The Safe Mortgage Licensing Act is designed to reduce fraud and help you make more informed decisions.
Mortgage brokers and loan officers may have state licenses but now they're required to also have a federal license.
The flood of foreclosures has not yet receded. Many buyers dealt with unqualified brokers who left them with bad loans they couldn't afford.
Martha Lucey of Clearpoint Credit Counseling believes the new law requiring criminal background checks for loan officers is badly needed.
Lucey said, "The criminal background checks are really important because in many cases we saw people perpetrating multiple, fraudulent criminal activities and they just continued to operate."
Loan officers like Paul Salazar are now brushing up to take a new test to join a federal registry. He says the new law would bring integrity back to the industry but Salazar does have some reservations. Salazar said, "The bad thing about it I believe is that the horse has already run out of the barn. The people that were in this industry causing some of this trouble they're long gone now."
And the push to weed out the unqualified comes at a price. Salazar said, "The whole cost of this between classes and testing and finger-printing with background checks is probably 800-dollars."
California is at the center of the foreclosure crisis. Lucey says consumer protection must be a priority. Lucey said, "Laws like this are critical for consumers to be aware of their options."
Come January 1st, loan officers won't be able to process any loans unless they have their federal license.