Home lending officials required to be certified

Before the mortgage debacle nearly bankrupted the mightiest of lenders, it wasn’t difficult to sell a home loan.

Today the rules have changed and the people responsible for helping Americans finance their most important and often largest purchase have to pass muster with the federal government.

Across the country these “mortgage loan originators” have submitted to background checks and are getting fingerprinted.

This week it was Nikki Elster’s turn.

For the past six years she has worked as a loan and member service specialist for Spokane Teachers Credit Union, and after running her thumb and fingers across an electronic print-taker Wednesday morning she called the entire process a “necessary step” that shouldn’t make honest lenders flinch.

The credit union and other mortgage lenders are complying with the Secure and Fair Enforcement for Mortgage Licensing Act. The new rules are intended to flush out nefarious businesses who helped fuel the economic meltdown by building an industry upon elaborate loans to ill-suited or ill-advised borrowers.

“For a while there the mortgage industry was like the wild, wild West,” said Deb Bortner director of consumer services for the Washington Department of Financial Institutions.

“Lenders were being paid, rewarded, for selling bad loan provisions,” she said. “It was ‘the more I could sell bad loans, the more I would collect from the lender.’ ”

The new licensing requirements don’t necessarily mean that every mortgage lender is honest. But the background checks should help ensure borrowers, banks and credit unions know if the person crafting their mortgage loan has a history of being a straight-shooter.

Every originator now has to register with the Nationwide Mortgage Licensing System and Registry, which will give them a unique identification number that will stick with them as long as they are in the home loan business. Many lenders will print their number on their business cards and borrowers will be able to look up their credentials and history – such as their own bankruptcies, liens and other red flags – online.

The credentialing will signal to borrowers that the originator has submitted to background checks, sat through mortgage education and ethics training, and has passed tests.

Scott Adkins, vice president of lending for STCU, said that starting July 29 the numbers must be available to loan applicants.

He noted that STCU did not participate in the risky lending practices that led to the subprime lending collapse.

Sean Scott has been flying around the country for months, fingerprinting mortgage loan originators. He works for Fieldprint Inc., a New Jersey company that specializes in collecting fingerprint scans that are used by the FBI.

After scanning the fingerprints of STCU employees, he will leave for Phoenix for a few days of similar work before heading off to yet another city.

In Washington alone there were some 13,000 people writing mortgage terms when the mortgage crisis erupted. The new regulations and background checks should ensure that those still working are more likely to be honest, Bortner said.