It appears that one state is finally going to officially ban some felons that are still currently originating/selling mortgages in Florida.

Beginning next year, former bank robbers, felons, and those individuals indicted for mortgage fraud will no longer be able to sell mortgages in the state of Florida.

According to the Miami Herald, Governor Charlie Crist is expected to sign new legislation that calls for annual criminal background checks on those selling mortgages in the ˜Sunshine State'.

Along with submitting annual background checks, brokers will have their fingerprints screened by the state and the FBI, with those convicted of felonies involving fraud or money laundering permanently banned from the industry.

However, it appears that misdemeanors for fraud and theft may only carry five year bans, while some other felonies will draw a seven-year ban ... at least it will sideline them for awhile.

Brokers will also be required to submit their personal credit reports annually to the sates and must disclose bankruptcies past or present.  Also, all those selling loans will need to be registered with the Nationwide Mortgage Licensing System (NMLS).

An investigation conducted by the Miami Herald last year found that one in four mortgages was "tainted with fraud" in 2007, in part due to the 10,000 former criminals were allowed to sell mortgages..

The annual checks will be aimed at weeding out currently licensed mortgage brokers, as the newspaper found 564 workers were convicted of crimes after licensure, including 20 for mortgage fraud, who were still able to continue selling loans.

The new bill, will also create a special state fund to compensate victims if they successfully sue their mortgage banker/broker, but are unable to collect because of insolvency; the funds would come from loan application fees.

The new regulations are supposedly the toughest in the country and represent the biggest changes to the state's mortgage laws in roughly 50 years.

It will be interesting to see how many states will follow this aggressive legislation - all of the states I hope.