The South Carolina Department of Consumer Affairs is pushing for tighter regulation of its mortgage lenders and brokers as part of a statewide crackdown on mortgage fraud.

After being identified as a national hot spot for mortgage fraud, South Carolina recently established a task force that includes the Federal Bureau of Investigation, the Secret Service, and the U.S. Attorney's Office for South Carolina.

Also, the state's Department of Consumer Affairs released a report this month detailing the scope of the problem and suggesting ways to prevent it. The report identified the state's lax oversight of mortgage brokers and lenders as a top concern.

"It's kind of like the Wild Wild West, only we're in the South," said Charles Knight, a staff attorney for the Department of Consumer Affairs.

South Carolina law permits mortgage bankers to conduct most forms of business without a license and does not require them to pass a criminal background check.

It is one of only eight states in the country that does not regulate mortgage bankers and lenders. (The others are Alabama, Alaska, Colorado, Indiana, Montana, North Dakota, and Ohio.)

Mortgage brokers are required to obtain a license, but such certification is not tied to prelicense testing or education, and background checks are run against only the state's criminal database — not the FBI's.

Mr. Knight said that his department is working with state lawmakers to introduce a bill that would establish a licensing process for mortgage bankers and tighten licensing requirements for mortgage brokers.

Though the bill has not yet been introduced, he said he is confident it will be soon. "There have been some members of the General Assembly, I think, that would very definitely sign on to something like this."

The department said in its report that it is also working with the American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors to develop a national Web-based licensing system in an effort to "curb fraudsters and bad actors from moving from one state to another, as they do now."

Mortgage fraud has become a growing concern for law enforcement officials throughout the United States.

The Financial Crimes Enforcement Network said in a November report that the number of suspicious activity reports regarding mortgage fraud increased from 1,318 in 1996 to nearly 26,000 in 2005.

The number of FBI cases on mortgage fraud jumped from 436 in 2003 to 818 last year, the bureau said in its 2006 Financial Crimes Report.

The issue has been particularly disconcerting in South Carolina, a state that was singled out in the FBI report as one of the 16 top states in the for mortgage fraud activity in the country.

"The South Carolina Attorney General further indicates that South Carolina has directly and disproportionately been targeted for this type of fraud," the Department of Consumer Affairs said in its report.

Mortgage fraud is generally broken into three categories. Fraud for property occurs when a borrower provides false information on a loan application to obtain credit that the borrower otherwise might not be able to obtain. Fraud for profit usually involves housing or mortgage industry insiders, who use identity theft, straw buyers, forged documents, or other misrepresentations to engage in fraudulent schemes. Mortgage fraud also can be used to launder money.

But support for increased regulation of mortgage brokers and lenders is far from unanimous.

Rhonda Marcum, the president of the Mortgage Bankers Association of the Carolinas Inc., said that increasing education and licensing requirements for mortgage brokers and lenders would not lead to less fraud.

"When I look at the laws that we are currently faced with in South Carolina, fraud is prohibited," Ms. Marcum said. If "we add laws to enforce laws that are not being enforced today, that doesn't make a great deal of sense to me."

(Ms. Marcum said that she was speaking as an individual mortgage lender, and not on behalf of the Mortgage Bankers Association of the Carolinas, which will wait for the legislation to be introduced before taking a position on the issue.)

She also said that increased education could actually lead to more mortgage fraud.

"Originators and lenders, by learning more about fraud, have an equal opportunity to learn how to commit it," Mr. Marcum said.

But Mr. Knight said that the increased regulation would act as a deterrent to would-be fraudsters. If he were a fraudster, "I would go somewhere else where there is lax regulation."

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