At least in words, a lot of this stuff was directly addressed, here:
"SAFE Mortgage Licensing Act of 2008
Title V of P.L. 110-289, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (“SAFE Act”), was passed on July 30, 2008. The new federal law gave states one year to pass legislation requiring the licensure of mortgage loan originators according to national standards and the participation of state agencies on the Nationwide Mortgage Licensing System and Registry (NMLS). The SAFE Act is designed to enhance consumer protection and reduce fraud through the setting of minimum standards for the licensing and registration of state-licensed mortgage loan. Mortgage loan originators who work for an insured depository or its owned or controlled subsidiary that is regulated by a federal banking agency, or for an institution regulated by the Farm Credit Administration, are registered. All other mortgage loan originators are licensed by the states.
The SAFE Act requires state-licensed MLOs to pass a written qualified test, to complete pre-licensure education courses, and to take annual continuing education courses. The SAFE Act also requires all MLOs to submit fingerprints to the Nationwide Mortgage Licensing System (NMLS) for submission to the FBI for a criminal background check; and state-licensed MLOs to provide authorization for NMLS to obtain an independent credit report."
But only since Obama has been President have a litany of national -- and, hence, state -- standards actually been codified.
In sum (as of March-ish), things like application fees are illegal and, as Mortgage Loan Officers are now required to be registered and act within guidelines to legally operate, any failure to act within SAFE Act guidelines gets you removed from the game.
Amazingly, there never was a system to check this. In the past, a guy could be
convicted of fraud in Dallas, TX, and open up shop 24 hours later in Tulsa, OK, with ZERO (beyond fines in the previous state) repercussions.
Now, this stuff is tightly regulated and it has taken me >90 days to receive licensing in MO and KS. Why was there an opening at a prestigious firm in a business that is relatively closed to outsiders?
Let's just say that, as licensing rolled in, a sizable percentage of originators rolled out: being unable to pass a criminal background, credit check, get the necessary score on state/fed examinations, and/or convince their brokerage houses that they were not a potential liability...
Yes, much of the industry used to smell. In my opinion, the SAFE Act is an example of regulation acting in a positive manner (that doesn't always occur).
Now, the potential unintended consequence is that fewer people will be able to afford homes with stricter guidelines for funding.