Indianapolis Mortgage Brokerages Lost Their Licenses

August 27th, 2008

Indianapolis

In Indianapolis real estate, about 40 percent of mortgage brokerages have lost their licenses. These mortgage brokerages have failed to comply with a newly introduced law that has been aimed at elevating the industry standards in Indianapolis having one of the highest foreclosure rates in the nation. This is a 2007 industry-backed law that states that each of the brokerage has to name a principal broker who has been through a state exam besides 3 years of experience. This principal broker is also required to look after the business matters of his company.

But about 361 of the 950 mortgage brokerages in Indianapolis have flunked to go by this law. About half of the 950 brokerages in Indianapolis who has been licensed by the state July 1 have been able to stay in the business. They are out of the new law till January 1, 2009.

As said by Todd Rokita, Indiana Secretary of State, nearly about 143 mortgage brokerages have given up their licenses on their own. Some have declined to open up their mouth when they were contacted over the phone. Many have even disconnected their telephone lines. This 2007 industry-backed law besides requiring the background checks on brokers has also increased their annual fees from $400 from $100.

Jim Gavin, a spokesman for Todd Rokita has said that there can be a change in the number of revocations and license forfeitures in the near future. Todd Rokita has said that the real estate brokers play the role of third parties between the borrower and lender. He has even stated, “Some businesses said, ‘I don’t even want to invest another $300 in this enterprise,”.

According to President Mike Monaco of Merrillville, The Indiana Association of Mortgage Brokers along with the lawmakers and help from Todd Rokita has drafted the new law. The state Securities Division’s investigators have been trying to find out whether there were any more unlicensed loan brokers in the state or not. Rokita has said that an unlicensed loan brokers can face civil penalties or can be charged with a criminal offence even.

He has even called up the mortgage lenders to provide secret information to the investigators if they knew any of the unlicensed loan brokers still running their business.

According to President Mike Monaco, the low standards are undoubtedly one of the reasons behind Indianapolis being arrested with one of the highest foreclosure rates in the nation.