Mortgage counselors face a rising workload

The Associated Press reports that, not surprisingly, there is a huge surge in the demand for non-profit mortgage counselors in the wake of the subprime meltdown.

A few things come to mind. At the height of the housing bubble, The Wall Street Journal ran a feature story on a former school counselor turned mortgage salesman who was on pace to earn $200,000 in a single year dealing with low-documentation, high interest mortgages -- probably subprime -- at a company called Benchmark.

That former school counselor is earning about 5 times what a nonprofit mortgage counselor makes. Is it any wonder that we ended up with a crisis? High-octane salesmen are earning 5 times as much on commission as these good-hearted souls who are brought in to clean up the mess.

And, because of the way the system is structured, these salesmen probably didn't give a darn whether the loans were any good: "Like many mortgage originators, Benchmark doesn't keep its mortgages long. Of its 2,176 loans last year, all but seven were sold to Wall Street firms and bigger mortgage companies, to be repackaged as bond-like instruments for insurers, pension funds and other investors. Benchmark nets about 1.5% of the value of the loan for its trouble, while freeing up capital to start the lending cycle again. It also means Benchmark doesn't have a major stake in the long-term fate of its mortgages."

Maybe the solution is to require mortgage salesman to take the same training program as mortgage counselors. Maybe they'd think twice about selling people mortgages they couldn't afford. At the very least, they'd be able to make themselves useful when the toxic mortgages they sold to unsuspecting consumers go bad.