Joe Wilson's Silicon Valley Real Estate Blog

New licensing rules for mortgage brokers that take full effect Jan. 1 aim to prevent some of the fraud and abuse that helped cause the subprime mortgage crisis.

Brokers and mortgage bankers will now have to be licensed and listed in a searchable federal database in order to take residential mortgage applications or negotiate loan terms. The law exempts those who work for banks that take customer deposits.

The hope is that the new rules will professionalize an industry that swelled during the real estate bubble with people who had little experience or education, and in some cases were outright criminals.

"It really should help keep the bad actors out of the business," said Tom Pool, a spokesman for the California Department of Real Estate. "For consumers, it gives them the ability to go in and check out who they are dealing with."

Advocates said the new requirements should help protect consumers.

"The anecdotal evidence suggests mortgage brokers were at least indirectly responsible for the bad lending that occurred," said Kevin Stein, associate director of the California Reinvestment Coalition.