CHEYENNE - The number of licensed mortgage brokers and lenders in Wyoming decreased by more than 20 percent last year compared to 2006, according to the state agency that oversees the industry.

The decline is in part the result of the state not renewing the mortgage licenses of vendors whose lending practices violated state or federal law, said Jeffrey Vogel, Wyoming’s banking commissioner.

He said others voluntary handed in their licenses because they did not have enough business.

Starting July 1, the oversight of who is authorized to work in the mortgage industry in Wyoming is due to become more stringent. That is when amendments to the Wyoming Residential Mortgage Practices Act go into effect.

Those involved with the legislation passed this year say the most important change is the authorization to perform a national criminal background check, complete with fingerprinting, on license applicants. State officials are specifically looking to see if an applicant has been convicted of a misdemeanor or felony related to the financial sector.

“We need to know what they’ve done outside the state before they come into Wyoming to do business with residents,” Vogel said.

The amended law gives Wyoming the authority to participate in the National Mortgage Licensing System, which includes a database that allows regulators to view the history of mortgage companies and individual brokers and lenders.

When applicants previously sought a license, they were asked to voluntary divulge and explain their relevant criminal history. The ability to share information with other states was limited.

David R. Johnson, executive director of the Wyoming Bankers Association, said the association fully supports the increased accountability.

“We think knowing who you’re doing business with and something of their business record and past history is very important, and this bill allows that to happen,” he said.

At last count, Johnson said, 42 states, including Wyoming, had either signed up for the national registry or passed legislation to participate in the database.

State Rep. Amy Edmonds, R-Cheyenne, is a member of the Joint Minerals, Business and Economic Development Interim Committee, which sponsored the legislation.

Edmonds said in debating the law, legislators weighed the responsibility between protecting consumers from dishonest mortgage dealers and not making the requirements too stringent that it will be difficult for small lenders to stay in business.

She believes the legislation accomplishes both objectives by preventing companies from coming into Wyoming, fleecing prospective homeowners with a mortgage and then leaving the state.

“That’s the biggest pressure a family is going to make during their lifetime, and we want to make sure we’re protecting them,” she said.

In 2005, there were 444 state-licensed mortgage brokers and lenders in Wyoming. The number jumped to 1,196 in 2006 before dropping to 926 at the end of last year, according to the Banking Division within the Wyoming Department of Audit, which oversees the issuance and annual renewal of the licenses.

Vogel explained that the small number in 2005 was due to the Wyoming Residential Mortgage Practices Act not going into effect until July 1 that year.

During the third quarter of 2007, Vogel said Wyoming had one of the lowest foreclosure rates in the nation, based on a compilation of statistics by RealtyTrac.com, the Federal Reserve and the Mortgage Brokers Association.

“I don’t see a big number escalation in the number of foreclosed-upon properties in Wyoming,” he said.

The recent amendments to the act may not be the end of refining the state’s licensing standards. There currently is no uniform requirement for applicants to have education specific to the lending industry.

“That’s something that will probably need to be out there in the future,” Vogel said.