New registry makes it easier for regulators to spot the mortgage world's con artists

There are lots of proposed remedies to prevent another mortgage catastrophe like the one we're going through now. Most of the suggestions I've seen won't fix the loopholes that allowed so many borrowers to take on loans they couldn't afford.

But there is one solution that may help stem fraud in the mortgage industry and reduce the number of unscrupulous or unlicensed brokers and loan officers.

The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators have launched the Nationwide Mortgage Licensing System, to help state officials keep track of individuals and companies. The system streamlines the regulatory process by allowing state-licensed mortgage lenders, brokers, and loan officers to use one form to apply for, amend, update, or renew their licenses online. The registry brings uniformity and transparency to the mortgage industry.

Often, unsavory individuals and companies can continue their unlawful practices because there are no uniform rules. What they are prohibited from doing in one state might be allowed in another.

Clearly, this new registry won't catch people who choose to escape detection by not applying for a license. But the database could be used by responsible lenders, brokers, and eventually consumers to check whether someone who claims to have a state license to arrange loans actually does.

With the mortgage registry, applicants have to disclose a great deal of information, ranging from their Social Security number to any criminal or civil actions against them. They also must provide fingerprints and identify affiliations with lenders, brokerages, and title companies.

The database is also designed to track those who do business under various names.

"From this single record it allows the regulators to see the entity exactly the same as other regulators," Matthews said.