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LANSING – The Michigan House today passed a bipartisan package to bolster consumer safeguards in the face of the country's subprime mortgage crisis by increasing protections for families purchasing a home. The package of bills establishes a registration process for mortgage loan officers working in Michigan.

"Michigan has been hit hard by the subprime mortgage crisis, and it's vital that we do everything we can to support Michigan homeowners during these difficult economic times," said State Representative Mike Simpson (D-Jackson). "This plan protects our state's consumers by increasing accountability of the mortgage loan industry."

This plan — which amends the Mortgage Brokers, Lenders and Servicers Licensing Act to create a registration process — strengthens the oversight powers that the Office of Financial and Insurance Services (OFIS) has over individual loan officers. Under the plan, applicants must:

·         Go through a background check.

·         Successfully complete an exam on state and federal regulations governing residential mortgage lending

·         Provide information ensuring they have never been convicted of a felony involving forgery, fraud, a financial transaction, or securities.

The plan prohibits anyone who is not registered under the new system to use "loan officer" or other similar terms to describe their position, and establishes a fine of $15,000 or one year of jail, or both, for violating these provisions.

By increasing transparency and safeguarding the reputation of those in the industry who do practice with professionalism and in an ethical manner, the plan has the support of the Michigan Mortgage Brokers Association and the Michigan Mortgage Lenders Association.

"Michigan's workers are second to none, and they work hard to realize the American Dream," Simpson said. "Loan officers play an important role in the process of buying a house, and residents deserve peace of mind that they are working with professionals who have not been convicted of financial fraud."

Last year, House Democrats unveiled the Home Loan Protection Act, which bans predatory lending practices, such as encouraging borrowers to default, and protects consumers from being steered toward high-cost loans when they would otherwise qualify for a traditional loan. Additionally, in December, House Democrats passed a plan to establish programs to allow homeowners saddled with risky adjustable-rate mortgages (ARMs), and those who have missed mortgage payments, to refinance and secure a fixed-rate loan.