The Countrywide Financial case study describes the “villainess” mentality of what had become the largest provider of home loans in the United States (Ferrell, Fraedrich, & Ferrell, 2013). Angelo Mozilo was a co-founding partner in Countrywide Financial in 1969 and in less than 30 years the mortgage provider had reached the $1 trillion mark by primarily on the back of subprime lending, which ultimately was at the heart of the economy’s collapse. The company focused its efforts and implemented a program for low-income and minority customers to purchase a home that they otherwise would not have qualified (Ferrell et al, 2013). Subprime loans are considered to be high-risk because of a variety of credit and income ratio criteria being less
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The economy went from bad to worse. Countrywide attempted to implement a mortgage modification program, but it was far too gone. A variety of factors led to the fall of what was the largest mortgage provider. First, loan officers unethically convinced unknowledgeable customers that they could afford their homes even with rate increases or that the value would increase and they would be able to refinance when the note matured. The originators were caught up in the money just the same, even to the point of relying on stated not verified income to qualify the mortgage. Second, the appraisers would cushion appraisals, so the mortgages could happen. Everything was done based upon their opinion of the future. It was easy to get caught up in the success of the organization because everyone wants to do “well.” Ultimately, Bank of America acquired Countrywide at a discounted price and Countrywide was happy to relinquish control because of investigations and lawsuits to come (Ferrell et al, 2013). However, BOA made some questionable choices, including the hiring of David Sambol, who later they replaced. BOA took on the dilemmas brought about because of Countrywide executives’ inability to act in an ethical
The economy went from bad to worse. Countrywide attempted to implement a mortgage modification program, but it was far too gone. A variety of factors led to the fall of what was the largest mortgage provider. First, loan officers unethically convinced unknowledgeable customers that they could afford their homes even with rate increases or that the value would increase and they would be able to refinance when the note matured. The originators were caught up in the money just the same, even to the point of relying on stated not verified income to qualify the mortgage. Second, the appraisers would cushion appraisals, so the mortgages could happen. Everything was done based upon their opinion of the future. It was easy to get caught up in the success of the organization because everyone wants to do “well.” Ultimately, Bank of America acquired Countrywide at a discounted price and Countrywide was happy to relinquish control because of investigations and lawsuits to come (Ferrell et al, 2013). However, BOA made some questionable choices, including the hiring of David Sambol, who later they replaced. BOA took on the dilemmas brought about because of Countrywide executives’ inability to act in an ethical