"We wanted to make tougher to be in this business, and it's working,"
                            ~ MN Commerce Department spokesman Bill Walsh

Word.

Minnesota's tougher mortgage industry regulation, passed into law last year, seems to be having the desired effect: Brokers are forfeiting licenses, and there is a fairly broad consolidation move afoot as smaller brokers and their employees are being absorbed by larger, more established local and national outfits.  From the Star-tribune:

The state's 1,319 active originators last week were down from more than 4,000 last year at this time. Many of them surrendered their licenses after new state laws aimed at making it tougher to be in the mortgage business were implemented last year.

On thing to keep in mind here is that less originator licenses don't necessarily mean less people in the business.  Assuredly, many marginal loan originators have simply left the business, particularly in the sub-prime and Alt-a space, but many of these folks simply have merged or consolidated with other lenders, or banks, and no longer needed a separate, stand alone license.

If being hounded by lenders with questionable motives and expertise isn't enough to steer you away from "Lending Tree" (whom we note has gone the high-profile sports sponsorship route previously tried by Ameriquest, but instead of baseball, with our beloved PGA Tour - excuse us while we puke) how about this:

several former employees" may have shared confidential passwords with "a handful" of lenders that were not approved by the company.

The lenders then used those passwords to access customer information files that contained mortgage request data such as name, address, e-mail address, phone number, Social Security number, income and employment information.

10-1 says these "lenders" or empoyees were selling access to that data.

UPDATE: Sam Glover (of our local Caveat Emptor, riding shotgun over at Consumerist for a couple of days) hoisted this post, along with some correspondence from Lending Tree attorneys who sought the removal of one of the comments.

The backstory:

The attorney, who called twice and emailed three times before noon, requested that we remove the comment by "Lance Moore" below, which contains some interesting and provacative allegations about Lending Tree's business model, among other things.

He first emailed under the cover of "please remove the non-public URL, this guy is encouraging hackers." Then, when we redacted that url, the attorney followed up right away stating that the comment contained numerous "defamatory" comments and again requested that the comment be removed. 

The attorney walked the line pretty carefully, and did not make any explicit threats, but here's the thing:  Any time we get an email from a corporate attorney tossing around jargon like "defamatory" and using interrogative sentences like: "Are you refusing to remove this?" we consider that a veiled, if unspoken, threat of legal action.

After all, if they really wanted the whole comment removed, why didn't they just ask for that in the first place?  That was what struck us as odd, and might mean their motives were not confined to angst over a hackable public url leading to a lender login page.  Maybe related to this? from Sam at Consumerist:

a class-action lawsuit in 2006 alleged just that: banks were not really competing, just LendingTree employees. As far as I can tell, the lawsuit is ongoing.

April 21, 2008

Dear LendingTree Customer:

We want you to know that some loan request forms our customers sent to LendingTree may have been seen by lenders without our consent. These lenders then used the forms to market their own mortgage loans to our customers. While we don't believe that the forms were used for any other purpose, we want you to know what happened and what we did to correct this situation, as well as what you can do to monitor your credit records.

What Happened and What We Did

Recently, LendingTree learned that several former employees may have helped a handful of mortgage lenders gain access to LendingTree's customer information by sharing confidential passwords with the lenders. When we learned of this situation, we quickly contacted the authorities, and LendingTree is helping with their investigation. We promptly made several system security changes. We also brought lawsuits against those involved.

Based on our investigation, we understand that these mortgage lenders used the passwords to access LendingTree's customer loan request forms, normally available only to LendingTree-approved lenders, to market loans to those customers. The loan request forms contained data such as name, address, email address, telephone number, Social Security number, income and employment information. We believe these lenders accessed LendingTree's loan request forms between October 2006 and early 2008.

What You Can Do

Again, we don't believe any identity theft or fraudulent financial activity resulted from this situation. However, we suggest you get a free credit report. Look for any accounts you didn't open and/or inquiries from creditors that you didn't initiate. If you see anything you don't understand, contact the credit bureau. If you see anything suspicious, you may want to file a fraud alert with the bureaus. For more information on how to do this, please refer to LendingTree's Guide to Protecting Your Credit and Identity.

Where to Get More Information

We regret any inconvenience and apologize for any unwanted mortgage calls you may have received. For more information about this situation, and for more information on what you can do, please refer to the attached Questions & Answers .

Sincerely,

R.L. Harris

Not sure how we missed this gem from Jennifer Bjorhus last week (we'll blame the Pioneer Press RSS feed):

As for the Minnesota Fin