Senate Committee Votes To Fingerprint Lenders

tjstork recommends a blog post up at Openmarket.org on the passage by a Senate committee of a fingerprinting provision in a foreclosure assistance bill. The provision would require thousands of people connected with the mortgage industry, even tangentially — possibly including part-time and seasonal real estate agents — to send fingerprints to the feds for storage in a database. No explanation is in evidence as to how this would help the problem of loan fraud. The measure passed the Senate Banking Committee by a bipartisan majority of 19 to 2. "The measure the committee passed states that 'an individual 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."

Seems to me..

[hansraj]

that all the problems these days can be solved either by litigating or by making laws enabling the government to collect more and more personal information.

This panacea coming to the country near you soon.. stay tuned!

My suspicion

[CyprusBlue113]

This just looks like a subtle way to destroy Prosper.com

Police states and the sad case of Fritz Thyssen

[westbake]

Those of you who think you can make a buck off a police state would do well to remember learn the fate of Fritz Thyssen [wikipedia.org]. He was an industrialist and early supporter of Adolf Hitler, in part financed by Prescott Bush [prlog.org]. He made plenty of money re arming Germany and he approved of racial purity laws. By the time he realized the Nazis believed all of the crazy things they said, it was too late for him to do anything about it. He was thrown into a concentration camp and was lucky to survive the wars he did not approve of. If you don't think the Neocons are just as crazy as the Nazis you have not been listening to them long enough [stallman.org].

double edged sword

[owlnation]

Hmmm, there's a few aspects to this...

1. Does it prevent loan fraud -- nope, of course not. Surely no-one with even passing insight into the issue would think otherwise.
2. It does, however, cause banks some hassle. And, aside from the legal profession, there are fewer institutions on Earth that deserve hassle more than bankers (which rhymes with .....?)
3. The downside of that though is that you can bet the associated charges (real or imagined by banks) will be passed on to the consumer.
4. It will further desensitize Joe Sixpack into thinking, "well, maybe fingerprinting people for ......(insert any profession you like here) is ok after all, I mean bankers have to do it"

Re:Typical American Response. Ignore the real prob

[fermion]

This is the excuse that the mortgage industry uses. It is why friends of mine, with six figure incomes, could not secure housing until they went to their proper part of town. It is why lawsuits were filed against financial officers at auto dealers for engaging in a pattern of offering loans at higher rates than equally qualified person who were of a more desirable color. The excuse still works, but is getting old given the median income in all racial groups is enough to own at least a modest home.

In any case, I don't think loaning to minorities is causing the current issues. For one thing, I don't think that so-called minorities are the primary people who speculated on property in florida, and other places, assuming that the price would go up by the time that development was finished and they could flip for a quick profit. Why banks would lend to such speculators, often with no obvious source of income, is beyond me. Furthermore, the NYT published a graphic on the largest foreclosures, and the cities are not those one associates with urban minority populations. Place like Merced, minneapolis, fort myers. Though these do have the minority population, and everyone has to take blame, the finance industry blaming it on government regulation is just weak.

This is why. Many years ago, Texas has a good regulation. The regulation was based on the idea that a persons home was not a liquid asset, but a vital possession. As such, texas allowed a person a great deal of protection to keep the home. The taxes would be fixed after 65. Your home could not be easily foreclosed or taken in a bankruptcy. In many jurisdictions taxes are easily disputed so people would not lose their houses due to excessive taxes. In exchange for these protections, Texans did not have the right to home equity loans.

That is until the financial industry bought out the Administration of George Bush and won his support to change the law. We now have a state of speculators instead of home owners. Prices went through the roof(tripled in 8 years) because the financial speculators wanted them to. Homeowner lost their house to due high taxes. Speculators moved in, borrowed against the house, and then moved out when they could not borrow leaving a blighted block. this was not due to government regulation forcing mortgage companies to loan to minorities. This was a calculated attack on the home owner back bone of america.

The sad thing is that the financial industry has made it bag of gold, and now is crying foul. Many of the mortgage holders are walking away, which they should, and the financial industry doesn't like it. Instead of renegotiating loans, they are begging the government for a bailout. It is sad. Those of us with eyes saw what was happening all those years ago, but all anyone else could see is free money. Now, as always, they are blaming it on regulation and minorities. The fact that the mortgage brokers were greedy bastards had nothing to do with it.

I for one...

[fuzzyfuzzyfungus]

Am glad to have this valuable reminder that fraud is something that little people do. Seriously, does anybody actually believe that the architects of our current lending debacle are a bunch of two-bit conmen running around with cheap suits and suitcases full of fake IDs?

Re:Solves *A* problem

[alexander_686]

Oddly enough, you can do that already. Itâ(TM)s called a non-recourse loan. If you want one all you have to do is go down to your bank and ask for it. Corporations do it all the time. The reason why you donâ(TM)t hear about these loans is that the interest rates are higher and the down payment requirements are larger. It makes no sense for the average person it do. And let us just remember two things. First â" countries that have strong laws protecting the borrow tend to have higher interest rates. If the bank is going to assume extra risk for declining property values they will need to be compensated. Second â" those evil sub prime loans are reasonable for dragging millions of people in poverty into middle class home ownership. Yeah, the past few years the party got out of hand. Changes are needed, but no reason why you need to toss the baby out with the dirty bathwater. By the way, change does not mean doing random things â" like fingerprinting. I have worked in the securities industry compliance area and I have been fingerprinted. People committing securities fraud do not go to jail because of fingerprints. For a real life experience, not much help at all. Sigh, these goes a little more humanity for nothing.

Re:Knee-jerk

[UncleWilly]

I've heard information otherwise. Like giving multiple no-money-down-cash-back mortgages to people with no visible means of support, then they turn around and sell the mortgages to 'Wall Street'. I hear in the greater Chicago area you can easily find the same name half a dozen times on the "abandoned house list" of homeowners. It seems more like this was a grass-roots organized crime activity which the support industries were complicit with. Not to say that good people have not been caught up by not understanding what they were signing (adjustable rate mortgages, balloon payments) which is unfortunate. Kind of like the stock market crash of 1929 and the reverberations it caused world wide, but not nearly so bad this go around.

California already does this

[Anonymous Coward]

Interestingly enough, California already does this. When I got my real estate license 5 years ago I was required to submit LiveScan fingerprints to them. And last year when I began working for a government contractor I initially was declined a security clearance because my fingerprints came up in a DOJ database. Had to argue with them to stop and actually look at WHY the fingerprints were in there to begin with. They just assumed that because my fingerprints were on file with the DOJ it was due to something criminal. On another note, consider that I originally filed my fingerprints as part of a STATE licensing requirement. They then showed up in the Department Of Justice's files even though I had never been fingerprinted before for any other reason other than a drivers license. Why does the federal government get access to my fingerprints even though I have never been convicted of a crime? They are consolidating information on every single one of us.