Licensing Would Slow Fraud, Proponent Argues

The lending industry must embrace a licensing initiative by state banking and mortgage regulators to keep from crumbling under the weight of fraud and mismatched incentives, a proponent of the project said at SourceMedia's Mortgage Fraud Conference in Las Vegas.A national residential licensing system "has the potential to transform today's mortgage industry and imbue it with a level of professionalism and accountability that will make it easier for responsible mortgage companies to operate and harder for unethical companies to compete," said Tim Doyle, vice president of industry and agency relations at the Conference of State Bank Regulators. The CSBR, together with the American Association of Residential Mortgage Regulators, is building the system so the states can work together more effectively in supervising licensees as they move from one jurisdiction to another. But not everyone favors the system. One major opponent, the 27,000-member National Association of Mortgage Brokers, which speaks for the originators of some 60%-70% of all home loans, maintains that its members will be singled out unfairly by the system, which is due to begin operations in 12 months. All originators, not just brokers, should be covered by the system, the group contends. "It just doesn't make sense to include some and not others, because all consumers should benefit regardless of the distribution channel chosen," says NAMB president Harry Dinham, a Plano, Texas, broker. But Mr. Doyle said the initiative would "make a profound impact on addressing fraud."