The Legislature passed a new mortgage oversight law last year, and this year the Division of Banks was rewarded in the $28.1 billion FY09 state budget with a 44 percent increase.
The 160-employee DOB, which oversees banking and lending institutions, will see its allocation increase from $12.2 million to $17.6 million.
“On a percentage basis, [DOB’s increase] is very large,” said Noah Berger, executive director for the non-profit Massachusetts Budget and Policy Center in Boston.
“Many areas of state government are getting a 1 [percent] to 3 percent increase, some are receiving no increase and some 6 [percent] or 7 percent,” he said.
The division saw its responsibilities increase exponentially when the new law required mortgage loan originators at state-licensed, non-bank lenders become licensed and supervised, and mortgage companies be graded on how well they lend to borrowers of all income levels – similar to the Community Reinvestment Act that already applies to banks.
Cyndi Roy, a spokeswoman for Gov. Deval Patrick, said the increase reflects DOB’s responsibilities under the new law.
DOB could have access to up to $5 million more in “retained revenues,” money it is expected to add to its coffers as non-bank mort-gage loan originators sign up for licenses newly required – at $500 per license – under the November 2007 law.
The agency will not get the entire additional $5 million in retained revenues. To achieve that figure immediately, 10,000 originators would have had to apply for a license, but just 6,400 had done so by the June 30 deadline. In addition, $2 million of whatever amount is raised is reserved for non-profit counseling agencies to establish homebuyer education and foreclosure prevention centers across the state.
However, DOB will see additional fee revenue when all the new licenses renew on Dec. 31 for another $500. All originator licenses and company licenses will renew on that date going forward.
Bank Commissioner Steven L. Antonakes said his agency will be able to work with its appropriation.
“It was reflective of our costs and our spending analysis,” he said.
DOB is hiring between 20 and 30 more bank examiners and attorneys to supplement its current staff, and supervise new licensees, with the added funds, he said.
In 1992, when the division first started licensing lenders and brokers, “We didn’t get a penny,” he noted.
In contrast, having money this time around to help division staff implement the new state law will be a funded mandate, he said, and incoming fees represent “reasonable” revenue to carry out DOB’s added responsibilities under the new law.
“The reality is Â… that based on market conditions of the past two years, the mortgage market in Massachusetts has contracted and we’ve had fewer licensed lenders and brokers than anticipated,” Antonakes said.
DOB was not a target of any of Patrick’s budget vetos, which will remain in place unless the Legislature overrides them.
Denise Leonard, executive director of the Massachusetts Mortgage Association, whose member originators will be licensed under the new law, said she’s glad the licensing initiative – a pet project of MMA’s – “was able to at least insure some of the revenue generated that’s being allocated to the division.”
