Minimizing predatory lending: Designing a long-term compensation structure to minimize the actions of opportunistic mortgage brokers
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| Title | Minimizing predatory lending: Designing a long-term compensation structure to minimize the actions of opportunistic mortgage brokers |
| Authors | |
| Abstract | This paper addresses the inadequacies in the current compensation structure for mortgage brokers, and asserts that the resulting opportunistic behavior by brokers played a major role in the 2008 collapse of the mortgage market. We utilize agency theory as an underpinning to suggest that increased regulation will have only a limited impact on self-serving behavior due to the complex information asymmetries possessed by brokers. We posit that a restructured long-term compensation package would be effective in aligning the interests of borrowers and brokers, ultimately reducing the level of mortgage defaults and foreclosures. |
| Publisher | International Journal of Business and Social Research |
| Date | 2013-07-03 |
| Source | 2164-2540 |
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