatory lending that has taken place.
“With the question of fraud, how do you prevent it?” said Collins. “There are always slimy, crooked brokers out there, and they should go to jail. We have no problem with that, and we’re for whacking the bad guys who cheat and commit fraud.”
Overall, Collins is confident that the banking committee co-chairs — State Rep. Ryan Barry, D-Manchester and State Sen. Bob Duff, D-Norwalk — are “very knowledgeable, good guys” who have shown a good understand of the process.
“I don’t anticipate that they’ll go overboard because they’re pretty level headed,” he said. “We’re not worried, but we have objectives that we want to take care of.”
Sean O’Leary is a Hartford Business Journal staff writer.
