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The Mortgage Minute--Facts, Figures and Forecasts: If ‘Ifs' and ‘Buts' Were Candy and Nuts ...

National Mortgage Professional
Jan 14, 2003

Keeping the Workplace Safe With Background ChecksNick Fishmanbackgorund checks, pre-employment screening, unethical business practices, High-Risk Home Loan Act The practice of conducting effective pre-employment screening for prospective employees has exploded in the workforce over the last 10 years. The need to hire the most qualified candidates has never been greater, nor has the inherent risk in hiring the wrong applicant. Employers owe it to themselves and their customers to know everything they can about their employees, and the most effective method to accomplish this is a background check. Workplace crime and unethical business practices are on the rise. The cost of internal employee theft is bleeding both large and small businesses, and has become a multi-billion dollar drain to our economy. Negative publicity, especially as the result of a less-than-thorough background check, can devastate the very foundation of a trusted company. And it is no different within the mortgage lending industry. Like every industry, there are opportunities for criminal, fraudulent and unethical behavior within the labor pool. We have all heard stories about workplace violence and theft, and there are more reports of predatory lending practices and fraudulent lending schemes than ever before. An effective background check can limit the opportunity for these instances. By addressing an applicant's past, an employer can determine if they are predisposed to engage in these activities. In Illinois, for example, not only is it good business to conduct a background check, but it will soon become mandatory with the implementation of the High-Risk Home Loan Act. This law mandates that all loan originators must submit to a background check in order to be certified as the employee of an approved lender. Laws such as this are springing up across the country and are designed to protect both business owners and consumers. But what is an effective method of conducting a relevant check? The term can refer to a wide array of services and practices, but there are some basics that must be followed in order to obtain the most accurate and concise information. To begin with, the best method is to go directly to the county courthouse where the person has resided for the past seven years. It is also acceptable and recommended to check maiden and alias names in each county as well. More expensive? Yes, but the alternative is a database search which is comparable to searching for a needle in a haystack. Contrary to popular belief, an applicant does not have to supply you with all of this information in order to find it. Once an applicant has agreed to submit to a check and provides their social security number, a search can be done to determine all past and present names and addresses. While the criminal check seems to be the sexy component of a background check, there are other equally important elements. In the case of a loan originator, an employer might want to conduct a credit check as well, in order to verify education, employment and/or professional licenses. Remember: a resume tells an employer what an applicant wants them to know. It is a sales tool designed to show all of the applicant=s benefits and none of their shortcomings. Background checks can verify this information and, more importantly, reveal significant withheld information, such as employment dates, salary and diplomas received. Once all of the information is obtained, it is up to the discretion of the hiring party to decide if the applicant is qualified for employment. A negative incident does not necessarily disqualify a potential employee, but the employer will be armed with all of the information necessary to make an informed decision. Professionals in the pre-employment screening industry realize that mandated checks are likely to be met with skepticism and anger, but you should view them as a blessing for your business. Remember, your liability and personal injury insurance can cover any damages. What it cannot recover is your reputation. The last thing that any company needs is negative publicity from the media or through word of mouth. Conducting a background check does not guarantee that such incidents will not occur. However, it can limit the risks inherent in owning a business. Nick Fishman is vice president of sales and marketing for Cleveland-based Background Information Services Inc. He may be reached by e-mail at [email protected].
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