Things Routinely Done Countrywide

In an article in today's New York Times by Gretchen Morgenson titled "Inside the Countrywide Lending Spree", we are given illuminating insight into Countrywide's aggressive lending practices.

Of course it's rather a billion dollars short, and several thousand days late, to call the company and its practices into question, but then again, if we are to learn anything, such stories are still worthwhile. Nevermind that the NY Times itself published its fair share of profiles of people reaching for what we now know is the impossible: the attainment of homes that could not have been achievable via normal methods of honest acquisition or reasonable lending practices.

So there is blame to go around. In the article we learn that:

• Countrywide routinely disregarded borrower assets in order to put them in a class of loans that garnered more fees. (Done no doubt to encourage pride of ownership since the more you pay, the more you value what you have overpaid for).
  
• Countrywide routinely charged blacks and hispanics more for the loans they received. (Because, well, the cost of pigmentation, like other commodities, has been rising around the world. Or, as one recently executed toy factory manager in China said, "Less pigmentation, more lead," when creating action figures).
• Countrywide avoided steering low income and new borrowers toward FHA government loans due to profit considerations. (And because the government has its hands full with Maliki in Iraq, poppies in Afghanistan, and a high number of congressman under investigation. Loan processing times would invariably slow, along with profits).
• Countrywide routinely charged more for mortgage related services than its competitors while verbally suggesting they provided the best loan possible "in the universe". (Or as they probably framed it during weekly team meetings, "High cost value-adds SHOULD cost an arm and a leg and your home")
• Countrywide's head, Mr. Mozilo, routinely purchased zero new shares in the last ten years, while at the same time routinely selling unpurchased shares (options grants) in order to remain highly diversified. (I imagine he will need the extra money to stay out of the big house. Then again, Mr. Mozilo will not suffer the fate of businessmen in China, who, when they mess up, get disposed of, and merely for poisoning the world's pets with funky food. (But oddly, not for poisoning the world's children with lead)).
• Countrywide routinely, right up into February and March, sold piggyback loans, sold loans covering 95% of the appraised price, and loans without income documentation. (Because trusting people is good, and them trusting you is even better, especially when they have no money).
• Countrywide routinely rewarded its employees in its incentive structure for selling high cost, riskier loans. (You cannot argue with compensating employees well, can you? Besides the extra income will be handy when they face the eventual individual and class action suits, or when they get laid off when Bank of America takes over and decides they like inventory and systems more than extra employees).

All of which could have been discovered ages ago if publications that employed journalists did a bit more journalism and a little less lifestyle and aspiration promotion. Or as a journalist in China once said before being killed by the government, "Less Lohan, more leadership (and still no pigmentation)".

Then too, we cannot wholely blame the filthy lucrists at Countrywide, or the reflexively late reporting of the nation's journalists for the situation we find ourselves in.

We must look in the mirror. (We meaning, YOU).

We are either a nation chock full of extremely stupid people, able to be repetitively swindled and swonked, or (and more likely), we are a nation of extremely morally challenged people, willing to shave off a bit of our better judgement or jolly goodness in order to cut ourselves a slice.

Thusly:

• We are routinely willing to lie about our income, or expand on our income, or pretend money does not exist at all, in order to get what we think we deserve. (Proper accounting not being relevent to most things).
• We routinely take on risks under the assumption that income today will be no different tomorrow, except more, but not less. (Or that, all things working for good, the world will end or we will win the Powerball, or the rapture will come, or society will collapse, or our parents will die leaving us money, thus saving us from the decision we made when the mortgage broker ventured into undiscovered laws of math by assuring us that if we signed "here", that our non-income and lifestyle would not be adversely impacted by monthly mortgage payments of $300 that would reset to $4000 dollars after a year if and only if the rare occasion of 365 days in a row occured.)
• We routinely are too impatient to do close reading, perfectly willing to let preachers, teachers, neighbors, email forwards, and loan originators explain to us concepts in one sentence that are better read in full paragraphs and fine print. (Once undone, we mistily recall our long ago desire to graduate kindergarten and go straight to Harvard, only to be held back by dyslexia and complicated stuff like letters and numbers arranged in a sentece on a piece of paper signed by our blood in front of a horned mortgage lender trainee).
• We routinely find ways to cut corners, like piggy backing on other people's credit histories in order to find houses big enough to hold all the stuff we bought with our own credit cards. (Imagining that we can drive over to a bad neighborhood and sell it to the crack addicted for half price, or on Ebay for twice the price, if times get sketchy).

And for those who don't own homes, and who have always had bad credit and lived paycheck to paycheck, but were too honest to fudge their way to greater circumstances, the credit markets salute you. They will never loan to you now, but you have the good fortune of knowing you will have a roof over your head long after the head of Bear Sterns has liquidated his last mortgage fund and played his last game of golf.