The Miami Herald has complete a thorough and frightening investigation into rampant mortgage fraud taking place in Florida. They found that over 1000 convicted felons obtained a loan originator license, even after submitting background checks to the state in order to receive their license.
The Herald has a full website devoted to their investigation located here.
What’s the solution to the Florida problem?
Do you see other systemic problems in other states?
What about the ability for a loan originator to escape licensing by working for a different type of institution that does not screen for felony convictions?
Do you believe the National Mortgage Licensing System coming our way in 2009 will reduce the problem of mortgage fraud, make it better, or no change? Why?
With our company, we all need to go through federal background check and we allow no felonies to work with our company. However, that does not mean someone couldn’t slip through the cracks. It starts with the justice system and the mortgage companies can only do so much to check out a persons background. If it’s not reported, what more can you do?
What’s the solution to the Florida problem, Although these people did not steal others identity when filling out their applications for license, if they are crooks, they can easily steal someone’s identity and pass a background check.
I think the problem for that state and other states are the same. If somone really wants to be a crook, they are going to be a crook. I think however, they should do a national background check through the FBI instead of just a State background check. I also feel that maybe the licensing time should be longer than 30 days. Maybe 60 days, but they should also have the right to revoke a license at any time if they find out that any material fact in their application has changed or that they lied on their initial application.
I do not feel that all convicted felons are bad. I think there are some that may have gotten into trouble when they were young and are totally rehabilitated. I think it depends on the nature of their crime. Obviously if it is a theft crime, fraud, larceny, etc, they should not be admitted into this industry.
What about the ability for a loan originator to escape licensing by working for a different type of institution that does not screen for felony convictions? I think in this day and age almost every institution are doing background checks and in Washington State you will not have the ability to become an originator without having gone through extensive pre-licensing education, screening and testing.
Do you believe the National Mortgage Licensing System coming our way in 2009 will reduce the problem of mortgage fraud, make it better, or no change? Why?
I agree with some of the comments. I am not sure that the National Mortgage Licensing system will provide you with more than knowing if someone obtained a license in a different state. It would be different if with every applicant they did their own independent background check on each licensee. They are primarily relying on the State Regulatory to manage it. They are collecting huge fees but I am not quite sure what the fee goes for.
I think in order to cut down on identity theft, that maybe credit reports are done a little bit differently. Maybe the borrower calls in their ssc# to an approved credit reporting/employment verification (Like the Work Number) agency, gives the credit reporting agency their Mortgage Broker’s identifying office number (for instance NWMLS assigns a four digit office number to each Real Estate Broker office)the credit reporting agency then forwards the credit report only displaying the last four of the ssc# and also employment information. The Loan originator can then finish processing the application for submission. It limits the amount of information that is shared or seen by the originator, processor (who is not licensed and has access to the clients information as well) escrow, etc. There are a lot of people in this industry creating fraud, not just the mortgage broker or originator, everyone needs to be policed to reduce fruad.
Great site… But really, not all felonies are the same. The majority are crimes that are the “stereotypical” felonies, but learn the facts before you soapbox.
For example, in some states purchasing items used for sexual stimulation is considered a felony. True. Dui. Sex on a commerical airliner, yadda yadda.
I hope that NMLS will review and determine if the crime fits the punishment.
Remember, we are on of the most advanced and highly educated countries in the world and I hope that we all act accordingly.
Enjoy….
The problem I’m seeing is that we aren’t being told what the process for background checks can be. First solution idea would be to have the mortgage companies be liable for up to $250k in damages per each employee. Why would this be my first choice? well it would require bonding for each employee and that is a cost but in order to acquire a bond you have to pass certain requirements that would address past felony convictions, fraud, etc. Using this as a benchmark might help relieve some of the burdens being put on various agencies in some of these states.
With regards to a Loan Officer working for an agency that does not have a license requirement currently, it’s my suggestion that the legislation include language that like FERA mandates that “All” practitioners performing duties as defined by FERA/RESPA/TILA be subjected to the same requirements by 2011.
I believe the NMLS will reduce the Fraud overall in the coming years since the practice will enable better enforcement.
I think that you have to go to the people that are licensing not just point the finger at the originators with felony convictions, some people are rehabilitated and some come out worse. I do think their financial and credit info should be a factor as it is important to but each person should be looked at individually as close to 1/3rd of convicted felons are innocent and that it what has been proven think how many are actually innocent. I also think it depends on the felony and if its at all related to the financial industry. I think politicians,lawmakers and court systems are just as much at fault and have greed issues and corruption if not more than others. I think each institution should have their standards without being discriminatory and i think NMLS is a good start.
Hi Alison, “close to 1/3rd of convicted felons are innocent”
Really? Do you have a link with more details on that statistic?
Thank you.
NMLS is another jurisdiction I am a beleiver in each State to investigate the LO or Licensee , why take away fee income to each state at $30 cost times thousands with the economic times , and again the Attorney General should do the back grounds and have a FACE TO FACE interview requirment , we had to go to school for 12 years why not go through a personal interview to see the applicant personally there may be some NO SHOWS etc?
NMLS and Wa St. DYI liscensing requirements seem to be in order, as I know 2 people personally who’ve haven’t been able to obtain a liscense and previously were originating loans in this state. I’m happy to see the restrictions to felons as well as the educational rquirements to add credibility to our industry. I do feel that these requirements should be standard for everyone that is originating mortgage loans, regardless of the institution, because we are all providing the same service to the public.
Licensing LO’s who are convicts is a crime. This video does seem a bit “Entertainment Tonight” however the facts remain that this were convicted felons.
Ok.. I will say it again.. the licensing and continuing education has been good. I do feel it needs to be the same licensing for all originators regardless of which entity you work for. It is very interesting to go back and read the blogs posted prior to today’s requirements.