The mortgage mess and ex-cons

When the history of the mortgage meltdown is written, there should be a chapter written about the cons of having ex-cons peddling loans.

A new federal law makes it tougher for felons to work in the loan business. But in Wisconsin, the Milwaukee Journal Sentinel writes, terrible damage was been done by former prisoners.

A killer, a handful of drug dealers and a onetime leader of the Latin Kings - these are just some of the criminals who have received state-issued licenses to write your mortgage loan.

Those ex-cons are among hundreds of people with convictions ranging from prostitution and drunken driving to burglary and armed robbery who obtained state permits to work as mortgage loan originators, commonly called loan brokers - a profession that operates with minimal state oversight.

The licenses give the ex-cons easy access to a client's personal financial information, including bank account and Social Security numbers. More importantly, the licenses open the door to the mortgage market, which was awash in billions of dollars until it crashed, sparking the national economic crisis.

Today, regulators and investigators nationally are discovering scores of illegal real estate schemes that helped contribute to the nation's mortgage meltdown, particularly in the now-moribund subprime market. Many of the illicit deals were hatched by people who had criminal histories before receiving state permits to enter the business.

The Journal-Sentinel reports that many of the ex-cons gained an interest in the dark side of the real estate business at minimum security facilities, where many white collar criminals pass share their expertise.

True, many former convicts lead honest lives after doing their time. But a lot of people, at least in Wisconsin, got involved in the real estate business who shouldn't have been allowed to.

Technorati tags: crime legal Politics subprime mortgages real estate news wisconsin