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A new law aimed at fixing Florida’s mortgage fraud crisis could actually lead to more foreclosures. In an attempt to keep con artists and felons from writing home loans in Florida, a new state law is requiring all mortgage councilors to be certified by the state. And as Whitney Ray tell us, it’s putting nonprofit groups in a bind.

10-thousand felons were found writing home loans in Florida, by a 2008 investigation. Some of the felons wrote bad loans, contributing to the housing meltdown. A new state law to keep crooks out of the mortgage business went into effect Friday. The Florida Bankers Association calls it a good start.

“That will certainly help, but the riffraff will always find a way to get under the radar,” said Alex Sanchez, the president of the Florida Bankers Association.

The new law requires loan processors and loan modifiers to be certified by the state as loan originators. Registering with the state subjects lenders to a background check and makes the loans they write easier to track.

But the fix passed by the state legislature is making it harder for nonprofit groups helping people fighting foreclosure. Dozens of HUD Certified Mortgage Councilors are now being told to stop helping their clients. Flora Beal with the Office or Financial Regulation says those who ignore the warning will face stiff penalties.

“It is a felon in the 3rd degree if you are conducting loan modification or services for your clients,” said Beal.

It costs about a thousand bucks to get your certification and takes between three to six months to process. The Office or Financial Regulation says it will consider an exemption for some nonprofit mortgage councilors, but only on a case by case basis.

We contacted the governor’s office to see if there was anything he could do to help the nonprofit groups continue their work, but since the legislature passed the law, it will be up to them to fix it.