Can You Lose Your Ability to Earn a Living If You Have a Criminal Conviction?

When I started doing mortgage broker/lender licensing over 10 years ago, very few states licensed their loan officers. Now, as a result of the federal SAFE Act, every state will be licensing loan officers by July 31, 2010. Some of the states which licensed their loan officers asked about arrests and criminal convictions when you applied for a license, others did not. Even in those states that asked about criminal convictions, there was a lot of leeway for license application reviewers to use their discretion about granting the license depending upon what kind of crime was involved or how long ago your conviction took place. Now every state will ask about your criminal background and require you to submit fingerprint cards to verify that you do not have a criminal conviction.

After the subprime mortgage mess revealed many instances of mortgage fraud, it came to light that there were thousands of loan originators who had criminal records. Some of the criminal convictions were for fraud, embezzlement, writing bad checks and identity theft. The SAFE Act attempts to address this issue by prohibiting anyone who has had a felony conviction within the last seven (7) years or who was convicted of a felony involving fraud, dishonesty, breach or trust or money laundering. Some of the states, in writing their own laws to implement the SAFE Act, have been more stringent in their desire to weed out possible bad apples. Those states have simply prohibited any person from getting approved for a loan originator license if that person has a felony conviction of any type, no matter how far in the past that conviction was.

So, if you were a loan officer in a state that did not inquire about criminal convictions or your felony conviction was for drunk driving or possession of some pot when you were 20 years old, you may have been closing mortgages for 5 or 10 years with no problem. Now, once your state implements the SAFE Act, depending on how strict they want to be, you may not get past the application that needs to be submitted through the Nationwide Mortgage License System. If you indicate that you have been convicted of a felony, the application process might stop right there. And you are now out of a profession. There is no room for leniency or discretion by the state regulators.

So, if you are an employer, be aware that you may be losing some of your loan officers once the SAFE Act comes to your state. If you are a loan officer, I am sorry to say that a felony conviction is one mistake in your life that you may not be able to correct.

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