Maybe it’s the new law, or maybe brokers were looking to get out anyway. Whatever the reason, the number of mortgage brokers in Indiana plummeted when new regulations went into effect: [Hat tip Old Mike!]
Nearly 40 percent of Indiana’s mortgage brokerages lost their licenses today because they haven’t complied with a new law aimed at raising the standards of the industry in a state with one of the nation’s highest foreclosure rates.
As of noon Tuesday, 361 of Indiana’s 950 brokerages had failed to meet a deadline yesterday for complying with a 2007 industry-backed law that requires each brokerage to name a principal broker with at least three years experience who has passed a state exam and will oversee his company’s business affairs.
Another 143 brokerages have voluntarily surrendered their licenses, Indiana Secretary of State Todd Rokita said in a teleconference with reporters.
That means only about half of the 950 mortgage brokers licensed by the state on July 1 remain in business five weeks later.
The new law also requires background checks on brokers and raised their annual fees to $400 from $100, Rokita said.
"Some businesses said, ‘I don’t even want to invest another $300 in this enterprise,’" he said.
The numbers of license forfeitures and revocations could change somewhat in the coming days because paperwork might still be in the mail, said Jim Gavin, a spokesman for Rokita.
There were those who blamed Indiana’s low standards for the high foreclosure rate:
