The question would be…how do we determine whether or not it’s the originator’s (executive’s and employees of the origination company) personal money, or money they got from “investors”?

Doesn’t really matter. This problem is similar to the problems of all corporate governance… how do the stockholders know they are not being fleeced. Personally, I think that there needs to be changes with respect to the relationship between companies, their executives and the stockholders. What has been lost is that the common stockholders are really the owners of the company.

If the money loaned on the retained portion comes from investors, but the origination fees go to the originator (executives and employees — with little of that money going back to the actual investors), then they will again be gambling with other people’s money, and will have no incentive to process good loans.

If most of the money gets ‘redirected’.. depending upon how done, that could be fraudulent conveyance, which will destroy the corporate shield between the company and its executives.