Business and Industry Director Bruce Breslow told lawmakers on Tuesday his Division of Mortgage Lending doesn’t have the personnel or the money to perform required annual examinations of lenders in the state.
Auditors reported to the Audit Subcommittee the division failed to perform examinations on most of the 238 licensed mortgage companies it regulates. The audit also said examiners didn’t conduct follow-up examinations on 14 of the 22 licensees who had bad ratings on their last exam.
“The reality is, with the budget we have, we cannot keep up,” said Breslow.
Assemblywoman Maggie Carlton, D-Las Vegas said that situation must be fixed so the bad actors in the mortgage lending business don’t get people into the kind of trouble they did during the last boom.
“The last thing I want is the bad guys out there knowing they’re not going to be inspected,” she said.
Breslow said one problem is while the state has gotten millions in settlement money from those lenders, he can’t get his hands on any of it because the Attorney General receives that cash and has refused to turn any of it over to his agency.
Breslow said when the housing market collapsed, so did his agency’s fee income but now, with the real estate market booming again, the workload has far outstripped his staff’s ability to keep up.
He said that’s one reason why his agency wants to shift away from billing mortgage companies for time it takes to perform financial examinations. He said shifting to a supervisory fee based on a mortgage company’s volume of business would provide a much steadier income stream.
Carlton said the only problem with that is if it makes the good guys in the business pay to inspect and monitor the bad guys.
Breslow said those in the industry are putting together a new fee structure to prevent that.