State Representative Mark Falzone joined his colleagues in the Massachusetts House of Representatives in passing legislation that will bring Massachusetts into compliance with the federal law that requires all mortgage loan originators to be licensed through the Nationwide Mortgage Licensing System and Registry. A mortgage loan originator accepts a residential mortgage loan application or negotiates terms of a residential mortgage loan in exchange for compensation.

Representative Falzone emphasized, “By bringing Massachusetts into compliance with this critical federal law, we are extending important consumer protections to residents of our community for the most important purchase of their lives. And by licensing loan originators we hold them to standards that avoid deceitful and incompetent practices which have led to so much heartache and financial distress from unnecessary home foreclosures. The housing crisis has helped trigger our current financial crisis, and this is one important step to ensure that it will never happen again.”

In their effort to address unscrupulous lenders, Congress passed and the President signed the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) designed to provide additional safeguards for consumers when working with their mortgage loan originators. The SAFE Act will not only enact important consumer safeguards, but will establish a system of compliance, enforcement and continuing education for mortgage loan originators to ensure that the highest ethical standard be met.

Prior to the SAFE Act, states had varying standards of compliance for loan originators who offered mortgage loan services to consumers. As a result, in some cases unqualified or unscrupulous individuals who lacked education and training provided confusing and false information to borrowers.

“The SAFE Act is critical to ensuring that what contributed to the downturn in the housing market never happens again,” House Speaker Robert DeLeo said. “Consumers are entitled to mortgage loan originators who have the stamp of approval from both the Commonwealth of Massachusetts and the federal government.”

While states are charged with enacting licensing standards that meet the requirements of the SAFE Act, overall responsibility for interpretation and compliance rests with the federal Department of Housing and Urban Development. The law requires that all states codify the legislation by July 31, 2009.