Thousands With Criminal Backgrounds Legally Selling Loans In Florida Without Being Licensed

In Part 2 of a 3-part investigative report published yesterday on what can be described as the betrayal of Florida home loan borrowers by state regulators, The Miami Herald I-Team reports:

• Gary Kafka, former body builder with a long rap sheet and violent past, wrote millions of dollars in mortgages in South Florida without ever applying for a state license. Fresh out of prison after serving time for bank fraud, he never went through a criminal background check before selling loans. He never took a competency exam. He never had to.

• 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 [loan officers employed directly by mortgage lenders], they perform the same job as mortgage brokers but aren't bound by the same rules.

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• While The Miami Herald found breakdowns in the state's licensing system for mortgage brokers, the lack of controls over originators created even more problems for an industry steeped in the highest fraud rate in the nation.

For more, see Thousands with criminal records work unlicensed as loan originators.

In related reports published as part of Part 2 of The Miami Herald investigative report, see:

• States act to license loan originators,
• Florida regulators shun licensing for loan originators,(1)
• Mortgage regulator's resignation sought (''I am outraged by the facts presented in today's Miami Herald article on mortgage broker licensing,'' [Florida Chief Financial Officer Alex] Sink said in a statement Sunday afternoon. She added: ''Floridians depend on the state to protect them from criminals, and it is inexcusable that state regulators were asleep at the switch.''),
• Showdown over criminal brokers is imminent ("The call for [Florida regulator Don] Saxon's ouster was prompted by a Miami Herald investigation that showed more than 10,000 criminals have been allowed to peddle home loans in Florida since 2000. Among them are bank burglars, cocaine traffickers and identity thieves who have gone on to commit at least $85 million in mortgage fraud, the newspaper found.").

(1) Some may say the regulators are too busy passing out licenses to convicted felons working for mortgage brokerages to be bothered with regulating the unlicensed loan officers / loan originators who work directly for mortgage lenders.