Community Forum on Lending – Why do African Americans pay more in Central Virginia? Part 3 of 4

I’ve provided the backdrop to the situation and introduced the participants on the panel.  At the breakout point in the session, our table consisted of four white loan officers, an African American Realtor and an African American Darden student.  We were asked by PHA to discuss our “Local Plan for Change.”  Interestingly enough, the options were already planned out for us in advance… wasn’t that nice of Piedmont Housing?  They wanted us to put stars on our top five predetermined choices.  Our table instead chose to discuss how we could make meaningful change.

We discussed education.  Education is a huge topic, and probably the most important piece of the puzzle to improve our rating.  There was cursory discussion about school-aged children learning about finance, but we didn’t really tackle that topic.  Our real discussion was centered on the African American communities coming together, either within community groups or faith-based places of worship.  If communities can share in the knowledge base (remember, many African Americans do not have parents that have owned a home), understand that they can seek out additional loan options and fully understand the loan product that they are considering, the individual members will make wise decisions.

Next up was legislation.  As much as Alex Gulotta would like to credit for pushing for licensure of loan officers and brokers (By the way, Alex,  brokers are licensed, requiring experience level among its owners, must pass an oral exam and be examined by the Commonwealth every 18-24 months), Central Virginia Mortgage Professionals (CVaMP) is way ahead of you.  We have already met with Del. Bell (archived: 2011) and have placed a phone call into Del. Toscano to discuss loan officer licensure, bricks and mortar requirement, real teeth in enforcement of violators and a “tangible benefit” provision.

Licensure is coming; either from Congress or because Virginia finally enacts legislation that over 30 states have enacted in the last few years. 

Bricks and mortar is a no-brainer, in my mind.  Why wouldn’t you require a mortgage loan officer to have a physical presence in Virginia?  Be it a formal office or home office, have an address in Virginia where a client can visit you personally.  Why not keep out-of-state predators out of Virginia?

Currently, the State Corporation Commission may pass out $1000 fines, but rarely withdraws the broker’s license.  Also, as I understand the law, an examiner may find a national violation, which is not a state violation.  In that case, he or she is prohibited from telling the appropriate agency, whether it is Housing and Urban Development or Veteran’s Administration or Freddie Mac or Fannie Mae about the violation.

Finally, many states are enacting a “tangible benefit” law.  Illinois’ standard is simple and concise (PDF).

Tomorrow I will list the action items that I will propose to our legislators, to Piedmont Housing Alliance and other community organizations, to the Charlottesville Area Association of Realtors, to CVaMP (archived: 2014) and to our own brokerage, Compass Home Loans (archived: 2016).

Ed Note: This is part three of a four-part series of posts authored by Matt Hodges, a mortgage broker in Charlottesville (archived: 2009). This matter is of vital importance to the Charlottesville area real estate market, and all citizens and real estate professionals should know as much as possible about it. That so many members of the community are talking is surely a positive sign.

Part 1 is here.
Part 2 is here.