Florida Welcomes Felons aboard the Mortgage Fraud Gravy Train

Lax state and federal oversight nurtured real estate and mortgage fraud.

Palm Coast, Florida – July 24, 2008 – A 2006 law requires Florida to screen all applicants for a Mortgage Broker license for federal crimes. They didn’t screen until March 2008, allowing thousands of convicted felons to become mortgage brokers. Even more felons avoided license scrutiny by becoming loan originators.
The Miami Herald recently reported the results of their investigation into the mortgage origination business. They found that, "In the first 11 months of 2007, more than 10,000 applicants got licenses without the (required) federal check, including at least one convicted bank robber and a man who was sentenced to prison for money laundering." But even worse, while Florida requires that mortgage brokers be licensed, it allows lenders to hire loan originators, who do not require a license. Mortgage brokers who lost or were refused a license simply became loan originators.
The Miami Herald report found that between 2000 and 2007, "5,306 people with criminal backgrounds became loan originators…. including 2,201 who had committed financial crimes, such as fraud, money laundering, and grand theft."
"Even large lenders hired loan originators with criminal backgrounds. In at least 30 companies with 50 or more employees, more than one in five originators had a criminal record."
The Miami Herald report supports the GoToby contention that the high rate of foreclosure is, at least in part, the result of lax oversight by both federal and state regulators. There is no single federal or state agency with the authority to oversee the entire real estate transaction; from real estate sales agent and broker to appraiser, to mortgage broker or loan originator, to lender, to the closing agent or Title Company, and to the financial industry that packaged the loans, sprayed them with perfume, and resold them to unsuspecting hedge funds and mutual funds (as well as to each other).
There was so much money and it was just too easy to grab. Only a small percentage of those who benefited through real estate fraud are likely to be caught. Just as the regulatory system was ill equipped to deal with the sheer volume of transactions during the boom, the enforcement system will likely investigate only a fraction of the thousands of possible fraud cases. The investigations are too paperwork intensive and time consuming.
1 reply
  1. Dan Bozza
    Dan Bozza says:

    Since The Beginning of Time

    It seems that some people are willing to spend tremendous efforts to outwit, if not outright steal, what does not belong to them. Since the beginning of time these people prefer take the risk of being caught and possibly even being convicted and sent to jail rather than use their intelligence in honest endeavors. When you add to this scenario large sums of money and the catalyst of "easy money" you inevitably have a situation that collapses of it’s own dead weight of immorality and corruption. Unfortunately there is no satisfaction from a few jail sentences when you are just an "average Joe" caught up in the epidemic and loose everything you ever had and now need to start all over again.

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply