A small group started two years ago to protect borrowers from unethical lending practices now includes 40 members in 16 states. At the same time, lenders are building a database to help identify unscrupulous loan officers before the bad guys can rip off their employers.

Members of first group, the nonprofit Lenders Who Care, adhere to strict guidelines, offer home-buyer education and provide services based on honesty and ethics. Applicants for membership must have two years of experience in the mortgage business and go through a screening process, including a criminal background check.

If accepted, members must adhere to strict standards of conduct and provide borrowers specific information on the affordable loan programs available in their areas. Members must be full-service lenders, offering government as well as conventional loans.

"Lenders Who Care is here to restore ethics and honesty in this industry, and give home buyers someone to trust during the home buying process," said Julie Miller, founder and president of Lenders Who Care and the branch manager of American Home Mortgage's Irvine, Calif., office. "We are like the Good Housekeeping Seal of Approval."

Originally conceived by a small group of mortgage brokers, the organization now includes individual loan officers and consultants who work for such industry giants as American Home Mortgage, US Bank Home Mortgage, Countrywide Home Loans, American Residential, Washington Mutual and Summit Mortgage, according to Miller.

The group, LendersWhoCare.org does not take company-wide memberships. "In every company, there are some loan officers who can be trusted and many who are only looking out for themselves," the organization's public relations representative said.

"Most loan officers are too focused on their own greed to care about the consumer. We identify the honest, fair and reputable individual professionals who are focused on educating the client and putting the client first."

The goal is to have 500 members throughout the country by the end of the year, Ms. Miller said.

"The mortgage industry has many fine professionals," Miller said. "Unfortunately, it is still common for home buyers to get involved with (loan officers or brokers) who are not forthright or ethical in their conduct, leading to predatory lending practices and putting consumers into home loans they can't afford and don't understand."

The group's members are active in Arizona, California, Colorado, Florida, Georgia, Illinois, Michigan, Minnesota, Missouri, Nevada, New Hampshire, New Jersey, New Mexico, Texas, Utah and Washington.

Meanwhile, another new cop on the beat in the war against mortgage fraud, the Coalition Against Broker Fraud, has created a "comprehensive database" on brokers and other financing business insiders known or suspected to have been involved in fraudulent activity.

Finding a name on the list is not tantamount to an immediate indictment, the database's co-founders, Mitch Freifeld and Ron Litt, said, explaining that some people could be listed in error or out of retribution. But it should be enough to give pause to anyone considering using someone whose name is registered, they said.

Seeing a name on the list is a "red flag that you need to go a little deeper into the resume," Freifeld, who is president of Global Net Branch Solutions in Clearwater, FL, said at the National Association of Mortgage Brokers convention in Philadelphia this summer. "We've got to act aggressively. We have to attack."

The co-founders said fraud against loan brokers goes much deeper than the $86 billion in losses estimated by the FBI in 2004. "It's putting entire companies out of business," Freifeld said. "And not just little, mom-and-pop companies, either. Nobody is immune."

Information for the database comes from a variety of sources, according to Litt, president of Advantage Credit in Pensacola. Some comes from the coalition's 15 originating members. And some comes from credit repositories, publically available clearinghouses and "lots of other sources."

The data is melded together at the group's website, fraudcoalition.com, and is available at no charge to members, who are asked to contribute their own suspicions so the registry will remain up-to-date.

Freifeld and Litt said their effort replaces a similar one by the National Association of Mortgage Brokers that "has worked its way to the back burner." An NAMB spokesmen said his group has found it extremely difficult to assemble a clearinghouse of bad actors because each state collects different information, sometimes even collecting the same data differently.

Another grey area, according to Litt, is keeping such information current, as is the quality of background checks being performed on prospective employees. Often, examinations are done too fast and on the cheap, he said. And as a result, it could be months before a criminal activity is listed somewhere, if it is listed at all.

"The data is very disappointing," Litt said. "So there needs to be a force to create some kind of standard. That's what we're attempting. We can prevent fraud before it gets to the quality control department, because once it's there, it's too late. You've already lost money."

Freifeld, who has been arrested on numerous charges, including credit card fraud and bouncing at least one check, said the coalition is his way of atoning for his past transgressions. He and Litt said they paid thousands of dollars of their own money to build the database "because that's how important we think this is."

Fraud "can be stopped, or at least we can slow the trend," he said. "If we can make this work, the industry will be far better off."

The co-founders said they will continue to operate the registry on a gratis basis for the next six-to-12 months. "We will continue to eat" the cost, Freifeld said. "We're not looking to make any money on it. We're looking at this as a way to remain in business."

Published: September 27, 2006

Use of this article without permission is a violation of federal copyright laws.

When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.