Florida is attempting to curb its fraudulent broker sector with new laws and regulations.

During the housing boom of the mid-2000s, few states experienced the spectacular rise of Florida. Home values and housing starts skyrocketed, and many people – particularly in the mortgage broker industry – earned substantial incomes.

When the market declined, though, it left behind numerous instances of fraud, and the state of Miami, in conjunction with federal law, is pursuing numerous avenues to confront mortgage lawbreaking.

Mortgage brokers, or, loan originators, as they are now called, earn their income by commission; an originator earns roughly 0.5 to 1.25 percent of the loan. According to a May report from the LesixNexis Mortgage Asset Research Institute, Florida accounted for more than 27 percent of all home loans nationally that were investigated in 2010, and a 2008 investigation by The Miami Herald found that Florida had licensed some 4,000 brokers with criminal backgrounds. Abuses were common among the brokers, with many setting up fake buyers to qualify for mortgages and then stealing the money. Overall, the group committed $85 million in fraud.

One of the options Florida has pursued to crack down on fraud is increased regulations. For instance, a new law passed in 2010 placed several restrictions on originators, such as: requiring them to renew their licenses annually; upping the cost of application fees from $50 to $332; increasing renewal costs from $150 to $254; and requiring annual criminal background checks, with automatic disqualification for felons convicted of fraud.

Those state laws work in addition to new federal laws that were recently established. In 2010’s Dodd-Frank Act, for instance, new regulations determine what type of mortgages can be written. Also, the SAFE act, from 2008, requires all loan originators to complete a 20-hour pre-license education and an additional eight hours of education for each subsequent year.

Ironically, for a system that was once defined by its laissez-faire attitude, some originators fear that the recent regulations are too strict.

In a story by The Miami Herald, originator Linda Knowlton said the new laws and requirements can be challenging to deal with.

“There just weren’t any checks and balances in the system,” said Knowlton, vice president of Mortgage Group Services in Fort Myers. “There are now so many it’s sometimes difficult to do your jobs.”