I support a national registry for mortgage originators, do you?

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The Associated Press is reporting that mortgage brokers are balking at new regulation to develop a nationwide registry system for mortgage brokers. Here are some snips from the article.

On one side is the Conference of State Bank Supervisors, which is working with state mortgage regulators to develop a uniform licensing application for use by all states starting in January. Eventually, the nationwide system would prevent miscreants from moving from place to place.

On the other side is the National Association of Mortgage Brokers, which says the CSBS model is defective because it singles out loan brokers who originate loans but who don’t actually fund them.

Since there can be rotten apples in every origination channel, the NAMB is backing the creation of a federal registry, one run by the Federal Trade Commission, the Federal Reserve or some other agency that would flag the con artists wherever they are so they can never work in the mortgage business again.

Their reasoning behind the opposition?

NAMB believes individuals should be held accountable for their behavior. If a mortgage originator is found guilty of bad behavior, he or she should be booted from the business permanently. That way, the so-called bad actors would be unable to move within the mortgage community at will, the group says.

“Without a focus on individual accountability, we can never truly have consumer protection. Individuals harm consumers, not companies,” NAMB’s previous president, Harry Dinham, said when the plan was introduced. “The purpose of this registry is to establish a consequence for bad actions. Mortgage originators must have something to lose if they act unethically.”

I happen to agree with the NAMB on this one. Just regulating mortgage brokers is a terrible idea. Look at the massive lawsuits won on behalf of disenfranchised consumers at the hands of Ameriquest and other large lenders. Brokers are not the problem. The system is the problem. Unscrupulous people at all levels, in all organizations, regardless of the business model ARE THE PROBLEM.

The National Association of Mortgage Bankers (different from National Association of Mortgage Brokers) is against individual registration citing cost concerns. I think that position is ridiculous – consider consumer protection a cost of doing business and make the adjustment!

We need a national registry so companies can’t float from state to state setting up shop and ripping people off. What you do in California should be accounted for in Florida, Alaska and anywhere in between.

This can be done before national licensing. This can be done now. Fingerprints, certificate of registration and small fee to support the administration of the program are easy ways to get this thing off the ground. I for one am a huge supporter of a national registry. Any system that just focuses on one segment of the mortgage origination puzzle is misguided and a red herring – consumers are not safe just because mortgage brokers are cataloged. All mortgage originators in all channels must be accounted for in order to any type of registry to do its job; which is? TO PROTECT YOU.