National Mortgage License System Planned

The mortgage industry is taking a lot of heat for the record numbers of borrowers with weak credit who are losing their homes.

But starting next year, state regulators will have an easier way to supervise the companies and individuals who have been criticized for helping put people in houses they can't afford.

The Nationwide Mortgage Licensing System is being developed by two industry groups, the Conference of State Bank Supervisors and the American Association of Residential Mortgage Lenders, to accept and process license applications and renewal forms online.

They say the system will help standardize licensing requirements across the nation. It should also make it easier for regulators to identify and punish fraudulent or unqualified lenders.

The system is coming online as the number of subprime borrowers losing their homes continues to mount. The percentage of adjustable-rate subprime loans entering the foreclosure process jumped to 3.3% during the first quarter from 2.7% in the fourth quarter of 2006, according to a survey by the Mortgage Bankers' Association.

Critics say mortgage lenders and brokers were too aggressive in pitching highly profitable loans with risky terms such as low, introductory 'teaser' rates. Many of these borrowers, who are already financially vulnerable, are having trouble making payments now that the rates have reset.