The Florida Office of Financial Regulation (OFR) has proposed state law changes that seek to tighten regulation of the mortgage industry, HeraldTribune.com reports. Among the changes proposed are a 2% broker's fee cap and prohibiting originators from including prepayment penalties in mortgage contracts.
The state's mortgage industry came under fire last year, when a Miami Herald investigative report found that more than 10,000 people with criminal backgrounds – many relating to fraud – had been allowed by the OFR to become brokers or originators. A report issued by the Mortgage Asset Research Institute in December showed that Florida had more reported loan misrepresentations than any other state during the second quarter of 2008.
Other changes proposed by the OFR and up for vote during the state's Legislature's next session include requirements that nonblank originators undergo annual criminal background checks and join a national registry of originators. If the changes pass, nonbank originators would also have to contribute to a fund that borrowers can access in the case that fraud has been proven, the HeraldTribune.com reports.