ANDERSON — Darrell Baylor, owner of Baylor and Associates, Anderson, is requesting a hearing with the Indiana secretary of state.

“I’m already fingerprinted down there,” he said. “I don’t need to go through this again.”

Baylor is referring to the new state law that took effect Wednesday aimed at raising the standards of the mortgage industry in a state with one of the nation’s highest foreclosure rates.

Nearly 40 percent of Indiana’s mortgage brokerages lost their licenses Wednesday 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.

Including Baylor, there are five mortgage companies in Madison County that failed to meet state requirements. The other four are Horizon Mortgage Services Inc., Elwood; Omni Mortgage Co. Inc., Anderson; Prime Rate Lending Inc., Anderson; and Home Star Mortgage Services, Elwood.

As of noon Wednesday, 361 of Indiana’s 950 brokerages had failed to meet a Tuesday deadline 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.

Baylor said the new state law is set up to get rid of small businesses.

“This will favor the big lenders,” he said.

The law was set up a year ago at the first sign of the mortgage and foreclosure crisis that has rocked the nation.

Baylor claims that it’s not the mortgage brokers who caused the problems but the big lenders.

“This is Rokita’s way to silence complaints about lending brokers.”

He said it will be a boon to the big banks who will reap the business that small brokerages won’t be able to supply.

But Osborne Morgan, regional president of STAR Financial Bank, Anderson, isn’t sure about that.

“People won’t flock necessarily to banks,” Morgan said. “Mortgage groups will become more aggressive in the market. Anyone who has the qualifications can do that.”

Morgan said the market for homes is soft and, as a result, little refinancing is going on. Consumers, he said, won’t suffer from having too few places to go. He added that if a refinancing boom was under way, the mortgage brokers would’ve gotten recertified. Brokers act as third parties that match a borrower to a lender. They originate about two-thirds of the home and commercial loans in Indiana, Rokita said.

Investigators from the state Securities Division will investigate to see if unlicensed loan brokers still were operating in the state. Rokita called on mortgage lenders to tip off investigators if they suspected an unlicensed loan broker was still in business. Unlicensed brokers could face criminal charges or civil penalties.

The Indiana Association of Mortgage Brokers worked with Rokita’s office and lawmakers in drafting the new law, said the group’s president, Mike Monaco of Merrillville.

“Make no mistake about it, we had one of the easiest entrance barriers in the country,” Monaco said. He said many of the brokers who have lost their licenses likely already had left the business because of the housing industry downturn.

The low standards likely were among the factors leading to Indiana consistently having one of the 10 highest foreclosure rates in the nation, Monaco said.

Meanwhile, Baylor said he will concentrate on other ventures in his office, such as insurance.

As for getting recertified, he said. “I’ll go back and take some classes, take the test.”

At least he’s answering his phone. A call to Horizon Services Mortgage Inc. in Elwood resulted in a message saying the phone was disconnected.



Reporter Brandi Watters and The Associated Press contributed to this story.





Madison County mortgage companies not in compliance with new Indiana law

• Baylor and Associates, Anderson

• Horizon Mortgage Services Inc., Elwood

• Omni Mortgage Co. Inc., Anderson

• Prime rate Lending Inc., Anderson

• Home Star Mortgage Services, Elwood

Consumers can see a list of unlicensed loan brokers on the Secretary of State’s Web page — www.in.gov/sos — which was to be updated daily.

Source: Indiana Secretary of State’s Web site