Mortgage fraud causes legislature to tighten licensing rules

June 24, 2010

The Florida legislature has increased the requirements for mortgage brokers who apply or seek to renew their licenses. The legislature enacted the law in an effort to curb the ongoing problem of mortgage fraud occurring in the Miami and South Florida area. No mortgage broker applications under the old standards will be accepted after July 8, 2010. On October 1, 2010, all mortgage brokers, loan originators, and mortgage business owners will be required to file under the new rules after Florida joins the Nationwide Mortgage Licensing System. Individuals that wait until after July 8th, will have to wait for several months under the new rules to receive their licenses. As a Miami criminal lawyer representing defendants charged in numerous mortgage fraud cases, it is understandable why the legislature acted.

The new rules will require that people applying and even renewing licenses will be required to undergo annual criminal history and credit report checks. The current licensing requirements were too relaxed according the legislature. Under the current rules, an applicant was required to undergo an initial background check and could renew their licenses every two years without a criminal background check. If mortgage brokers were arrested on criminal charges, it was their obligation to report themselves to licensing department.

According to the Mortgage Asset Research Institute, the licensing changes were necessary as Florida leads the nation in mortgage fraud. The changes in the licensing policies come at time when the media continues to report on the fraud that has caused serious economic difficulties in Florida and across the United States. In fact, it is believed that the legislature acted in response to a Miami Herald article. The article explained that mortgage licenses were issued to individuals with prior criminal histories such as convictions for armed robbery and cocaine trafficking. Once that information became public knowledge, the legislators acted.

The new licensing laws also set out the penalties if a broker is convicted of a certain criminal offense. Lifetime disqualification will occur for anyone convicted of the following offenses: fraud, robbery, identity theft, burglary or tax fraud. Convictions for other criminal offenses allow for five, seven and 15 years license suspensions. Anyone required to have a mortgage broker license must be keenly aware of the ramifications of being arrested for criminal charges. Any mortgage broker or lender that has pending criminal charges must seek legal representation from an experienced Miami criminal defense lawyer because the entry of any type of pleas, as harmless as it might seem, could cause someone to lose their livelihood.

Mortgage Broker Licensing Rules to Get Tougher, The Miami Herald.com, June 24, 2010.