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DRE Commissioner Reports Fewer Real Estate Licensees Today, But Stricter Licensing Requirements for Mortgage Lenders


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Tuesday, April 20, 2010

DRE Commissioner Jeff Davi spoke to real estate professionals at this month's meeting of the Filipino American Real Estate Professional Association and updated them on the number of real estate licensees and new laws, including the SAFE Act, which now requires anyone engaged in mortgage lending to register in a nationwide data base. Pictured left to right are are Silicon Valley Association of REALTORS® President-elect Gene Lentz, DRE Commissioner Jeff Davi and FAREPA President Richard Miller.

In the aftermath of the turmoil in the real estate industry, it's no surprise that there's a drop in the number of real estate licensees and stricter license requirements for mortgage lenders. The message was conveyed by California Department of Real Estate Commissioner Jeff Davi to real estate professionals at the April meeting of the Filipino American Real Estate Professional Association (FAREPA).

Davi told real estate professionals there are currently 490,201 real estate licensees, a big drop from a peak of 548,000 a couple of years ago. Davi estimated of the total number, only half are actually practicing in today's market. He expects the number of licensees will continue to drop by the end of this year, but not below 450,000.

"We see that once people obtain their license, they tend to keep it even if they don't practice," Davi said.

The DRE Commissioner gave an update on recent laws that affect those in the industry. He noted SB 94 signed by the Governor last year, now bans all foreclosure consultants, including loan modification firms and attorneys who specialize in loan modifications, from charging advanced fees or compensation before fully completing the services contracted.

All real estate agents now have to have their DRE number posted on all marketing materials, including business cards, stationery and Web sites owned by the soliciting real estate license. It's a way real estate professionals and consumers can make sure they are dealing with legitimate agents, Davi said.

Controversial is SB 36, also known as the SAFE Act, which now requires anyone engaged in mortgage lending to be registered with the Nationwide Mortgage Licensing System and Registry by January 1, 2011. The NMLS&R will contain a single license record for each mortgage loan lender, broker, branch and mortgage loan originator (MLO). To obtain an MLO license, applicants will need to pass new qualification assessments, federal and state examinations, and background checks, including fingerprinting and a credit check. There are no exceptions to or exemptions from these requirements for existing licensees, Davi said.

The process is lengthy, so those who intend to do anything related with mortgage lending need to start now, Davis said. "If you haven't started working on it by now, then you need to be concerned," Davi said.

Endorsement applications for qualified MLO registrants must be submitted electronically to the NMLS&R by September 15, 2010 to be issued by January 1, 2011. The endorsement will carry a nationwide identification number known as a "unique identifier" which will be assigned by the NMLS&R. The MLO endorsement is required every year.

Davi said real estate licensees will continue to be responsible for filing the necessary renewal and record update and continuing education requirements to maintain their four-year real estate license separate from the MLO endorsement, Davi said.

In addition to passing a federal examination, mortgage lenders also need to pass the state exam. If a lender chooses to practice in a different state, the lender will also need to take that state's exam, Davi said. There is talk some states require a certain FICO score in order to obtain the endorsement. Davi assured licensees in the state of California, the FICO score will not be used as a criterion, but misrepresentation of financial and other information would mean an automatic revocation. 

"You just need to be truthful in your answers to the credit check," Davi stated.

FAREPA President Richard Miller, an affiliate member of the Silicon Valley Association of REALTORS® and a Northern California regional sales manager with MIGMTG, LLC, a nationwide lender, said in the long run, everyone will benefit from the new requirements.

"I believe the new requirements are necessary," Miller said. "This way, everyone in the business will be accountable for their own personal production and actions."

Gene Lentz, President-elect of the Silicon Valley Association of REALTORS®, added, "In view of recent problems we have had in the industry, the new requirements serve to protect all parties engaged in a real estate transaction."

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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