The trade group representing the nation's mortgage brokers, who claim they are responsible for originating more than 60 percent of all home loans and who also are the folks who take most of the heat for abusive lending practices is starting to flex its political muscles.

With chapters in 45 states and nearly 15,000 members, the National Association of Mortgage Brokers last week stepped forward with model state licensing legislation it believes will go a long way toward curbing what has become popularly known as predatory lending.

But more important than the proposal was the aggressively strong language used by NAMB's new president, Armand Cosenza of Commonwealth Financial Services in Richmond Heights, Ohio. In his acceptance speech at the group's annual convention in Cleveland, the Ohio broker said "it's time for everyone to hear our side of the story."

"As of today, we are going to strop being reactive," Consenza said to a standing ovation in the hall where he celebrated his high school graduation more years ago than he would admit. "As of tomorrow, we are going to start being proactive again."

NAMB's side of the story is that predatory lending can be reduced, if not toally eradicated, through a strong system of licensing and education. It does not deny that abusive practices are going on, but it says most the solutions currently being debated in the halls of government at all levels won't work.

"We fear that if these proposal are adopted, predators will just change their ways and figure out new methods to defraud the public," said outgoing president Joseph Falk of Irian Mortgage in Miami.

But worse, Falk added, good lenders would not be able to make good loans to worthy borrowers.

A better idea, the NAMB says, it to require anyone who takes a mortgage application from a borrower were to be licensed and educated. That way, consumers would be able to get the critical information they need to make informed choices, and the incidences of predatory lending, fraud and other abuses would decline.

Not everyone thinks all originators should be licensed. Certainly, not the lenders who actually fund the loans that brokers bring to them but don't really have any face-to-face business with borrowers.

But Falk said at a press conference that, "in a world where employees change jobs frequently and where the line between bankers and brokers, between lenders and funders continue to morph and blur, it is time to create a minimum standard for all originators."

The model statute would require anyone seeking a licenses to submit to a criminal background check and pass a written test to assure their competency. It also sets minimum educational requirements to both obtain and maintain an originator's license.

"Crooks, scoundrels, felons and thieves, NAMB gives you fair warning: We do not want you in our business," Falk told the convention's opening session. "If you are in it, get out!" he proclaimed. "If you are considering joining our industry, don't!"

Under the plan, every currently employed loan officer would be grandfathered -- but only until the next license renewal period specified in each state's law.

To obtain a license, all applicants would have to submit their finger prints to the authorities and be subjected to a criminal background check. "Their must be a way for the originator to be denied a license," said Falk. "If you are a felon, you should be denied access to our customers."

This part of the NAMB's model legislation is drawn largely from the new licensing law which took effect May 2 in Ohio, according to Cosenza, the new president.

Of the 7,136 applicants processed so far under the new law, he said, a "shocking" 772 more than one in 10 -- had criminal records and were denied.

Many of those rap sheets probably represent college pranks and other minor scrapes with the law, the new NAMB leader said, adding that applicants with such problems have the right to appeal. But 100-150 were "hard core" criminals.

"If that does not convince you of the need to implement this initiatives," Falk commented, "I don't know what does."

All applicants would also have to meet certain pre-licensing education requirements, including attending classes and passing a test for core competencies. And to renew their licenses, they would have to submit proof of satisfactory completion of continued education.

Currently, according to the NAMB, all but three states require some form of licensing or registration, but laws are far from uniform and there are no minimum standards.

Only 15 license or register employee originators of mortgage brokers, and just 12 require that loan officers working for mortgage lenders be licensed or registered.

A dozen place continuing ed requirements on broker-originators and eight place similar conditions on lender-originators. But 44 don't put any pre-licensing education demands on loan officers employed by brokers and 46 don't require any pre-license educational requirements on those working for lenders.

NAMB plans to work through its state affiliates to take its case to attorneys general, state regulators and mayors. It also plans to reach out to the American Association of Residential Mortgage Regulators, which holds its annual meeting in mid-August in Chicago.

Published: June 26, 2002

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.