The second part of the series focuses on the loan originators. These are the unlicensed counter-parts to the mortgage brokers. In Florida mortgage originators do basically the same job as the brokers but do not need the licenses. Criminals figured this out very quickly, some headed straight to Florida right out of prison.
More than half the mortgage professionals registered in Florida -- 120,563 -- entered the industry this decade without being licensed by the state, The Miami Herald found.
Known as loan originators, they perform the same job as mortgage brokers but aren't bound by the same rules.
The state has the highest level of fraud in the nation but the lawmakers did not want any to put up any impediments. Instead of preventing crime, state lawmakers condoned it. Leaders within the mortgage industry repeatedly asked for stricter regulations and more oversight and yet the state did nothing. It is little surprise that Florida ended up being the number one state for mortgage fraud. Another area where being number one has very, very dire consequences.
Here are some of the Miami Herald shocking findings regarding loan originators for the years 2000-2007 -
Former and current criminals could make a quick dollar in the unregulated loan originator position. Unlicensed and unregulated but still having readily access to any buyer and/or refinancers personal information.
• 5,306 people with criminal histories became loan originators -- a rate of nearly two a day. Worse, those include 2,201 who had committed financial crimes, such as fraud, money laundering and grand theft.
• Even large lenders hired loan originators with criminal backgrounds. The Miami Herald found that in at least 30 companies with 50 or more employees, more than one in five originators had a criminal record.
• Nearly two dozen people stripped of their licenses as mortgage brokers were able to sidestep regulators by becoming loan originators. Nine others who were denied licenses because of prior crimes or regulatory violations were able to do the same.
And it gets worse. The state has laws that they are supposed to monitor the originators through their lenders - but that was not being done. Once again Florida regulators were not doing their jobs and the public was paying the price.
The regulators were not monitoring the industry. What exactly were they doing? Either they were so short staffed that everything was falling through the cracks or they were just not bothering. It is obvious no one was looking over their shoulder to make sure the work was getting done.
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.
Unfortunately it sounds like the tax payer received very little return on the salaries for the regulators. Giving licenses to criminals who never would have been allowed in the industry before the boom. Not following up on loan originators and the companies they work for. It sounds like it was a free-for-all in Florida during the bubble and the most vulnerable payed the price.
The third part of the series - The Probe is not yet available. When its posted we will review the last part in this devastating series. In the meantime we recommend visiting the Borrowers Betrayed main page to check out the video and slide show to hear and see the victims stories.