Your Papers, Please!

I recently received an e-mail from the St. Louis Association of Realtors detailing a new policy being implemented by the Missouri Real Estate Commission (the official governmental board regulating real estate practices).  In the next licensing period, anyone licensed to sell or rent real estate will have to be fingerprinted and the fingerprints -- along with a tougher background check -- kept on file with both the state police and the Federal Bureau of Investigation.  Of course, I will have to pony up $52.20 for this singular honor.

Granted, other states have had this provision, but why implement it in Missouri now?  There didn't seem to be a pressing need for this reform at this time, yet it was implemented anyway.  And although the MREC claims to have held meetings and taken comments, few people I know in the field were aware of this planned change.  There really doesn't seem to be a pressing need to treat people in the housing industry like common criminals; that should be reserved for felons, congressmen, and lawyers in general.

Well...

In 2008, Congress passed the S.A.F.E. Mortgage Licensing Act, which mandated, among other things, a national fingerprint database for anyone having anything remotely to do with originating home loans.

While this was aimed at mortgage brokers, it seems clear that state commissions are implementing this for sales/leasing licensees in anticipation of a new federal mandate.

SAFE requires (I love that word; it means forces, but sounds softer) states to develop a "Model State Law" for regulation of the mortgage industry and establishes a national database that includes fingerprints for anyone dealing with the origination of a mortgage.  HUD is to administer this plan.

The model law is designed to compel uniformity of regulations across the country.  While states are free to reject the law, it is made abundantly clear that HUD money may be less forthcoming to states that operate independently of the system -- and HUD money makes up the lion's share of the market.  In short, the feds want to set the standards but make the states actually do the dirty work.

The Nationwide Mortgage Licensing System (NMLS) will likewise review all educational and licensing requirements for mortgage brokers.  In short, SAFE may not have nationalized the lending industry, but it clearly placed it under the thumb of the federal government; every mortgage lender (except for some non-insured credit unions) has to register and be approved by the NMLS.

Here is a good analysis of the SAFE Act and why it puts realtors in the crosshairs.

The bottom line is this:

Well, I find illustrative the following Commentary on the Model State Law by HUD:

The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry for the purpose of achieving the following objectives:

(1) Providing uniform license applications and reporting requirements for state licensed-loan originators;

(2) Providing a comprehensive licensing and supervisory database;

(3) Aggregating and improving the flow of information to and between regulators;

(4) Providing increased accountability and tracking of loan originators;

(5) Streamlining the licensing process and reducing regulatory burden;

(6) Enhancing consumer protections and supporting anti-fraud measures;

(7) Providing consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators;

(8) Establishing a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the consumer;

(9) Facilitating responsible behavior in the subprime mortgage market place and providing comprehensive training and examination requirements related to subprime mortgage lending;

(10) Facilitating the collection and disbursement of consumer complaints on behalf of state mortgage regulators.

The new standards, as well as the uniformity and consistency of such standards, directed to be established nationwide by the SAFE Act present a significant step in the effort to increase integrity in the residential mortgage loan market, enhance consumer protections, and reduce fraud. (Emphasis added)

Endquote from HUD

All but one of those objectives (#9) would apply with equal force to real estate agents, who are also licensed by each State as mortgage originators used to be.  Uniform licensing requirements?  Isn't this something even some in the industry has been clamoring for?  Establishing a means by which residential brokers would, to the greatest extent possible, be required to act in the best interests of the consumer?  Isn't that the point of fiduciary duty of the realtor?  Providing increased accountability and tracking of real estate brokers?  Seems to me the argument applies with equal force.

licensing - a huge part of the "Raise the Bar" (or #RTB) movement wants higher standards, tougher requirements, more education, and so on.  Dale Stinton himself has suggested that the industry needs to raise the bar for what it means to be a real estate licensee.

Given the sentiment of some consumers about their realtors, arguing against "greater accountability" for real estate agents strikes me as a difficult hill to climb in any event."

Of course, NAR (the National Association of Realtors) may decide that a Federal licensing scheme and a registration database is a step too far, and wield its considerable political power to oppose such a thing.  But is this a battle NAR would even choose to fight?

