Wednesday, July 28, 2010

Mortgage Brokers to Be Fingerprinted and Registered

like criminals, like sex offenders released after a jail term. You gotta be kidding, right?

No. This is all thanks to the Federal Reserve, who will have even more non-transparent power to regulate and legislate under the Donk bill, aka Dodd-Frank financial "reform" bill.

Mortgage brokers to be fingerprinted and registered
(7/28/2010 Reuters via Yahoo Finance)

"WASHINGTON (Reuters) - Mortgage loan originators will have to be fingerprinted and sign up to a central registry to do business in future, according to final rules issued on Wednesday by the Federal Reserve and other regulators.

"The rules are part of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, also called the S.A.F.E. Act.

"They were issued by the Fed, Comptroller of the Currency, Federal Deposit Insurance Corp, Office of Thrift Supervision, Farm Credit Administration and National Credit Union Administration. [They all will be subsumed under the Federal Reserve.]

"Mortgage brokers came under tough scrutiny in the wake of the 2007-09 financial crisis, with some lawmakers and regulators sharply critical of underwriting standards and practices that were seen as so loose they helped foster a housing price bubble.

"The S.A.F.E. Act specifies that mortgage brokers who are employees of agency-regulated institutions must register with the Nationwide Mortgage Licensing System and Registry,

""As part of this registration process, residential mortgage loan originators must furnish to the registry information and fingerprints for background checks," a joint release from regulators said.

"The final rules take effect on October 1 and it is anticipated that the registry could start accepting registrations as early as January 28, 2011.

"Industry sources say that thousands of brokers have gone through mandatory education, credit checks and state and federal testing in order to retain the right to handle mortgage originations.

"The process has thinned the ranks of brokers, who may be even fewer soon given talk of a 30 percent fail rate on testing, said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York.

""It cleaned up the industry," said Moulton, who nonetheless cautioned that he felt credit availability for mortgage lending has been reduced as a result of uncertainty caused by U.S. financial regulatory reform."

Mortgage brokers DID NOT cause the 2007-09 financial crisis (which is on-going, as far as I know). It was 1) easy money from none other than the Federal Reserve; 2) securitization and leveraging by the big Wall Street banks that caused it, coupled with lax enforcement of regulation by the government (the current and the past).

Big Wall Street banks needed the raw material, i.e. mortgage loans whether it was subprime, alt-A, or prime, and a ton of them, to craft MBS (mortgage-backed security), CDO (collateralized debt obligation) based on MBS, and further permutation of the original material such as CDS (credit default swap) on MBS and CDO, and CDO made up of those CDS.

Do those TBTF (too big to fail) Wall Street bankers also get fingerprinted and registered? How about the officials at the Federal Reserve, present and past? Do they get fingerprinted and registered? How about the members of Congress, who turned the other way as long as they got preferential treatment and campaign money? Do they get fingerprinted and registered?

Instead, they go for small flies, the lowest in the food chain.

How is fingerprinting and registering the mortgage brokers and maintaining the national database supposed to prevent the future financial "crisis"?

This is a sick joke.


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