New Arizona law helps shield buyers from mortgage abuses

New state licenses required for anyone handling a mortgage application could help prevent a repeat of the bad loans that contributed to Phoenix's housing crash. Backed by mortgage brokers and real-estate regulators, the law quietly went into affect on July 1. The law, passed in 2008, creates state oversight for people who take loan applications, gives consumers an avenue for reporting misconduct and establishes a fund to help repay borrowers who lose money because of unethical or illegal acts by their loan officers. The law faces hurdles, as cash-strapped Arizona struggles to process thousands of new applications. Still, advocates call it a success. Many of the risky - and sometimes illegal - home loans that helped lead to record foreclosures in Arizona might not have been made if the more than 10,000 unlicensed loan officers working then had been subject to more oversight.

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