So basically nothing changed -- a mirror image of 2004-2007, with the same people getting rich. Mortgage originators were paid for speed -- get as many loans done as possible in order to fuel the MBO/CMBS securitization machine. Now foreclosure processors (many ex-originators) are getting paid again for speed - process as many as possible, ignoring procedure if it results in greater volumes because most of the homeowners in foreclosure are the same fools that didn't know any better when they took the loan, so why would they bother questioning anything now (especially when they know they have behaved badly by not paying the mortgage)?
Unanticipated Consequences:
- Ignorance: By focusing on speed and throughput, decisions were made on incomplete analyses.
- Immediate Interests: Loan originators (and now foreclosure processors) were incentivized to process as many new loans or new foreclosures as possible (by being paid on a per transaction basis). This ignored the long-term effect of inflating the housing bubble on the front end and having bad debt return to bank balance sheets on the back end.
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