After all, a number of people within the industry has been asking for higher standards on real estate[.]

It strikes me that somebody in Jefferson City is preparing for a federal regulatory scheme over real estate professionals.

This bespeaks of a larger problem than just some real estate professionals being inconvenienced; the FBI will have access to the fingerprints of anyone practicing real estate in Missouri, and I doubt they will destroy the files after they are done checking.  It is a national epidemic; there are movements requiring fingerprinting in the insurance industry, in education, in daycare, in medicine, etc.  While this may aim toward a noble end, it conditions the public to think that governments have a right to very personal information -- exactly what can be found in most totalitarian nations.  How long before a national ID number is issued?  How long before every citizen must present his papers to any official who asks?  How long before we implant chips, or laser-tattoo bar codes on the citizenry?  This is not idle speculation; few think anything of using their Social Security number as an identification mark, despite the fact that there was great anger at the issuance of this number when Social Security was established.  It has become the norm; how long before fingerprinting becomes the norm?

How long before a national database is established to keep tabs on the citizenry?

It could happen quicker than we expect.  The Obama administration is proposing an ID number for using the internet.

Now, the public is quite upset with the TSA for "enhanced security" checks at the airport, yet that was predictable when government took over control of airport security; the DMV came to the checkpoint.  (I wonder if I will have to submit to a full-body cavity search when getting fingerprinted.)  Americans are routinely being forced to surrender their liberty and privacy to an ever-intrusive government.  (I wonder if Barack Obama would submit to such indignities; he has refused to release any personal information, including his birth certificate, and has paid out huge amounts of money for the privilege.)  A national database of personal information is guaranteed to be abused.  Such is the stuff of tyranny.

And tyranny never begins with the big things, but with the small, and there is always some public good to be served.  Now, I am prepared to be printed and perhaps even have my "junk" examined by some over-zealous TSA worker moonlighting as a fingerprinter, but I shouldn't have to, and the public should understand the very slippery slope we are skipping down.

(Thanks to Jack Kemp for reviewing this and making some excellent suggestions.)
I recently received an e-mail from the St. Louis Association of Realtors detailing a new policy being implemented by the Missouri Real Estate Commission (the official governmental board regulating real estate practices).  In the next licensing period, anyone licensed to sell or rent real estate will have to be fingerprinted and the fingerprints -- along with a tougher background check -- kept on file with both the state police and the Federal Bureau of Investigation.  Of course, I will have to pony up $52.20 for this singular honor.

Granted, other states have had this provision, but why implement it in Missouri now?  There didn't seem to be a pressing need for this reform at this time, yet it was implemented anyway.  And although the MREC claims to have held meetings and taken comments, few people I know in the field were aware of this planned change.  There really doesn't seem to be a pressing need to treat people in the housing industry like common criminals; that should be reserved for felons, congressmen, and lawyers in general.

Well...

In 2008, Congress passed the S.A.F.E. Mortgage Licensing Act, which mandated, among other things, a national fingerprint database for anyone having anything remotely to do with originating home loans.

While this was aimed at mortgage brokers, it seems clear that state commissions are implementing this for sales/leasing licensees in anticipation of a new federal mandate.

SAFE requires (I love that word; it means forces, but sounds softer) states to develop a "Model State Law" for regulation of the mortgage industry and establishes a national database that includes fingerprints for anyone dealing with the origination of a mortgage.  HUD is to administer this plan.

The model law is designed to compel uniformity of regulations across the country.  While states are free to reject the law, it is made abundantly clear that HUD money may be less forthcoming to states that operate independently of the system -- and HUD money makes up the lion's share of the market.  In short, the feds want to set the standards but make the states actually do the dirty work.

The Nationwide Mortgage Licensing System (NMLS) will likewise review all educational and licensing requirements for mortgage brokers.  In short, SAFE may not have nationalized the lending industry, but it clearly placed it under the thumb of the federal government; every mortgage lender (except for some non-insured credit unions) has to register and be approved by the NMLS.

Here is a good analysis of the SAFE Act and why it puts realtors in the crosshairs.

