Reminder letters were mailed in June. And again in July. And a third time last month.
State officials are now really worried that the 10,000-plus loan officers who do business in Maryland as the employees of mortgage brokers are determined to wait until the last minute to apply for their soon-to-be-required licenses, a rush that could swamp regulators and put procrastinators temporarily out of work.
Whether they wait or not, the new rules are expected to thin the ranks of loan officers, thanks to criminal background checks, education mandates and fees totaling as much as $1,000 per person. That's good for consumers if it gets rid of shady operators, but researchers warn that a potential downside is less competition and higher mortgage costs.
Only 1,650 loan officers have applied, probably because the deadline - the end of the year - seems far away. The state says those who don't get in the queue by the end of next month will almost certainly be in for a nasty surprise. It takes six to eight weeks to get through the process. On Jan. 1, those who don't have a license in hand can't do their jobs.
If they try to skirt the law and get caught, they will face fines of up to $25,000 and the possibility of as much as five years in prison.
"We're trying to get the message out to these people that they have to apply now," said Joseph E. Rooney, deputy commissioner for financial regulation at the state Department of Labor, Licensing and Regulation. "Otherwise, we're going to be overwhelmed and unable to get them out in a timely manner."
Mortgage brokers, already licensed by the state, said they lobbied for the law as a way to try to root out bad apples. Loan officers - employees who work directly with the public, collecting sensitive financial information and suggesting loan products - have theoretically been able to walk into the job without prior training and with a history of fraud.
The state hasn't had the power to bar from the profession even those loan officers involved in illegal property-flipping schemes, which victimized buyers and devastated parts of Baltimore in the 1990s, although the government can put pressure on the officers' employers.
About half of the states have loan officer licensing mandates, according to the National Association of Mortgage Brokers. One national mortgage trainer described Maryland's requirements as the most restrictive. Thomas Shaner, executive director of the Maryland Association of Mortgage Brokers, said it wasn't a scandal but rather a general uneasiness in the industry about some loan officers that prompted calls for licensing.
"This was a recognition by the profession - mortgage brokers - that the public needed a more knowledgeable, professional, ethical loan originator," Shaner said. "We believe this raises the bar."
Legislators passed the licensing law last year, setting a deadline they hoped would allow the state time to ramp up for applications from a large but uncertain number of workers. A state survey of mortgage brokers who do business in Maryland put their loan officer ranks at more than 10,000 - possibly much more - but officials expect that some will opt out, either switching to states without licenses or leaving the business altogether.
Brian Sacks, a local loan officer and president of training company LoanOfficerSuccess.com, estimates the number at 15,000 to 20,000.
Sacks says he thinks loan officer jobs doubled after 2000, pressed upward by low interest rates and the five-year-long housing boom. Some of those people are moonlighting, such as the security guard Shaner ran into a few years ago who said he closed loans in his free time.
It's unclear whether the licensing law puts Maryland at any risk of a loan officer shortage. Sacks says it's unlikely. Thanks to a market reversal - interest rates above where they were last year, and a sharp slowdown in the housing market - there's now a glut. Mortgage loan officers at banks are exempt from the law.
But the upfront fees could have an unintended ripple effect, experts say.
Research conducted this year for the Federal Reserve Bank of Minneapolis suggests that the costs involved with strict licensing programs decrease competition. And the researchers, graduate students at the University of Minnesota, warned that the fees will probably be passed directly to consumers.
"It's now going to cost $1,000 before you can write your first loan in Maryland - that has the potential to dramatically reduce the number of loan originators," said Christopher Cruise, a national mortgage trainer based in Silver Spring.
"It's going from one of the least regulated states in terms of loan officer licensing to the most regulated," Cruise said.
That doesn't mean the state can assume it will get fewer than 10,000 applications. "A couple of years ago, Illinois expected 2,000 and got 20,000," Cruise said.
Maryland's law will require loan officers working for mortgage brokers to fill out an application and undergo criminal background checks by the FBI and the state police. Officials are looking for financial crimes such as embezzlement and bank fraud, though they say they will also flag violent crimes to learn the circumstances. They can do a credit check, too.
Applicants in the business for less than three years have the extra requirement of taking a 40-hour course covering regulations, ethics and other basics, followed by a 100-question test.
The state is charging a $100, one-time investigation fee and $300 for a two-year license. The cost of the course isn't included; that adds about $450 to $550 to the tab.
Loan officers will have to reapply if they switch companies, which the state hopes will cut down on employees causing trouble and then job-hopping, leaving no trail. Consumers currently can file complaints only against mortgage brokers, who might have no idea where their former loan officers went.
Rooney said most of the roughly 3,000 written complaints that the state Department of Labor, Licensing and Regulation gets each year are mortgage-related, a portion of which are possible fraud. Last year his division increased the number of enforcement officers investigating mortgage and other fraud to seven from two.
Even so, regulators are "horrifically understaffed, and there's no way they're going to be able to catch anyone unlicensed," Cruise said. Consumers need to ask to see a license, he said.
Shaner, who is more worried that large numbers of loan officers will wait too long to apply than not apply at all, is reminding everyone he talks to in the industry about the law. Procrastination is typical, he said. Employees put off everything that doesn't involve loans.
Even Sacks, a board member of the National Association of Responsible Loan Officers, hasn't applied. He laughed sheepishly as he admitted as much last week.
"But I'm going to," he said.