Friday, May 23, 2008

Fingerprint Registry required in Lending Bailout Bill

For anyone related to the mortgage lending business.

Link HT: Flashpoint

Yet earlier this week, a measure creating a federal fingerprint registry totally unrelated to national security passed a U.S. Senate committee almost without notice. The legislation would require thousands of individuals working even tangentially in the mortgage and real estate industries — and not suspected of anything — to send their prints to the feds. The database and fingerprint mandates were tucked into housing and foreclosure assistance bills that on Tuesday passed the Senate Banking Committee by a vote of 19-2.

The measure the committee passed states that “an indvidual may not engage in the business of a loan originator without first … obtaining a unique identifier.” To obtain this “identifier,” an individual is required to “furnish” to the newly created Nationwide Mortgage Licensing System and Registry “information concerning the applicant’s identity, including fingerprints for submission” to the FBI and other government agencies.

[...]

The amendment adopted the fingerprint provisions in a section called the “S.A.F.E. Mortgage Licensing Act.” The fingerprints will be part of what the amendment calls “a comprehensive licensing and supervisory database.”

And the database would cover a broad swath of individuals involved with mortgage lending. The amendment defines “loan originator” as anyone who “takes a residential loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain.” It states that even real estate brokers would be covered if they receive any compensation from lenders or mortgage brokers. Since many jobs in both real estate and mortgage lending are part-time and seasonal, even some of the most minor players in the mortgage market may have to submit their prints.

Justifications listed in the bill for this database include “increased accountability and tracking of loan originators,” “enhance[d] consumer protection,” and “facilitat[ing] responsible behavior in the subprime mortgage market.”