Texas Mortgage Brokers know more

Bloomberg News was comparing the Savings and Loans Scandal of the 1980's to the current subprime mess. Many of the geographic areas that were effected by the S&L mess are the same ones that are being hit with the subprime problems with the excemption of Texas. After the S&L problems Texas wanted to prevent something like it from happening again so they began regulating the state's Mortgage Brokers.

"We had no regulation of mortgage brokers before 1990 and now we have some of the most robust requirements in the country,'' said Doug Foster, commissioner of the Texas Department of Savings and Mortgage Lending in Austin.

Texas decided to conduct criminal background checks and also administered testing for all their mortgage brokers. It is shocking how simple this sounds but how very few states actually do this.

"Texas is one of 32 states that require criminal background checks for mortgage brokers and one of 12 states that administer tests that prospective brokers must pass," Foster said. "The state has a 42 percent failure rate on that test," he said. "Texas also requires 90 hours of training for new brokers and 15 hours of continuing education every two years. Only Wisconsin mandates more," he said.

It is also interesting to note that Texas's 5 largest markets and Milwaukee, WI are have a less than 1% chance of home price depreciation in the next 2 years according the US Market Risk Index.