The American dream of home ownership is rapidly fading for many people. Thousands of people are facing foreclosure and watching their neighbors move away. This didn’t have to happen. The looming foreclosure crisis is directly traceable to bad decisions on the part of people who should know better.
In the Monday, October 1, 2007, New York Times, Paul Krugman wrote an article about Angelo Mozilo, chairman and CEO of Countrywide Financial, the nation’s largest mortgage lender. Mr. Mozilo was paid $142 million in 2006 alone, according to Mr. Krugman, making him one of the highest paid chief executives in America.
Stopping Home Foreclosures
Yet this CEO is a prime example of one of the greatest problems America is facing today: a crisis of corporate governance that affects every person in all areas of life. Lack of accountability would be an understatement; there has been a complete betrayal of trust by certain lenders, bankers and mortgage companies. In his article, Mr. Krugman talks about the similarities with the Enron scandal and wonders about the lack of public outrage.
Countrywide victimized its borrowers by leading them to high cost and unfavorable loans, said Gretchen Morgenson, another Times commentator. After making questionable loans, Countrywide is showing reluctance to work out deals to help borrowers hold onto their homes. Such deals usually work to the benefit of both sides because the costs of foreclosure are avoided. Ms. Morgenson’s article points out that Countrywide can make money from the fees it charges on foreclosures. But for mortgages that could have been saved, but weren't, the costs are borne by others.
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