To train for a new career after prison, inmates are turning to mortgage brokering to start a new life.

Irvine Home Address … 90 BRIARWOOD #105 Irvine, CA 92604

Resale Home Price …… $300,000

Crawling to my glass prison

A place where no one knows

My secret lonely world begins

Life here in my glass prison

A place I once called home

Fall in nocturnal bliss again

Dream Theater — Glass Prison

Inmates learn new skills as part of their rehabilitation. It is a wise societal investment to give thieves training in something other than thievery so they can have an opportunity to begin a new productive life — if they choose to live differently after prison. Unfortunately, many skills taught in prison give criminals new skills to be even better criminals.

Mortgage Brokering Taught in Prison

Walter Pavlo — September 16, 2010

While I was in Edgefield Federal Prison Camp, many of us white-collar felons taught classes to the other inmates. Most of the classes involved helping inmates get their high school diploma (GED). Like other inmates who had the opportunity to teach, I felt good to find a way to give back.

Other classes helped inmates prepare for a career after prison. Hair cutting was a popular skill to learn, though many states prohibit felons from cutting hair….must have something to do with scissors. Tattoo art was also popular but the shortage of clean needles kept the enrollment for that particular class to a minimum.

So what was the most popular class during my time in Edgefield during 2001-2002, “How to be a Mortgage Broker”. The class was taught by an inmate, Eric, who was doing 3 years for mortgage fraud. So I guess that made him an expert. Each semester (a 2-hour class met 3 days a week for a month) the enrollment prompted a waiting list for the class. The waiting list resulted because the prison would only allow 25 copies to be made of the various forms that were a part of the curriculum (about 20+ pages of forms, work sheets and exemplar credit reports). Those with more time left on their sentence were pushed off to another semester to make room for those that would hit the streets in a few months. If you were doing 5+ years, you didn’t have a chance. Even prison classes are selective in their enrollment.

Mortgage Brokering was a great career because institutions did not care whether you were a felon or not, as long as you had a legitimate deal. And in 2002-2006 they were all legitimate. There was no licensing requirement and the inmate would return home with dreams of home-ownership to a host of friends and family. Testimonials to the success of the program flowed back to the instructor and he shared these with the next class.

Professor Eric probably meant well. The would-be brokers that he fed into the market were just trying to make a living in a business that seemed more lucrative and easier than selling the drugs that had put them in prison to begin with. Professor Eric did not do too bad either. He received $30 in commissary goods per inmate ($750 per session). Not bad for a place where the legitimate wage is about $0.15/hour for a prison job. Granted, there were only 4 sessions a year, but Eric also offered private lessons not sanctioned by the prison.

When I left prison, Professor Eric had turned his energy toward his own career once he secured his release, and it wasn’t Mortgage Brokering. He had created a business plan for a mutual fund that bet on NBA games with a guaranteed return of 12%. I told him that it sounded like a Ponzi Scheme, and I’ll never forget his reply, “What’s that?”

The entire housing market in California is a Ponzi Scheme. The newly released felons will be completely comfortable originating loans here in California. The question is, will you be comfortable having a convicted felon get a loan for you?

A private Ponzi prison

Perhaps we should make all the Ponzis who stripped the equity from small condos live in them until they pay the money back…. Actually, that is occurring to those who continue to make their payments. I wonder if they feel like they are in prison?

• Today's featured property was purchased on 3/17/2003 for $279,000. The owner used a $223,200 first mortgage, a $41,850 second mortgage, a $13,950 third mortgage, and a $0 down payment.
• On 11/10/2004 he refinanced with a $336,000 first mortgage.
• On 12/27/2005 he refinanced again with a $360,000 first mortgage and a $40,000 second mortgage.
• Total property debt is $400,000.
• Total mortgage equity withdrawal is $121,000. Not bad for a small condo.
• Total squatting time is 17 months so far.

Foreclosure Record

Recording Date: 11/09/2009

Document Type: Notice of Sale

Foreclosure Record

Recording Date: 07/31/2009

Document Type: Notice of Default

Irvine Home Address … 90 BRIARWOOD #105 Irvine, CA 92604

Resale Home Price … $300,000

Home Purchase Price … $279,000

Home Purchase Date …. 3/17/2003

Net Gain (Loss) ………. $3,000

Percent Change ………. 1.1%

Annual Appreciation … 0.9%

Cost of Ownership

————————————————-

$300,000 ………. Asking Price

$10,500 ………. 3.5% Down FHA Financing

4.31% …………… Mortgage Interest Rate

$289,500 ………. 30-Year Mortgage

$57,332 ………. Income Requirement

$1,434 ………. Monthly Mortgage Payment

$260 ………. Property Tax

$0 ………. Special Taxes and Levies (Mello Roos)

$25 ………. Homeowners Insurance

$328 ………. Homeowners Association Fees

============================================

$2,047 ………. Monthly Cash Outlays

-$130 ………. Tax Savings (% of Interest and Property Tax)

-$395 ………. Equity Hidden in Payment

$16 ………. Lost Income to Down Payment (net of taxes)

$38 ………. Maintenance and Replacement Reserves

============================================

$1,577 ………. Monthly Cost of Ownership

Cash Acquisition Demands

——————————————————————————

$3,000 ………. Furnishing and Move In @1%

$3,000 ………. Closing Costs @1%

$2,895 ………… Interest Points @1% of Loan

$10,500 ………. Down Payment

============================================

$19,395 ………. Total Cash Costs

$24,100 ………… Emergency Cash Reserves

============================================

$43,495 ………. Total Savings Needed

Property Details for 90 BRIARWOOD #105 Irvine, CA 92604

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Beds: 2

Baths: 1 full 1 part baths

Home size: 1,125 sq ft

($267 / sq ft)

Lot Size: n/a

Year Built: 1978

Days on Market: 4

Listing Updated: 40443

MLS Number: P753437

Property Type: Condominium, Residential

Community: Woodbridge

Tract: Wbrs

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According to the listing agent, this listing may be a pre-foreclosure or short sale.

Quite Inside Loop Location, 2 Huge Bedrooms, One with Walk-In Closet, Large Laundry Room.

Quite Inside Loop Location? I think he meant "quiet."