The bottom line is this:

Well, I find illustrative the following Commentary on the Model State Law by HUD:

The SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry for the purpose of achieving the following objectives:

(1) Providing uniform license applications and reporting requirements for state licensed-loan originators;

(2) Providing a comprehensive licensing and supervisory database;

(3) Aggregating and improving the flow of information to and between regulators;

(4) Providing increased accountability and tracking of loan originators;

(5) Streamlining the licensing process and reducing regulatory burden;

(6) Enhancing consumer protections and supporting anti-fraud measures;

(7) Providing consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators;

(8) Establishing a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the consumer;

(9) Facilitating responsible behavior in the subprime mortgage market place and providing comprehensive training and examination requirements related to subprime mortgage lending;

(10) Facilitating the collection and disbursement of consumer complaints on behalf of state mortgage regulators.

The new standards, as well as the uniformity and consistency of such standards, directed to be established nationwide by the SAFE Act present a significant step in the effort to increase integrity in the residential mortgage loan market, enhance consumer protections, and reduce fraud. (Emphasis added)

Endquote from HUD

All but one of those objectives (#9) would apply with equal force to real estate agents, who are also licensed by each State as mortgage originators used to be.  Uniform licensing requirements?  Isn't this something even some in the industry has been clamoring for?  Establishing a means by which residential brokers would, to the greatest extent possible, be required to act in the best interests of the consumer?  Isn't that the point of fiduciary duty of the realtor?  Providing increased accountability and tracking of real estate brokers?  Seems to me the argument applies with equal force.

licensing - a huge part of the "Raise the Bar" (or #RTB) movement wants higher standards, tougher requirements, more education, and so on.  Dale Stinton himself has suggested that the industry needs to raise the bar for what it means to be a real estate licensee.

Given the sentiment of some consumers about their realtors, arguing against "greater accountability" for real estate agents strikes me as a difficult hill to climb in any event."

Of course, NAR (the National Association of Realtors) may decide that a Federal licensing scheme and a registration database is a step too far, and wield its considerable political power to oppose such a thing.  But is this a battle NAR would even choose to fight?

After all, a number of people within the industry has been asking for higher standards on real estate[.]

It strikes me that somebody in Jefferson City is preparing for a federal regulatory scheme over real estate professionals.

This bespeaks of a larger problem than just some real estate professionals being inconvenienced; the FBI will have access to the fingerprints of anyone practicing real estate in Missouri, and I doubt they will destroy the files after they are done checking.  It is a national epidemic; there are movements requiring fingerprinting in the insurance industry, in education, in daycare, in medicine, etc.  While this may aim toward a noble end, it conditions the public to think that governments have a right to very personal information -- exactly what can be found in most totalitarian nations.  How long before a national ID number is issued?  How long before every citizen must present his papers to any official who asks?  How long before we implant chips, or laser-tattoo bar codes on the citizenry?  This is not idle speculation; few think anything of using their Social Security number as an identification mark, despite the fact that there was great anger at the issuance of this number when Social Security was established.  It has become the norm; how long before fingerprinting becomes the norm?

How long before a national database is established to keep tabs on the citizenry?

It could happen quicker than we expect.  The Obama administration is proposing an ID number for using the internet.

Now, the public is quite upset with the TSA for "enhanced security" checks at the airport, yet that was predictable when government took over control of airport security; the DMV came to the checkpoint.  (I wonder if I will have to submit to a full-body cavity search when getting fingerprinted.)  Americans are routinely being forced to surrender their liberty and privacy to an ever-intrusive government.  (I wonder if Barack Obama would submit to such indignities; he has refused to release any personal information, including his birth certificate, and has paid out huge amounts of money for the privilege.)  A national database of personal information is guaranteed to be abused.  Such is the stuff of tyranny.

And tyranny never begins with the big things, but with the small, and there is always some public good to be served.  Now, I am prepared to be printed and perhaps even have my "junk" examined by some over-zealous TSA worker moonlighting as a fingerprinter, but I shouldn't have to, and the public should understand the very slippery slope we are skipping down.

(Thanks to Jack Kemp for reviewing this and making some excellent suggestions.)

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