Kafka, 48, joined America's Best Lending in Boynton Beach in 2004 after living in a halfway house.

While his federal probation officer said in court records that Kakfa should not be working in the mortgage industry, he went on to join two other firms without disclosing his past.

Two years after he began to peddle mortgages, he was convicted of cheating lenders of $2.7 million in loans at America's Best Lending by inflating incomes, boosting assets and misrepresenting other finances.

''You never would have guessed it,'' said Philip Sencer, who hired Kafka at a Wellington firm in 2006. ''He was the type of guy you'd invite to your home for a barbeque.''

BURDEN ON LENDERS

State regulators say they don't license loan originators, but they regulate those who hire them: mortgage lenders. The 1991 law allowing originators made it clear: The burden is on the lenders to ensure that everyone follows the law.

If a lender refuses to act on complaints against a loan originator, the state can discipline the lender, said Terry Straub, recently appointed director of the Office of Financial Regulation's Division of Finance.

''We hold them accountable,'' he said. But The Miami Herald found that in at least nine major cases when originators were arrested for mortgage fraud, no action was taken against their lenders.

While Florida requires lenders to report the names of their loan originators every quarter, the newspaper found that hundreds of companies don't follow the law. In the first half of 2005 -- during the peak of the boom -- 355 didn't file required reports, according to the state's own records.

Falk, the former president of the National Association of Mortgage Brokers, said the lack of reporting in the state system allows too many gaps.

The lack of tracking leads to even more problems: Without any central registration and with no requirements for entry, loan originators with criminal histories can move from firm to firm without divulging their past.

There is no state law requiring lenders to check their background.

If they had, they would have found that Kafka spent nearly three years in federal prison for loan fraud in 1999 and illegally keeping an arsenal of guns and ammunition while a resident of Ocean Ridge, near Boynton Beach.

Sencer, who hired Kafka at Financial Security in Wellington, said he learned of Kafka's police record only after federal Alcohol, Tobacco and Firearms agents showed up at his office in 2005. Sencer said that when he met with prosecutors, 'they told me, ''You got duped.' ''

Assistant U.S. Attorney Neil Karadbil, who prosecuted Kafka, said the former loan originator was able to conceal his past while peddling loans, partly because he didn't have to submit to criminal background checks.

''There has to be some way to know in this industry whether you're dealing with a convicted felon,'' Karadbil said. ''At least borrowers or employers should know that.''

Even before his latest conviction, Kafka had a criminal record dating to 1977, including 15 arrests and four felony convictions, court records show. The charges include grand theft, burglary and possession of contraband in prison.

He is now back in prison -- serving 57 months -- for the most recent mortgage scheme.

A NEW CALLING

Harry Rolle was a convicted felon who had declared personal bankruptcy three times before he became a loan originator in 2001 for International Lenders of South Florida in Oakland Park.