Regulators slap mortgage LOs with fines for skipping class

Regulators slap mortgage LOs with fines for skipping class
Written by Publishing Team

More than 400 mortgage loan originators will pay fines after a multi-state investigation claimed they erroneously claimed to have completed the annual continuing education requirement.

Contacts in the 42 states that have settled with in-state regulators will pay about $2,700 each — $1,000 for each state authorized — to skip the annual eight-hour course. They must also hand in their three-month licenses and take additional education programs.

Investigation 26 states, which California Department of Financial Protection and Innovation Led by, I captured the discrepancies using a digital tool to check that NMLS requirements were met. The effort found that loan officers failed to meet continuing education requirements, which vary by state, and which are intended to enhance consumer protection and reduce fraud.

All contacts involved in the investigation paid for educational software from Carlsbad, California Real estate education services (REES), regulators said. The company, owned by Danny Yen, was licensed to provide multi-state licensing system education nationwide, but has instead coordinated two educational schemes.

For more than 600 loan officers, state regulators claim Yen is either taking classes for compensation, or giving them class credit without requiring LOs to come to class. State agencies in California, Maryland and Oregon have begun separate administrative proceedings against Yen, and he could face fines of up to $3.4 million, according to officials from State Bank Supervisors Conference CDFPI said during a press conference on Tuesday.

According to REES’ website, a three-hour online course that provides “a basic understanding of housing law and fair discrimination” can be purchased for $19. CSBS officials said Yen is only licensed to offer in-person lessons.

Calls to REES and Danny Yen on Tuesday afternoon went unanswered.

Although the investigation found that 608 LOs had not completed their requirements, only 441 had entered into settlements so far. States have already taken disciplinary action against 14 of the 167 orders that have refused to settle with the task force. Regulators said additional measures will be lifted in the coming months.

Although loan officers who have settled with government regulators face a three-month “cooling-off” period, the mortgages already created by the lenders are not in question. State regulators said the loans were “valid,” because LOs had NMLS licenses in place at the time. Officials stated that there was “no indication of consumer harm.”

But it is not clear what will happen to the mortgages that loan officers currently have in the pipelines. Officials said mortgage companies that have lending officers who were part of the settlement and have loans in progress should contact the appropriate state regulator.

Loan officers spanned 44 states and represent a broad segment of the mortgage industry, said Ed Gill, CDFPI Senior Deputy Commissioner. Gill added that LOs were not concentrated in any particular market segment, and included a wide range of companies. No action has been taken against companies that have hired LOs.

“Mortgage handlers have a responsibility to guide consumers through the largest financial transaction of their lives,” DFPI Commissioner Clotheld Hewlett stated.

These actions, Hewlett added, “remind the mortgage industry of its obligations to be ethical, honest and forthright.”

About the author

Publishing Team

Leave a Comment