There are lots of proposed remedies to prevent another mortgage catastrophe like the one we’re going through now. Most of the suggestions I’ve seen won’t fix the loopholes that allowed so many borrowers to take on mortgage loans they couldn’t afford.

But there is one solution that may help stem fraud in the mortgage industry, and it could reduce the number of unscrupulous or unlicensed brokers and loan officers who move from state to state preying on borrowers.

The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators have launched the Nationwide Mortgage Licensing System, which is designed to help state licensing officials keep track of individuals and companies responsible for arranging mortgage loans.

The system streamlines the regulatory process by allowing state-licensed mortgage lenders, brokers and loan officers to use one form to apply for, amend, update or renew their licenses online.

The registry brings uniformity and transparency to the mortgage industry without impairing the ability of states to approve, deny, suspend or revoke licenses.

Often unsavory individuals and companies can continue their unlawful business practices because there are no uniform mortgage licensing rules.

What they are prohibited from doing in one state might be allowed in another. Some states have tough mortgage laws; others do not.

Clearly, this new registry won’t catch people who choose to escape detection by not applying for a license. But the database could be used by responsible lenders, brokers and eventually consumers to check whether someone who claims to have a state license to arrange mortgage loans actually does.

“It’s incredible how much mortgage fraud is out there and how pervasive it is,” said Bill Matthews, senior vice president of the Conference of State Bank Supervisors, which owns and operates the Nationwide Mortgage Licensing System.

With the mortgage registry, brokers, lenders and loan officers fill out a comprehensive application that can be forwarded to states participating in the system. As part of the process, applicants have to disclose a great deal of information ranging from their Social Security number to any criminal or civil actions against them. They also must provide fingerprints and identify affiliations with industry companies such as lenders, brokerages and title companies.

The database is also designed to track individuals or companies that do business under various names.

“From this single record it allows the regulators to see the entity exactly the same as other regulators,” Matthews said in an interview. “A uniform application increases the breadth and depth of information available.”

What a great tool this will be once all the states participate.

Imagine state investigators being able to check the status of a questionable applicant nationwide without having to search databases in 50-plus jurisdictions.

This uniform licensing source will be a crucial tool for regulators trying to determine if someone is participating in an unlawful activity that got them banned from mortgage activity in another state.

So far, seven states – Idaho, Iowa, Kentucky, Massachusetts, Nebraska, New York and Rhode Island – are participating in the mortgage registry, which was launched online in January. By year’s end, 18 state agencies are scheduled to be part of the system, although 42 state agencies representing mortgage regulators in 40 states have indicated their intent to come on board.

Matthews said he expects all 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands to be part of the registry in the next three to five years. By 2009, consumers will have access to the database, he said.

I know it takes time to get such a system up and operating, but I certainly hope the states that intend to join do so quickly. Those who haven’t made a commitment should race to participate. This type of oversight is badly needed.

A lot of criticism for the mortgage mess has fallen on borrowers – and rightfully so. Many did not do their research and didn’t read their closing documents carefully or crunch the numbers long-term to see if they could afford their loans.

Still, some blame should be placed on brokers, lenders and front-line loan officers (some of whom were unlicensed) who pushed mortgage products on borrowers without adequately explaining the terms. The nationwide licensing system can go a long way to weed out these players.

It’s not a perfect system. For one, the registry doesn’t include the professionals working for federally insured banks, thrifts and credit unions. Still, the database is a better regulatory net than we have now.

We’ve had a lot of pompous proclamations of what should be done to avoid a repeat of the current mortgage disaster. At least this new system may actually provide much-needed consumer protection.