Scum comes along when there is room for ‘great margin’. That almost always comes when there is monopoly or deception. The subprime mortgage crisis happened when

Scum comes along when there is room for ‘great margin’. That almost always comes when there is monopoly or deception. The subprime mortgage crisis happened when there was deception of investors about the quality of mortgage-backed securities. An effect of that was that companies that had no exposure to loan quality perversely had an incentive to originate large volumes of low quality loans. Mortgage brokers earn points on transactions, so a typical commission would be say 60 basis points on the loan amount. A $100k loan earns the broker $600. Typically this was paid to the broker and shared with any loan officer and processor employees(yes gatekeepers were paid commission!). Prime loans, home purchase loans, typically had similar yield spread premiums. Subprime loans were marketed so aggressively because their points ranged from 120-450, with the highest rates coming from Option ARMs. The same broker on the same $100k loan made $4500 vs $600. The rest is history. Margin. If there’s enough of it, there’s room for free beer, more of it, call centers and big ad campaigns, more of it, Vegas parties and dark money. It doesn’t matter where the margin comes from, the result is always the same. Source: I worked at a big mortgage lead gen company. Almost went to work for rehab lead site, then didn’t want to repeat prior mistakes.