Alan Abelson of Barrons with some anecdotes of what investigators are finding as they dig into the bubble machine known as Countrywide.There is, for example, the woman who bought a $600,000 house, claiming she worked as an account exec at a California investment firm, earned $13,494.03 (nice touch that three cents) a month, had a $45,000 bank account at Wells Fargo and, according to the insurance application, made a $30,000 down payment.
When MGIC nosed around, it discovered the investment firm she supposedly worked for didn’t exist, neither did the bank account, she hadn’t made a down payment and she actually earned $3,901.58 a month as a janitor at a medical facility.
In another instance, a $350,000 loan was extended by Countrywide to a fellow who wanted to buy a home valued at that amount and claimed he was a dairy foreman earning $10,5000 a month. Again, the snoops at MGIC discovered the guy was a milker at the dairy who earned $1,100 a month and signed the documents where he was told to — even though he couldn’t read English.
There’s plenty more of the same in the complaint by MGIC charging that Countrywide agents were complicit in various and sundry deceptions. Frankly, we found it all something of a hoot, though it’s not hard to see why MGIC isn’t laughing. But even comic tales typically embody a moral, and this one is no exception. Fraud played no small role in the great demolition of housing, but the principal perpetrators were never diligently pursued and, for the most part, went crying all the way to the bank. Moral hazard, anyone?
That’s the really startling thing here. As the saying goes, prosecutors can indict a ham sandwich. And given the general outrage against all who facilitated the housing bubble, mortgage-related indictments would be applauded.
And, yet, there have hardly been any.
Which suggests that, except in egregious anecdotes like the ones above, which can presumably be blamed on clueless low-level employees, what Countrywide, et al, were doing was perfectly legal.
Given the U.S. government’s ongoing encouragement and subsidization of “The American Dream,” this is hardly surprising. Before he was hated and ridiculed, after all, Angelo Mozilo was a hero.
(via Barry Ritholtz)
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