Since the mortgage crisis has taken hold, I’ve tried to think of all the reasons why everything went so horribly wrong.
By now, we know things like no money down mortgages, stated income loans, huge second mortgages, and option arms were bad news.
Seems so very obvious in hindsight…
But the problems went beyond that, as evidenced by a piece in Forbes, written by white-collar criminal Walter Pavlo.
In the blog post titled, “Mortgage Brokering Taught in Prison,” Pavlo noted that the class, taught by an inmate accused of, you guessed it, mortgage fraud, was by far the most popular.
In fact, the two-hour class, which met three days a week for a month back in 2001-2002, had a waiting list because the prison would only allow 25 copies of the curriculum to be produced.
And as Pavlo aptly pointed out, “Mortgage Brokering was a great career because institutions did not care whether you were a felon or not, as long as you had a legitimate deal. And in 2002-2006 they were all legitimate.”
Those who took the course and were subsequently released from prison saw success and testimonials were shared with future classes, making it all the more popular, and certainly “more lucrative and easier than selling the drugs that had put them in prison to begin with.”
Let me just get one thing straight.
This isn’t to say that mortgage brokers were to blame for the mortgage crisis, rather that a lack of regulations allowed for an anything-goes environment, fueled by larger mortgage lenders and Wall Street, with their originate-to-distribute model.
(photo: chicagogeek)