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Ban On Felons Won't Fix Mortgage Mess

The Tampa Tribune

Published: August 18, 2008

When the Clemency Board last year approved Gov. Charlie Crist's proposal to automatically restore the voting rights of most felons, Attorney General Bill McCollum was the lone holdout. Now in the wake of the state's mortgage-broker scandal, McCollum is again painting all ex-offenders with a broad brush.

The attorney general says anyone convicted of a felony should be prohibited from working as a mortgage broker, no matter whether their conviction stemmed from a DUI or a custody dispute. McCollum may feel he is being tough on crime, but his hard-line stance comes off as vindictive. Communities aren't made safer by preventing ex-prisoners from finding work.

Besides, protections are in place; they just weren't being followed.

An investigation by The Miami Herald last month revealed that from 2000 to 2007, regulators approved 10,529 people with criminal records to work in the mortgage profession. Some of these criminals committed nearly $85 million in mortgage fraud.

The newspaper found that regulators were ignoring a 2006 state law that requires criminal background checks on mortgage brokers.

Without question, felons who engaged in theft or fraud should be barred from the lending industry, but a blanket ban on all ex-felons is too heavy-handed considering what qualifies as a felony these days.

Besides, lawmakers share the blame for creating a special job category - loan originator - that performs the same functions as a broker, but is not licensed or subjected to background checks.

Last year the governor's office estimated that 515,000 Florida felons had committed crimes that would qualify for automatic restoration of civil rights after their time was served. It would be wrong to automatically ban half a million people from the mortgage industry if their crimes had nothing to do with the business.

Chief Financial Officer Alex Sink has, like McCollum, come out for more scrutiny on licensing, but she believes reform should come from the Office of Financial Regulation, not the attorney general. Repairing this problem requires a scalpel, not an ax.

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