Phote of a credit manager wanting a payment.
More restrictions are being put on credit lenders in New York. CC by Wsssst's/Flickr

In many states, personal loan products are being subjected to new regulations, mostly based on who offers them. Unscrupulous agents who offered small loans as well as large loans to customers are the intended target. New York passed these regulations in 2006, and the federal government passed similar laws in 2008.

Licensing for New York state loans

The New York state regulations are not intended for cash advance lenders that offer mortgages, but for their employees who actually offer mortgages. As of July 31, any mortgage loan officer who wants to work in the state of New York must have a license to do so. Getting this license requires a 20 hour course in responsible lending. Financial, criminal, and knowledge tests are also required for the license. In the next few years, there are similar laws that will go into effect.

Limiting options for dangerous employees

One very specific problem is addressed by this Secure and Fair Enforcement for Mortgage Licensing law. A unique subset of lenders created the fast cash advance products that contributed to the economic recession. The employees who work for lenders that were licensed did not have to have their own certification. Mortgage loan officers who had made loans to people with no credit or otherwise bad loans could jump from job to job. States now can keep closer tabs on mortgage lenders with these licenses.

Relatively weak licensing requirements

By addressing issues in the mortgage business, the new law does help, but some are worried it might not be enough. Some people think that 20 hours of training is not enough. There is a minimum of 75 hours of professional training for most licenses. The Nationwide Mortgage Licensing System and Registry is providing a search that will help you find a mortgage lender that has a license.

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